Arista Networks (ANET) 10-K risk factor changes: FY2023 vs FY2022

- shipment [added: interruptions or] delays could cause [added: our] revenue to [removed: fall;][added: fall.]

- some key components in our products come from sole or limited sources of supply and increases the risk of supply shortages, [removed: delays,] extended lead times or [removed: costs, particularly in an industry-wide] supply [removed: constrained environment;][added: changes;]

- adverse economic [removed: and geopolitical] [added: conditions, continuing uncertain economic] conditions [removed: and] [added: or] reduced information technology and network infrastructure spending may adversely affect our business;

- our revenue and revenue growth [added: rates are volatile and] may [removed: decline;][added: decline or not meet our or our investor's expectations;]

- our results of operations may vary significantly from period to [removed: period;][added: period and can be unpredictable;]

- failure to successfully [removed: pursue] [added: carry out] new products and [removed: services] [added: service offerings] and expand into adjacent markets could adversely [removed: affect] [added: impact] our business;

- [added: we expect] our gross margins [added: to] vary [added: over time] and may be adversely affected by [removed: an increase in costs;][added: numerous factors;]

- we are subject to risks associated with [added: the expansion of our] international sales and operations;

- we face risks associated with the [removed: acquisition] [added: investments in] and [removed: integration] [added: acquisitions] of complementary companies, products or technologies;

- failure to raise [removed: any needed] [added: additional] capital on favorable terms could harm our business.

[removed: - if] [added: If] we are unable to attract new large customers or [added: to] sell additional products and services to our existing customers, our revenue growth will be adversely [removed: affected;][added: affected and our revenue could decrease.]

- [removed: some] large customers require more favorable terms;

[removed: - if] [added: If] we are unable to increase market awareness [added: or acceptance] of our [removed: products,] [added: new products and services,] our revenue may not continue to grow or may [removed: decline;][added: decline.]

- sales [removed: cycle] [added: cycles] can be long and unpredictable;

- indemnification provisions under [added: our standard] sales contracts could expose us to losses;

- we rely on distributors, systems integrators and [added: value-added] resellers to sell our products;

- sales to government entities are subject to a number of [removed: risks] [added: challenges] and [removed: challenges;][added: risks;]

- we are exposed to [added: the] credit risk of [added: our] channel partners and [added: some of our end] customers.

- our products must interoperate with operating systems, software [added: applications] and hardware [added: that is] developed by others.

- future sales forecasts may be materially inaccurate which could result in incorrect levels of inventory and purchase [removed: commitments.][added: commitments;]

- assertions by third parties of intellectual property [removed: infringement] [added: rights infringement, misappropriation or other violation] could harm our business;

- failure to protect [added: or assert] our intellectual property rights could harm our competitive position;

- failure to comply with [removed: open-source software] licenses [added: to software and other technology] could restrict our ability to sell our products;

- risk that our competitors could develop products that are similar to or better than ours because we provide access to our software and selected source code to certain [removed: partners, which creates additional risks.][added: partners.]

- defects, errors or vulnerabilities in our [removed: security network] products, failure of our products to detect security breaches or incidents, misuse of our products or risks of product liability could harm our business;

- failure to maintain effective internal control over financial reporting could adversely affect [added: the accuracy and timing of] our financial reporting;

- if our critical accounting [removed: estimates] [added: policies] are based on incorrect assumptions, our results of operations could fall below analyst and investor expectations and result in a decline in the market price of our common stock;

- enhanced U.S. tax, tariff, import/export [removed: restrictions] [added: restrictions, Chinese regulations] or other trade barriers may negatively affect our business;

- changes in our [added: income taxes,] effective tax rate or new tax laws could adversely affect our results;

- the trading price of our common stock [removed: is] [added: has been and may continue to be] volatile and the value of your investment could decline;

[removed: - any] [added: Any] reduction or discontinuance [added: by us] of [added: repurchases of] our [added: common] stock [added: pursuant to our current stock] repurchase [removed: programs] [added: program] could cause the market price of our common stock to [removed: decline;][added: decline.]

- [removed: if we are unable] [added: inability] to hire, [removed: retain and] [added: retain,] train [added: and motivate qualified] personnel and senior [removed: management,] [added: management could cause] our business [removed: could] [added: to] suffer;

- [removed: natural disasters, terrorism] [added: earthquakes, fire, power outages, floods, health epidemics] and other catastrophic events could harm our business;

- we have not paid dividends [added: in the past] and do not intend to pay dividends for the foreseeable future.

Because some of the [added: key] components in our products come from sole or limited [removed: sources] [added: sources] of supply, we have [removed: increased our] [added: entered into significant] purchase commitments and are susceptible to supply shortages, extended lead times or supply changes, which could disrupt or delay our scheduled product deliveries to our [removed: end] customers and may result in the loss of sales and [removed: end] customers.

Our products rely on components, including merchant silicon chips, integrated circuit components, printed circuit boards, connectors, custom-tooled sheet metal and power supplies that we [removed: purchase] [added: purchase,] or our contract manufacturers purchase on our behalf from a limited number of suppliers, including certain sole source providers.

Generally, we do not have guaranteed supply contracts with our component suppliers, and our suppliers have suffered and could continue to suffer shortages, [added: require] longer lead times, delay shipments, prioritize shipments to other vendors, decommit orders, increase [removed: prices] [added: prices, impose expedite fees] or cease manufacturing such products or selling them to us at any time.

Supply of these components worldwide [removed: have been] [added: was and could continue to be] adversely affected by [removed: the COVID-19 pandemic] [added: supply constraints,] as well as industry consolidation and geopolitical conditions such as international trade wars like the U.S. trade war with China, [added: the] Russia-Ukraine [removed: conflict] [added: conflict, Israel-Hamas conflict, the Houthi attacks on marine vessels in the Red Sea,] and increased political tensions in Russia, Europe or Asia.

Such shortages, increased component lead times, reduced allocations of components and decommitments of orders have resulted in and may continue to result in increased component prices, fewer sourcing options, unpredictability of supply, prolonged manufacturing disruptions and increased product lead times, which has [added: impacted] and may continue to adversely impact our revenue and gross margins.

Although we have [removed: increased our] [added: entered into significant] purchase commitments to support long-term customer demand, if we are unable to obtain sufficient quantities of any of these components on commercially reasonable terms or in a timely manner, or if we are unable to obtain alternative sources for these components, shipments of our products could be delayed or halted [removed: entirely] [added: entirely,] or we may be required to redesign our products.

Our business is subject to numerous risks and uncertainties.

These risks include, but are not limited to, the following:

- seasonality and industry cyclicality may cause fluctuations in our revenue;

- breaches of our cybersecurity systems or other security breaches could degrade our ability to conduct our business operations and deliver products and services to our customers, cause vulnerabilities in our products and services or subject us to regulatory enforcement actions and or fines or liabilities for damages incurred by our customers or partners.

- issues in the development and use of artificial intelligence, combined with an uncertain regulatory environment, may result in reputational harm, liability, or other adverse consequences to our business operations;

In addition, an increased focus on the deployment of AI enabled solutions by these customers has accelerated the need for advanced technology offerings including some offerings from potential new market entrants.

This prioritization of AI related infrastructure investment has come in conjunction with the announcement of various cost reduction measures by such customers, including optimization and increased efficiency in non-AI related capital expenditures.

In some instances, such measures have had, and may continue to have, an impact on certain current or future projects and have reduced our visibility to customer demand, increased our risk of excess and obsolescence charges on existing products, and may result in reductions in future demand and negatively impact our revenue, financial condition, business or prospects.

Further, if we are unable to reduce our lead times, customers may also cancel existing orders or reduce future orders.

Moreover, the AI market is new and customers continue to evaluate their opportunity in this market, and the potential demand for AI Ethernet switches may not develop as anticipated or at all.

We expect that such concentrated purchases will continue to contribute materially to our revenue for the foreseeable

While all our markets may be adversely affected by negative macroeconomic conditions, the impact may be particularly significant in our enterprise market where we are seeking to increase our penetration into this market.

A government shutdown or a default by the U.S. government on its debt obligations, or related credit-rating downgrades could also have adverse effects on the broader global economy and contribute to, or worsen, an economic recession.

We believe that any extended or renewed economic disruptions or deterioration in the global economy could have an adverse impact to our liquidity or to our current and projected business operations, financial condition or results of operations.

For example, if banks or other financial institutions with whom we have banking relationships or whose corporate bonds are held in our marketable securities investment portfolio, enter receivership or become insolvent in the future, we may be unable to access, and we may lose some of our existing cash, cash equivalents and investments to the extent those funds are not insured or otherwise protected by the FDIC.

In addition, in such circumstances we might not be able to timely pay key vendors and others.

We regularly maintain cash balances that are not insured or are in excess of the FDIC’s insurance limit.

Any delay in our ability to access our cash, cash equivalents and investments (or the loss of such funds) or to timely pay key vendors and others could have a material adverse effect on our operations and cause us to need to seek additional capital sooner than planned.

We also believe that our customers continue to assess the impact of these macroeconomic factors on their businesses and future investment plans, resulting in business uncertainty and a more constrained approach to forecasts and orders.

We have experienced volatility in demand from certain of our large customers, and some of our large customers have announced various cost reduction measures or are considering changing technology roadmaps and priorities including the need for the rapid deployment of AI and related technologies, which have had and could continue to have, an impact on certain current or future projects and have reduced our visibility to demand for these customers, which may result in reductions in overall demand from these customers in future periods and negatively impact our revenue, financial condition, business or prospects.

allocations to multiple vendors based upon specific network roles or projects or who may be placing orders based on longer planning horizons to ensure supply;

networks.

In particular, the market for AI applications is new and our customers are continuing to evaluate their opportunity in this market.

If the AI market does not develop as anticipated or at all, then the potential demand for AI Ethernet switches may not be realized.

Moreover, even if the market for AI applications does develop, the successful adoption of AI Ethernet products will be dependent upon their ability to compete against more established InfiniBand products to address AI networking clusters.

will be adversely affected, and our revenue could decrease.

We expect our gross margins to vary over time and the gross margins we have achieved in recent years may not be sustainable and may be adversely affected in the future by numerous factors, including but not limited to pricing pressure on our products and services due to competition, the ability of more fully integrated competitors to bundle their networking products with other products, or utilize proprietary silicon in their products, the mix of sales to large customers who generally receive lower pricing, the mix of products sold, manufacturing-related costs, including costs associated with supply chain sourcing activities, merchant silicon costs, and excess/obsolete inventory charges, including charges for excess/obsolete component inventory held by our contract manufacturers.

Customers may also increase their adoption of

As new markets emerge like AI, we expect the field to remain intensely competitive.

In addition, we have not established broad market awareness or acceptance of our AI Ethernet products that will compete against more established InfiniBand products.

- global macroeconomic conditions, including recessionary cycles;

- changes in trade controls, economic sanctions, or other international trade regulations, which have in general recently trended toward increasing breadth and complexity of controls, and which may affect our ability to import or export our products to and from various countries;

- possible deterioration in relations between Taiwan and China, and other factors affecting military, political, or economic conditions in Taiwan or elsewhere in Asia;

- issues related to cloud-specific regulatory requirements in certain countries, including the UK, EU and Asia-Pacific countries;

In addition, the privately-held companies in which we invested are in the startup or development stages.

These investments are inherently risky because the markets for the technologies or products these companies are developing are typically in the early stages and may never materialize, and we could lose our entire investment in these companies.

We may not

We have experienced declines in sales for some of our products over time as they mature and are superseded by products with improved performance and functionality.

in lower margins for the period in which such sales occur.

Our failure or the failure of our channel

Our business is subject to numerous risks and uncertainties, including those highlighted in Part I, Item 1A titled “Risk Factors.” These risks include, but are not limited to, the following:

- seasonal fluctuations impact revenue;

- breaches of our cybersecurity systems or other security breaches could harm our business and our products and result in regulatory fines, required changes to our data handling processes, and liability for damages to affected data subjects.

In the past, we have also experienced shortages in inventory for dynamic random access memory integrated circuits, semiconductors and delayed releases of the next generation of chipset, which delayed our production and/or the release of our new products.

Further, long-term supply and maintenance obligations to end customers

For example, we have experienced volatility in demand from certain of our large end customers.

Overall demand from larger customers may decline in future periods, which would impact our future revenue growth.

Our results of

Moreover, if the investment or acquisition becomes

Some factors that may

We have experienced declines in sales for our products, including our 10 Gigabit Ethernet modular and fixed switches.

Our failure or the failure of our channel partners to maintain high-quality support and services could have a material adverse effect on our business, financial condition, results of operations and prospects.

If our end customers, especially our large end customers, do not renew their maintenance

funding reductions or delays adversely affecting public sector demand for our products and services.

batches resulting in reliability issues, in such products, and we may be required to do so in the future.

industry standards.

Commitments and Contingencies of the Notes to Consolidated Financial Statements included in Part II, Item 8, of this Annual Report on Form 10-K.

As a result of supply disruptions, we have extended our demand planning horizon and increased our purchase commitments for components and products in order to support long-term customer demand.

Our reliance on contract manufacturers also

Lockdown orders increase the risk in obtaining components or material that are used to produce Arista products.

However, there is no guarantee that suppliers will meet their commitments or that actual

customer demand will directly match our demand forecasts.

advance notice to us.

reputation, expose us to liability to third parties and require us to incur significant additional costs to maintain the security of our networks and data.

to expend significant capital and other resources to remediate and otherwise address any data security incident or breach, including to notify individuals, entities, or regulatory bodies and to implement measures in an effort to prevent further breaches or incidents.

These new controls also apply to certain hardware containing these specified integrated circuits.

While there is the potential for legislation that would repeal or defer the capitalization requirement to later years, we have followed the current legislation to capitalize R&D expenditures in our current financial statements.

The Council of the European Union adopted this initiative for enactment by European Union member states by December 31, 2022, with implementation into the domestic laws of those states by the end of 2023.

For example, Virginia, Colorado, Connecticut, and Utah all have enacted privacy legislation that shares similarities with the CCPA, CPRA, and legislation proposed in other states.

decreased ability to export or sell our products to, existing or potential end customers with international operations or create delays in the introduction of our products into international markets.

resources from our business and prospects.

If we are unable to attract or retain qualified personnel, or

Arista Networks is an industry leader in data-driven, [removed: cognitive] [added: client to] cloud networking for [removed: next-generation] [added: large] data [removed: center and] [added: center,] campus [removed: workspace] [added: and routing] environments.

[added: Arista] EOS, combined with a set of network applications and [removed: ethernet] [added: our Ethernet] switching and routing platforms using [added: best of breed] merchant silicon, provides [added: customers with a highly competitive and diversified portfolio of products with] improved price/performance and time to [removed: market, delivering a cloud networking solution with high performance scale and availability, and enabling network automation, visibility, and security.][added: market.]

We also generate revenue from post-contract support ("PCS"), which [removed: end] customers typically purchase in conjunction with our products, and renewals of PCS.

Our [removed: end] customers span a range of industries and [removed: include] [added: geographies including] large [added: cloud customers or hyperscalers, other] internet [removed: companies,] [added: providers,] service providers, financial services organizations, government [removed: agencies, media and entertainment companies, telecommunication service providers] [added: agencies] and [removed: other cloud service providers.][added: a cross section of enterprise customers.]

Historically, large purchases by a relatively limited number of [removed: end] customers have accounted for a significant portion of our revenue.

We have experienced unpredictability in the timing of orders from these large [removed: end] customers primarily due to [removed: changes in demand patterns specific to these customers,] the time it takes these [removed: end] customers to evaluate, test, qualify and accept our newer products, [removed: and] the overall complexity of these large [removed: orders.][added: orders and changes in demand patterns specific to these customers, including reductions in capital expenditures by these customers and the impact of cost reduction and other efficiency efforts by these customers.]

For example, sales to our end customers Microsoft and Meta Platforms [removed: in fiscal 2022] represented [removed: 16%] [added: 18%] and [removed: 26%] [added: 21%] of our total revenue, respectively, [removed: whereas sales to our end customer Microsoft] in fiscal [removed: 2020 and 2021 amounted to 22%] [added: 2023, 16%] and [removed: 15%] [added: 26%] of our total revenue, respectively, [removed: with our end customer Meta Platforms representing] [added: in fiscal 2022 and, 15% and] less than 10% of our total [removed: revenue] [added: revenue, respectively] in [removed: both] fiscal [removed: 2020 and] 2021.

Furthermore, we typically provide pricing discounts to large [removed: end] customers, which [removed: may result in lower] [added: reduces gross] margins for the period in which such sales occur.

As organizations of all sizes have moved workloads to the cloud, spending on cloud and next-generation data centers has increased rapidly, while traditional legacy IT spending has grown [removed: more slowly.][added: at a slower rate.]

[removed: We must also continue to develop] market-leading products and features that address the needs of our existing and new customers, and increase sales in the enterprise data center switching, and campus workspace markets.

We intend to continue expanding our sales force and marketing activities in key geographies, as well as our relationships with channel, technology and system-level partners in order to reach new [removed: end] customers more effectively, increase sales to existing customers, and provide services and support.

Global economic and business activities continue to face widespread macroeconomic uncertainties, including [removed: supply chain constraints, inflation and] [added: inflation,] monetary policy shifts, recession risks, [removed: the COVID-19 pandemic,] and potential [added: supply chain and other] disruptions [removed: from] [added: such as] the Russia-Ukraine [removed: conflict] and [added: Israel-Hamas conflicts, the Houthi attacks on marine vessels in the Red Sea, and the] U.S. trade war with China.

We [removed: continue to work] [added: have worked] closely with our contract manufacturers and supply chain partners to ramp production following a period of delayed component sourcing and workforce disruptions.

Our operating cash-flows have also been and may continue to be negatively impacted by [removed: increased] [added: significant] component inventories on hand or at our contract [removed: manufacturers, awaiting supply of a limited number of scarce components necessary to build and ship the completed product.][added: manufacturers.]

While [removed: overall demand remains stable,] [added: we have seen improvements in our] supply chain and manufacturing [added: operations, any remaining or new supply chain and manufacturing] related constraints could [removed: impact our ability to fulfill this demand and as a result could] negatively impact our business in future periods.

In addition, although our business has experienced limited disruption as a result of the [added: recent] Russia-Ukraine conflict, continued escalation of [added: this conflict as well as] the [added: Israeli-Hamas] conflict [added: and Houthi movement in the Red Sea] may negatively impact the global economy and our future operating results and financial condition.

Management continues to actively monitor the impact of [removed: these] macroeconomic factors on the Company's financial condition, liquidity, operations, suppliers, industry, and workforce.

The extent of the impact of these factors on our operational and financial performance, including our ability to execute our business strategies and initiatives in the expected time frame, will depend on future developments, the impact on our customers, partners, employees, contract manufacturers and supply [removed: chain, all of which continue to evolve and are unpredictable; however, any continued or renewed disruption in manufacturing and supply resulting from these factors could negatively impact our business.]

[removed: We also believe that] [added: In addition,] any [removed: extended or renewed] [added: prolonged] economic disruptions or [added: further] deterioration in the global economy could have a negative impact on demand from our customers in future [removed: periods.][added: periods, particularly in the enterprise market where we are continuing to expand our penetration.]

Accordingly, current results and financial [removed: condition] [added: conditions] discussed herein may not be indicative of future operating results and trends.

Service revenue is primarily derived from sales of PCS contracts, which [removed: is] [added: are] typically purchased in conjunction with our products, and subsequent renewals of those contracts.

We expect our revenue may vary from period to period based on, among other things, the timing, size, and complexity of orders, especially with respect to our large [removed: end] customers.

As supply chain costs improve, we [removed: expect] [added: expected] to return to a more competitive pricing environment for our products and services.

These increases were primarily driven by a corresponding increase in product and service revenues, combined with an increase [added: in provisions for excess/obsolete inventory and supplier liability charges.]

[added: These increases were primarily driven by a corresponding increase] in [added: product and service revenues, combined with an increase in] material and logistics costs to mitigate supply chain constraints and to meet customer demand, as well as an increase in provisions for excess/obsolete finished goods and component inventory.

Gross margin, or gross profit as a percentage of revenue, has been and will continue to be affected by a variety of factors, including pricing pressure on our products and services due to competition, the mix of sales to large [removed: end] customers who generally receive lower pricing, the mix of products sold, manufacturing-related costs, including costs associated with supply chain sourcing activities, merchant silicon costs, and excess/obsolete inventory charges, including charges for excess/obsolete component inventory [removed: with] [added: held by] our contract manufacturers and suppliers.

The decrease was primarily driven by an increased proportion of our sales to larger [removed: end] customers who generally receive larger discounts, increased material and logistics costs, and increased excess/obsolete finished goods and component inventory charges, partly offset by the leverage of fixed overhead costs on a higher revenue base.

Personnel costs also include stock-based compensation and [removed: travel] [added: travel-related] expenses.

General and administrative expenses consist primarily of personnel costs and professional services [removed: costs.][added: costs for our finance, human resources, legal and certain executive functions.]

Other income (expense), net consists primarily of interest income from our cash, cash equivalents and marketable securities, gains and losses on our [removed: equity investments in privately-held companies and] marketable [removed: securities,] [added: securities] and [added: strategic investments, and] foreign currency transaction gains and losses.

| [removed: Unrealized gain (loss)] [added: Gain] on [removed: equity] investments [added: in privately-held companies] | | | | | | 27,479 | | | | | | 0.6 | | | | | | — | | | | | | — | | | | | | 27,479 | | | | | | 100.0 | | |

Year Ended December 31, [removed: 2021] [added: 2023] Compared to Year Ended December 31, [removed: 2020][added: 2022]

[removed: Service] [added: In addition, service] revenue increased by [removed: $83.6] [added: $165.4] million, or [removed: 17.2%,] [added: 24.9%,] in the year ended December 31, [removed: 2021] [added: 2023] compared to [removed: 2020,] [added: 2022,] as a result of continued growth in initial and renewal [removed: PCS] [added: support] contracts as our customer installed base [added: has] continued to expand.

Cost of revenue increased by [removed: $231.6 million] [added: $524.3 million,] or [removed: 27.7%] [added: 30.7%] for the year ended December 31, [removed: 2021] [added: 2023] compared to [removed: 2020.][added: 2022.]

Gross margin [removed: slightly decreased] [added: increased] from [removed: 63.9%] [added: 61.1%] for the year ended December 31, [removed: 2020] [added: 2022] to [removed: 63.8%] [added: 61.9%] for the year ended December 31, [removed: 2021.][added: 2023.]

Research and development expenses increased by [removed: $100.2] [added: $126.5] million, or [removed: 20.6%,] [added: 17.4%,] for the year ended December 31, [removed: 2021] [added: 2023] compared to [removed: 2020.][added: 2022.]

The increase was primarily due to a [removed: $67.0] [added: $84.1] million increase in personnel costs driven by an increase in headcount, and a [removed: $32.3] [added: $40.7] million increase in new product introduction costs, including [removed: third-party] [added: non-recurring] engineering [added: costs] and [removed: other] [added: prototype expenses as we expand our] product [removed: development costs.][added: portfolio.]

Sales and marketing expenses increased by [removed: $56.8] [added: $72.1] million, or [removed: 24.8%,] [added: 22.0%,] for the year ended December 31, [removed: 2021] [added: 2023] compared to [removed: 2020.][added: 2022.]

The increase was primarily [removed: driven] [added: caused] by increased [added: personnel costs driven by] headcount [removed: and higher sales volume resulting] [added: growth,] in [added: addition to] increased [removed: personnel] [added: sales and marketing events and field demonstration] costs.

General and administrative expenses increased by [removed: $16.9] [added: $25.8] million, or [removed: 25.5%,] [added: 27.7%,] for the year ended December 31, [removed: 2021] [added: 2023] compared to [removed: 2020.][added: 2022.]

Arista's platforms deliver availability, agility, automation, analytics and security through an advanced network operating stack.

Since Arista’s inception, our founders have reimagined cloud networks for performance, scale and programmability with a focus on differentiating in three ways: uncompromising quality, advanced open and standards-based technology and a robust quality assurance capability built on a suite of automated diagnostics.

At the core of Arista’s platform is Arista’s EOS, a modernized publish-subscribe state-sharing networking operating system.

Over the past five years, we have diversified the types of enterprise customers we sell to and have continued to expand our presence across a wide spectrum of industries including media and entertainment, healthcare, oil and gas, education, manufacturing, industrial, and more.

In addition, an increased focus on the deployment of AI enabled solutions by these customers has accelerated the need for advanced technology offerings including some offerings from potential new market entrants.

This prioritization of AI related infrastructure investment has come in conjunction with the announcement of various cost reduction measures, including optimization and increased efficiency in non-AI related capital expenditures.

In some instances, such measures have had, and may continue to have, an impact on certain current or future projects and have reduced our visibility to customer demand, increased our risk of excess and obsolescence charges on existing products, and may result in reductions in future demand and negatively impact our revenue, financial condition, business or prospects.

We must also continue to develop

As we exit 2023, the business is emerging from a period of unprecedented global supply chain disruptions.

Throughout this period, we made significant supply chain investments, including funding additional working capital and incremental purchase commitments in response to extended visibility to deployment plans from our customers.

This increased capacity has allowed us to ship products against previously committed demand/deployment plans and accelerate some deployments where needed, while trying to limit building customer inventory, and to some extent balancing customer lead times with those currently experienced from our key suppliers.

As a result, some shipments against these previously committed demand/deployment plans have extended into 2024.

As the global supply chain has experienced some improvements and as customer lead times have been reduced from their peak, we have seen and expect to continue to see a commensurate reduction in visibility to customer demand and a gradual return to shorter demand-planning horizons resulting in lower demand levels.

Given these shipment and order patterns, near term revenue trends may not be solely reflective of current demand levels, but as discussed above will benefit from demand/deployment plans that had been previously committed.

While inventory and working capital levels may remain elevated in the near term, we expect that purchase commitments will continue to decline as supplier lead times shorten.

The larger magnitude of these balances, combined with a reduction in customer demand-planning horizons and shifting customer product priorities, has resulted in increased risk that we may not be able to sell all of this inventory, which in turn has resulted, and may in the future result, in additional excess and obsolete inventory and supplier liability charges.

chain, all of which continue to evolve and are unpredictable.

In addition, any continued or renewed disruption in manufacturing and supply resulting from these factors could negatively impact our business.

We also believe that some of our customers, following a year of elevated purchases, must now consider changing technology roadmaps and priorities, including the need for the rapid deployment of AI and related technologies, resulting in some uncertainty as to future investment plans and a more constrained approach to some forecasts and orders in the near term.

| | | | | | | 2023 | | | | | | | | | | | | 2022 | | | | | | | | | | | | Change in | | | | | | | | |

| Product | | | | | | $ | 5,029,493 | | | | | 85.8 | | % | | | | $ | 3,716,079 | | | | | 84.8 | | % | | | | $ | 1,313,414 | | | | | 35.3 | | % |

| Service | | | | | | 830,675 | | | | | | 14.2 | | | | | | 665,231 | | | | | | 15.2 | | | | | | 165,444 | | | | | | 24.9 | | |

| Total revenue | | | | | | 5,860,168 | | | | | | 100.0 | | | | | | 4,381,310 | | | | | | 100.0 | | | | | | 1,478,858 | | | | | | 33.8 | | |

| Product | | | | | | 2,061,167 | | | | | | 35.2 | | | | | | 1,573,629 | | | | | | 35.9 | | | | | | 487,538 | | | | | | 31.0 | | |

| Service | | | | | | 168,720 | | | | | | 2.9 | | | | | | 131,985 | | | | | | 3.0 | | | | | | 36,735 | | | | | | 27.8 | | |

| Total cost of revenue | | | | | | 2,229,887 | | | | | | 38.1 | | | | | | 1,705,614 | | | | | | 38.9 | | | | | | 524,273 | | | | | | 30.7 | | |

| Gross profit | | | | | | $ | 3,630,281 | | | | | 61.9 | | % | | | | $ | 2,675,696 | | | | | 61.1 | | % | | | | $ | 954,585 | | | | | 35.7 | | % |

| Gross margin | | | | | | 61.9 | | % | | | | | | | | | | 61.1 | | % | | | | | | | | | | | | | | | | | | |

| | | | | | | 2023 | | | | | | % of Total | | | | | | 2022 | | | | | | % of Total | | |

| Americas | | | | | | $ | 4,651,193 | | | | | 79.4 | | % | | | | $ | 3,462,621 | | | | | 79.0 | | % |

| Europe, Middle East and Africa | | | | | | 670,960 | | | | | | 11.4 | | | | | | 529,800 | | | | | | 12.1 | | |

| Asia-Pacific | | | | | | 538,015 | | | | | | 9.2 | | | | | | 388,889 | | | | | | 8.9 | | |

| Total revenue | | | | | | $ | 5,860,168 | | | | | 100.0 | | % | | | | $ | 4,381,310 | | | | | 100.0 | | % |

Product revenue increased by $1.3 billion, or 35.3%, for the year ended December 31, 2023 compared to 2022.

These increases reflect increased shipments of our switching and routing products across our customer base, including improved supply availability for our enterprise customers.

International revenues as a percentage of our total revenues decreased from 21.0% in 2022 to 20.6% in 2023, which was primarily driven by changes in the geographic mix of sales to our large global customers.

These changes reflect an improvement in product margins driven by a lower mix of revenue from our larger customers, partly offset by an increase in excess/obsolete inventory-related charges.

In addition, our gross margin benefited in 2023 from the leverage of relatively fixed overhead costs on a higher revenue base.

| | | | | | | 2023 | | | | | | | | | | | | 2022 | | | | | | | | | | | | Change in | | | | | | | | |

| Research and development | | | | | | $ | 854,918 | | | | | 14.6 | | % | | | | $ | 728,394 | | | | | 16.6 | | % | | | | $ | 126,524 | | | | | 17.4 | | % |

At the core of Arista's platform is our EOS, combined with a set of network applications and our Ethernet switching and routing products using merchant silicon, delivering a cloud networking solution with high performance scale and availability, and enabling network automation, visibility, and security.

As of December 31, 2022, we had delivered our cloud networking solutions to over 9,000 end customers worldwide.

Although we saw some improvement in our manufacturing and supply chain operations in the latter part of 2022, we continue to experience constraints, with some lingering component shortages, extended lead times, and elevated component and supply chain costs.

Although we have worked diligently to drive improvements in these areas, including funding additional working capital and incremental purchase commitments, these delays have negatively impacted our ability to supply products to our customers on a timely basis.

Our demand planning horizon remains extended with high levels of purchase commitments and increased investments in working capital to address delays in component sourcing and the risk of future supply chain disruptions, but we cannot be certain that such delays or disruptions will not occur, or that our extended demand planning horizon will adequately address these disruptions should they occur.

General and administrative personnel costs include those for our executive, finance, human resources and legal functions.

| | | | | | | 2021 | | | | | | | | | | | | 2020 | | | | | | | | | | | | Change in | | | | | | | | |

| Product | | | | | | $ | 2,377,727 | | | | | 80.7 | | % | | | | $ | 1,830,842 | | | | | 79.0 | | % | | | | $ | 546,885 | | | | | 29.9 | | % |

| Service | | | | | | 570,310 | | | | | | 19.3 | | | | | | 486,670 | | | | | | 21.0 | | | | | | 83,640 | | | | | | 17.2 | | |

| Total revenue | | | | | | 2,948,037 | | | | | | 100.0 | | | | | | 2,317,512 | | | | | | 100.0 | | | | | | 630,525 | | | | | | 27.2 | | |

| Product | | | | | | 958,363 | | | | | | 32.5 | | | | | | 749,962 | | | | | | 32.4 | | | | | | 208,401 | | | | | | 27.8 | | |

| Service | | | | | | 108,895 | | | | | | 3.7 | | | | | | 85,664 | | | | | | 3.7 | | | | | | 23,231 | | | | | | 27.1 | | |

| Total cost of revenue | | | | | | 1,067,258 | | | | | | 36.2 | | | | | | 835,626 | | | | | | 36.1 | | | | | | 231,632 | | | | | | 27.7 | | |

| Gross profit | | | | | | $ | 1,880,779 | | | | | 63.8 | | % | | | | $ | 1,481,886 | | | | | 63.9 | | % | | | | $ | 398,893 | | | | | 26.9 | | % |

| Gross margin | | | | | | 63.8 | | % | | | | | | | | | | 63.9 | | % | | | | | | | | | | | | | | | | | | |

| | | | | | | 2021 | | | | | | % of Total | | | | | | 2020 | | | | | | % of Total | | |

| Americas | | | | | | $ | 2,156,183 | | | | | 73.2 | | % | | | | $ | 1,771,992 | | | | | 76.5 | | % |

| Europe, Middle East and Africa | | | | | | 486,836 | | | | | | 16.5 | | | | | | 326,729 | | | | | | 14.1 | | |

| Asia-Pacific | | | | | | 305,018 | | | | | | 10.3 | | | | | | 218,791 | | | | | | 9.4 | | |

| Total revenue | | | | | | $ | 2,948,037 | | | | | 100.0 | | % | | | | $ | 2,317,512 | | | | | 100.0 | | % |

Product revenue increased by $546.9 million, or 29.9%, in the year ended December 31, 2021 compared to 2020, which reflected stronger demand for our products from new and existing customers, and broader market acceptance of our enterprise and campus products.

International revenues increased from 23.5% in 2020 to 26.8% in 2021, which was mostly driven by increased shipments to our large end customers in the EMEA region.

These increases were primarily driven by a corresponding increase in product and service revenues, coupled with an increase in supply chain costs due to increased production capacity and higher volumes.

The change in gross margin was unfavorably impacted by higher supply chain costs, as well as increased service costs to support our growing installed base.

These unfavorable impacts were mostly offset by improved product margins due to a reduced proportion of our sales to larger end customers who generally receive larger discounts.

| Research and development | | | | | | $ | 586,752 | | | | | 19.9 | | % | | | | $ | 486,594 | | | | | 20.9 | | % | | | | $ | 100,158 | | | | | 20.6 | | % |

| Sales and marketing | | | | | | 286,171 | | | | | | 9.7 | | | | | | 229,366 | | | | | | 9.9 | | | | | | 56,805 | | | | | | 24.8 | | |

| General and administrative | | | | | | 83,117 | | | | | | 2.8 | | | | | | 66,242 | | | | | | 2.9 | | | | | | 16,875 | | | | | | 25.5 | | |

| Total operating expenses | | | | | | $ | 956,040 | | | | | 32.4 | | % | | | | $ | 782,202 | | | | | 33.7 | | % | | | | $ | 173,838 | | | | | 22.2 | | % |

The increase was driven by a $17.7 million increase in personnel costs, primarily stock-based compensation, which was partially offset by a decrease in non-recurring acquisition-related expenses of $4.2 million resulting from the acquisitions of Big Switch and Awake Security in 2020.

| Interest income | | | | | | $ | 7,215 | | | | | 0.2 | | % | | | | $ | 27,139 | | | | | 1.2 | | % | | | | $ | (19,924) | | | | | (73.4) | | % |

| Gain on sale of marketable securities | | | | | | — | | | | | | — | | | | | | 9,432 | | | | | | 0.4 | | | | | | (9,432) | | | | | | (100.0) | | |

| Gain on investments in privately-held companies | | | | | | — | | | | | | — | | | | | | 4,164 | | | | | | 0.2 | | | | | | (4,164) | | | | | | (100.0) | | |

| Other income (expense), net | | | | | | (1,075) | | | | | | — | | | | | | (1,556) | | | | | | (0.1) | | | | | | 481 | | | | | | (30.9) | | |

| Total other income, net | | | | | | $ | 6,140 | | | | | 0.2 | | % | | | | $ | 39,179 | | | | | 1.7 | | % | | | | $ | (33,039) | | | | | (84.3) | | % |

The unfavorable change in other income, net, during the year ended December 31, 2021 as compared to 2020 was driven by a $19.9 million decrease in interest income, which was primarily caused by significant declines in the yields of government and corporate bonds in our investment portfolio.

In addition, we recorded a gain on sale of marketable securities and a gain on investments in privately-held companies in 2020, which did not recur in 2021.

| Provision for income taxes | | | | | | $ | 90,025 | | | | | 3.1 | | % | | | | $ | 104,306 | | | | | 4.5 | | % | | | | $ | (14,281) | | | | | (13.7) | | % |

The decrease in our income taxes and effective tax rate was largely attributable to increased tax benefits from stock-based compensation, combined with a favorable change in jurisdictional mix of earnings.

These two factors are variable in nature and past results may not be indicative of future results.

Our market risk exposure is primarily a result of fluctuations in foreign currency exchange rates, interest rates, [removed: investments in privately-held companies,] and [removed: marketable] [added: strategic] equity investments.

Macroeconomic uncertainties, including [removed: supply chain and labor shortages, inflation and] [added: inflation,] monetary policy shifts, [removed: recession risks,] [added: uncertainty in] the [removed: COVID-19 pandemic,] [added: global banking] and [added: financial services markets, recession risks,] potential disruptions from the Russia-Ukraine [removed: conflict] and [added: Israel-Hamas conflicts, the Houthi movement in the Red Sea and the] U.S. trade war with China have increased the volatility of global financial markets, which may increase our foreign currency exchange risk and interest rate risk.

As of December 31, [removed: 2022,] [added: 2023,] and [removed: 2021,] [added: 2022,] we had cash, cash equivalents and available-for-sale marketable securities totaling [removed: $3.0] [added: $5.0] billion and [removed: $3.4] [added: $3.0] billion, respectively.

For the years ended December 31, [removed: 2022, 2021] [added: 2023, 2022] and [removed: 2020,] [added: 2021,] the effect of an immediate 10% change in interest rates would not have been material to our operating results and the total value of the portfolio assuming consistent investment levels.

Our non-marketable equity investments in privately-held companies are recorded in [removed: “Investments”] [added: “other assets”] in our consolidated balance sheets.

As of December 31, [removed: 2022] [added: 2023] and [removed: 2021,] [added: 2022,] the total carrying amount of our investments in privately-held companies was [removed: $39.5] [added: $62.3] million and [removed: $20.2] [added: $39.5] million, respectively.

For the years ended December 31, [removed: 2022, 2021] [added: 2023, 2022] and [removed: 2020,] [added: 2021,] we recorded a net gain of [removed: $15.8] [added: $13.9] million, [removed: $0,] [added: $15.8 million] and [removed: $4.1 million,] [added: $0,] respectively, [removed: on certain] [added: with respect to these] investments.

These investments are inherently risky because the markets for the technologies or products these companies are developing are typically in the early [added: stages and may never materialize.]

One of our equity investments in a privately-held company completed an initial public offering at the beginning of 2022 and subsequently our investment converted to a marketable equity [removed: security and is subject to price risk.][added: security.]

Conversely, an increase in interest rates could have a material impact to the fair market value of our investments in fixed income securities.

Strategic Equity Investments

During the year ended December 31, 2023, the Company sold all its shares of this security for $23.9 million.

The cost of this investment was $3.0 million and the cumulative gain since inception was $20.9 million, the majority of which has been reflected in prior periods as mark-to-market net gains in Other income, net.

On the other hand, the fair market value of our investments in fixed income securities may be adversely impacted.

Investments in Privately-Held Companies and Marketable Equity Investment

stages and may never materialize.

This investment generated an unrealized gain of $10.7 million during 2022 and the fair value of the investment was $19.1 million as of December 31, 2022.

Arista Networks is an industry leader in data-driven, [removed: client-to-cloud] [added: client to cloud] networking for [removed: next-generation] [added: large] data [removed: center and] [added: center,] campus [removed: workspace] [added: and routing] environments.

[added: Arista] EOS, combined with a set of network applications and [removed: ethernet] [added: our Ethernet] switching and routing platforms using [added: best of breed] merchant silicon, provides [added: customers with a highly competitive and diversified portfolio of products with] improved price/performance and time to [removed: market, delivering a cloud networking solution with high performance scale and availability, and enabling network automation, visibility, and security.][added: market.]

Since we began shipping our [removed: products,] [added: products in 2008,] we have [removed: grown rapidly,] [added: experienced rapid growth,] and, according to market [removed: research,] [added: research in 2023,] we have achieved the [added: leadership position in high-speed Ethernet port shipments of 100G and above and the] second largest market share in [added: overall] data center Ethernet switch ports and revenue.

We have been profitable and cash flow positive [removed: for each year] since 2010.

We sell our products through both [removed: our] [added: a] direct sales force and channel partners, [removed: and compete] [added: competing] primarily in the high-speed data center [added: Ethernet] switching [removed: market] [added: markets] for 10 Gigabit Ethernet [added: ("GbE")] and above, [removed: excluding blade switches.][added: including the AI Ethernet switching market, the cloud-grade and enterprise routing markets, and the campus wired and wireless markets.]

Our [removed: end] customers span a range of industries and [removed: include] [added: geographies, including] large [added: cloud customers or hyperscalers, other] internet [removed: companies,] [added: providers,] service providers, financial services organizations, government [removed: agencies, media and entertainment companies, telecommunication service providers] [added: agencies] and [removed: other cloud service providers.][added: a cross section of enterprise customers.]

[removed: Purchases by both Microsoft and] Meta Platforms [removed: accounted for more than 10%] [added: and Microsoft, two] of our [removed: total revenue for the years ended December 31, 2022 and purchases by Microsoft] [added: cloud end customers, each] accounted for more than 10% of our total revenue for the years ended December 31, [removed: 2021] [added: 2023,] and [removed: 2020 .][added: December 31, 2022.]

[removed: Cloud Networking and Market] [added: Market] Drivers

Digital transformation is fundamentally changing the way [added: technology is integrated into business operations and as a result how] IT infrastructure is [removed: built] [added: built,] and [removed: how] applications are delivered [removed: from a] [added: across] cloud [removed: environment.][added: and end-customer environments.]

[removed: These internet] [added: The public cloud] leaders pioneered the development of large-scale cloud data centers [removed: in order] to meet [removed: the] [added: these] growing demands [removed: of] [added: from] their users, including business customers.

[removed: Enterprise] [added: Enterprises now have the option to move] applications [removed: are rapidly moving] to the cloud as cloud services are [added: generally] easier and more cost effective to deploy, scale and operate than traditional applications.

[removed: Enterprises and service] providers around the world are [added: also now] adopting cloud computing technologies [added: and principles to their own non-cloud or hybrid operations] in order to achieve similar performance, operational efficiencies and cost reductions.

The expansion of [added: generative] AI computing and distributed applications is further pushing the [removed: envelope] [added: boundary] of predictable scale and performance in the network.

A common characteristic of these AI workloads is that they are both data and [removed: compute-intensive.][added: compute intensive.]

[removed: ][added: ]

[removed: Traditional] [added: In the post-pandemic world,] enterprise [added: campus] wired and wireless [removed: campus] networks must cope with an [removed: ever-increasing] [added: ever increasing] number of endpoint IoT devices and remote work locations [removed: requiring] [added: that require] users to be connected from [added: virtually] anywhere.

[removed: ][added: ]

Capacity, Performance and [removed: Scalability][added: Scale]

Our data-driven cloud networking [removed: platform enables] [added: platforms enable] data center networks to scale to hundreds of thousands of physical servers and millions of virtual machines with the least number of switching tiers.

We achieve this by leveraging standard protocols, non-blocking switch architectures and EOS to meet the scale requirements of cloud [removed: computing, including AI workloads.][added: computing.]

We [removed: have used] [added: architect] active-active Layer 2 and Layer 3 network topologies to enable customers to build extremely large and resilient networks.

[removed: High Availability][added: Availability]

EOS also natively supports Ansible, CFEngine, Chef, Puppet, virtual network orchestration applications and [removed: third-party] [added: third party] management tools.

[removed: Network Visibility][added: Visibility]

[removed: We focus] [added: Arista focuses] on [removed: securing] [added: building security into] the [removed: network] [added: networking layers] through features native to EOS, such as [removed: segmentation,] [added: segmentation and encryption,] as well as [removed: Network Detection and Response (NDR).][added: NDR powered by AI.]

[removed: Lower Total] [added: Total] Cost of Ownership

Our Cognitive Campus Networking solutions are based on three [removed: principles:][added: capabilities:]

[removed: Our Universal] [added: Universal] Cloud Network [added: (UCN) - Offered as an alternative to brittle, proprietary solutions from legacy vendors, Arista UCN] is an open, standards-based design focusing on data-driven control principles.

[removed: *Securing The Campus*] [added: Zero-trust Network Security] - Securing the [removed: campus] [added: Campus] requires a [removed: holistic] [added: built-in] approach to network segmentation, [added: encryption,] device compliance and auditing, as well as service integration with [removed: our] [added: Arista’s] security partners.

[removed: We deliver these capabilities through EOS, DMF, NDR] [added: EOS] and [added: managed through] CloudVision.

[removed: - Purpose-Built] [added: Purpose-Built] Cloud Networking [removed: Platform.] [added: Platform -] We have developed a highly scalable cloud networking platform that uses software to address the needs of large-scale cloud companies, cloud service providers, and large [removed: enterprises including financial services organizations, government agencies and media and entertainment companies,] [added: enterprises,] including AI, virtualization, big data and low-latency applications.

[removed: - Broad] [added: Broad] and Differentiated [removed: Portfolio.] [added: Portfolio -] Using multiple merchant silicon architectures, we deliver switches, capable of routing, with industry-leading capacity, low latency, port density and power efficiency, and have innovated in areas such as deep packet buffers, highly available modular hardware, and reversible cooling options.

[removed: - Single] [added: Single] Binary Image [removed: Software.] [added: Software -] The single binary image of EOS software allows us to maintain feature consistency across our entire product portfolio and enables us to introduce new software innovations into the market that become available to our entire installed base without a “forklift upgrade” (i.e., a broad upgrade of the data center infrastructure).

[removed: - Rapid] [added: Rapid] Development of New Features and [removed: Applications.] [added: Applications -] Our highly modular EOS software has allowed us to rapidly deliver new features and applications while preserving the structural integrity and quality of our network operating system.

[removed: - Deep] [added: Deep] Understanding of Customer [removed: Requirements.] [added: Requirements -] We have developed close working partnerships with many of our largest customers that provide us with insights [removed: about] [added: into] their needs and future requirements.

This has allowed us to develop and deliver products to [added: the] market that meet customer demands and expectations as well as to rapidly grow sales to existing customers.

[removed: - Strong] [added: Strong] Management and Engineering Team with Significant Data Center Networking [removed: Expertise.] [added: Expertise -] Our management and engineering team consists of networking veterans with extensive data center and campus networking expertise.

Our [removed: President and] Chief Executive [removed: Officer,] [added: Officer and Chairperson,] Jayshree Ullal, has over [removed: 30] [added: 40] years of networking expertise from silicon to systems [removed: companies.][added: companies, and Kenneth Duda, our Founder, Chief Technology Officer and Director, leads our software development team including EOS.]

[added: Our technical team also includes highly experienced leaders such as Hugh Holbrook, our Chief Development Officer, who leads our platform driven software engineering, and] Andy Bechtolsheim, our Founder and Chief [removed: Development Officer,] [added: Architect, who] was previously a founder and chief system architect at Sun Microsystems.

[removed: - Significant] [added: Significant] Technology [removed: Lead.] [added: Lead -] We believe that our networking technology represents a fundamental advance in networking software.

Arista’s platforms deliver availability, agility, automation, analytics and security through an advanced network operating stack.

Since Arista’s inception, our founders have reimagined cloud networks for performance, scale and programmability with a focus on differentiating in three ways: uncompromising quality, advanced open and standards-based technology and a robust quality assurance capability built on a suite of automated diagnostics.

At the core of Arista’s platform is Arista’s Extensible Operating System (EOS®), a modernized publish-subscribe state-sharing networking operating system.

Our current portfolio of offerings are categorized in the following three product categories:

Core: high-speed Data Center and Cloud Networking systems including newer artificial intelligence ("AI") Ethernet switching platforms.

Cognitive Adjacencies: campus wired and wireless products and advanced routing systems addressing Core Routing, Edge Routing, Data Center Interconnect (DCI), Multi-cloud and Wide Area Networking (WAN) use cases.

Network Software and Services: a suite of value-add software solutions that leverage Arista’s EOS to provide advanced end-to-end orchestration, automation, analytics, network monitoring and security.

In recent years, we have also entered into the Network Monitoring and Network Detection and Response (NDR) security markets through both acquisition and organic development.

Over the past five years, we have diversified the types of enterprise customers we sell to and have continued to expand our presence across a wide spectrum of industries including media and entertainment, healthcare, oil and gas, education, manufacturing, industrial, and more.

Digital Transformation

The expanded dependency of business operations on the network has increased the complexity of the network and heightened the importance of network availability, predictable performance, open programmability and operational simplicity.

These cloud metrics have become the baseline for performance, cost and efficiency of IT infrastructure investments.

Enterprises and service

[Table](#ic034a470397a417699a027ca8e2873b3_7) [of](#ic034a470397a417699a027ca8e2873b3_7) [Contents](#ic034a470397a417699a027ca8e2873b3_7)

Arista addresses our customers' requirements through our approach to network architecture, our platforms and our software.

Our comprehensive R-series and X-series switching and routing portfolios running the highly programmable EOS, transform networks with simplified and scalable architectures across multiple use-cases.

Artificial Intelligence (AI)

Arista's AI strategy is based on achieving two key objectives.

Arista first offers to customers the Arista Autonomous Virtual Assist ((AVATM)) using natural processing language to provide AI assisted outcomes for security and observability.

Arista also provides network switching products intended to provide a robust interconnect that seamlessly links GPUs, compute and storage to deliver fast job completion time for training and generative AI workloads.

An overview of our AI enabled solutions is shown below:

As a proud founding member, Arista is committed to leading the Ultra Ethernet Consortium (UEC) to achieve scalable and efficient remote memory access, implemented with enhanced packet spraying, flexible ordering, and modern congestion control algorithms.

Hybrid Work

In the post-pandemic world, the traditional “campus” has been redefined and the boundaries between the office, home, teleworker and user have converged.

At the same time, the proliferation and sophistication of devices that connect the campus, such as smart devices, security cameras and Internet of Things ("IoT"), has grown dramatically.

The challenge lies in successfully transitioning the existing siloed campus into a data-driven, distributed campus model with a common experience, while addressing the growing security and availability needs.

Arista’s campus portfolio was driven by customers desiring the same quality and operational efficiency available from EOS and CloudVision® throughout their entire enterprise network.

We entered the campus market with a diverse portfolio of modular and fixed form factor Campus spine switches, Power-over-Ethernet (PoE) switches, and WiFi access points based on

[Table](#ic034a470397a417699a027ca8e2873b3_7) [of](#ic034a470397a417699a027ca8e2873b3_7) [Contents](#ic034a470397a417699a027ca8e2873b3_7)

We continue to expand our campus portfolio to offer the advantages of EOS across the entire enterprise network.

Most recently, we have added incremental Enterprise WAN products as well as embedded NDR security sensors into our campus switches to address more of the security challenges that face campus administrators.

Zero Trust Networking Security

Today, a zero trust networking approach to security is paramount for organizations looking to build a robust cybersecurity program.

Irrespective of which device, application, or user is accessing an enterprise resource, zero trust focuses on complete visibility and control over all activity on the network.

Arista’s zero trust networking principles, based on NIST 800-207, help customers address this challenge with three cornerstones: visibility, continuous diagnostics, and enforcement.

The Arista NDR platform delivers continuous diagnostics for the entire enterprise threat landscape, processes countless points of data, senses abnormalities or threats, and reacts if/when warranted.

The introduction of large scale, highly complex, public cloud environments and the digital transformation of end customer business models meant that the traditional ways of building networks were no longer adequate to meet the needs of customers for the deployment and provision of cloud applications and more recently generative AI applications, and new innovations were needed to push network performance forward.

Historically, most common network designs were rigidly hierarchical, based on a 3-tiered model developed in the early days of the internet for sparse north/south traffic patterns.

This model was limited in the number of devices that could be connected to a network and introduced many points of congestion as customers tried to scale the solution.

As more applications move to the cloud, network connections must scale, and the increased east/west traffic must be managed without congestion.

Starting from the beginning, Arista set out to differentiate our architecture in two ways – uncompromising quality and operational efficiency built on an advanced networking operating system, Arista’s Extensible Operating System (“EOS”).

In recent years, we have brought the operational consistency and principles of cloud networking to the broader enterprise and campus markets with our Cognitive Cloud Networking approach, extending EOS across the enterprise data center and campus wired and wireless workspace.

CloudVision®, our workload orchestration and automation solution, leverages EOS based network wide data models to deliver turnkey automation and configuration capabilities across data center, wired and wireless workspaces, multi-cloud, and WAN routing use cases.

In 2020, we completed the acquisition of Big Switch Networks, a pioneer in network monitoring software and Awake Security, an Artificial Intelligence (AI)-driven network detection and response (NDR) company.

We believe the integration of these capabilities with our network-wide, data-based visibility and telemetry offerings delivers the next generation of operationally efficient network security and visibility solutions.

In 2022, we completed the acquisitions of Untangle Incorporated, a security asset for edge threat management for integration into our Cognitive Unified Edge (CUE) commercial and branch offering.

We also completed the acquisition of Pluribus Networks, a pioneer in unified cloud fabric networking, for integration into Arista’s Unified Cloud Fabric (UCF).

In addition, we continued to expand our 400G product portfolio for both enterprise and cloud customers with the introduction of the next generation 7050X/7060X and 7300X Series switches delivering performance and cost benefits for customers of all sizes as they transition to 400G.

We also continue to expand our cognitive campus edge portfolio with the new C-360 Wi-Fi 6E access point to take advantage of the greater capacity, higher bandwidth, and lower latency of Wi-Fi 6E.

We added advanced routing capabilities to our R-Series switches, which in addition to switching address the Data Center Interconnect (DCI) market, cloud-grade routing, next-generation network edge and wide area networking routing market.

We also compete in the enterprise campus market for 1 Gigabit Ethernet switching and above and in the cloud-managed wireless networking market.

In addition, we participate in the Network Monitoring and Network Detection and Response security markets.

We believe that client-to-cloud networking represents a fundamental shift from traditional legacy network architectures.

As organizations of all sizes have moved workloads to the cloud, spending on cloud and next-generation data centers has increased rapidly, while traditional legacy IT spending has grown more slowly.

As of December 31, 2022, we had delivered our cloud networking solutions to over 9,000 end customers worldwide.

In cloud computing, applications are distributed across thousands of servers.

These servers are interconnected by high-speed networking switches to form a pool of resources that allows applications to be rapidly deployed and cost-effectively updated.

Cloud computing enables ubiquitous and on-demand network access to these applications from internet-connected devices including personal computers, tablets, Internet of Things (IoT) devices, and smartphones.

Nearly all consumer applications today are delivered as cloud services, which was originated by internet leaders like Amazon, Google, Meta Platforms and Microsoft.

The aggregate network bandwidth in the cloud can be orders of magnitude higher than typical legacy data center networks.

Therefore, the networks in such cloud environments must be architected and built in a new way.

We refer to these next-generation data center networks as cloud networks.

Cloud networks must deliver high capacity, high availability and predictable performance, and must be programmable to allow integration with third-party applications for network management, automation, orchestration, and network services.

Examples of key secular trends driving network transformation are illustrated below:

We believe that cloud networks and legacy networks are fundamentally different.

In a traditional data center, specific applications are installed on a small number of servers and most network traffic is server-to-client, or “north-south” traffic, which results in perhaps a few terabits/second of aggregate network bandwidth.

In the cloud, most network traffic is server-to-server, or “east-west” traffic.

The aggregate network bandwidth in the cloud can exceed 1 petabit/second, orders of magnitude higher than that of typical legacy data center networks.

Increasingly more complex and sophisticated use cases such as AI clusters are further pushing the boundaries of cloud networking bandwidth and capacity demands.

These large scale cloud networks require much higher network availability since network outages in the cloud are costly to customers.

Traditional network switches have evolved, and the features and capabilities of their operating system have expanded over many years without addressing the structural deficiencies of their underlying software architectures, making it difficult to achieve the required level of reliability.

Some networking vendors have built products that use proprietary protocols to address the scaling needs of next-generation data centers.

However, proprietary protocols are generally disfavored by cloud customers and cloud service providers because they create vendor lock-in and discourage vendor multi-sourcing.

Legacy enterprise networks are generally not programmable and, as a result, are extremely difficult to integrate with third-party applications for network management, automation, orchestration and network services.

This lack of integration forces customers to continue to rely on time consuming, manual box-by-box configuration and processes that can be error-prone and cost-prohibitive.

The core of our platform is an advanced network operating system, Arista's EOS, which was designed from the ground up to be open, programmable, modular and reliable.

The programmability of EOS has allowed us to expand our software applications to address the ever-increasing demands of cloud networking, including data-driven workflow automation, network visibility, analytics and network detection and response, and has allowed rapid integration with a wide range of third-party applications for virtualization, management, automation, orchestration and network services.

Our highly modular EOS software architecture was designed to be fault-isolating and self-healing in order to deliver higher availability compared to legacy network operating systems.

In addition, customers can non-disruptively upgrade switches running in the network using Arista’s Smart System Upgrade ("SSU") application, without interrupting the network service.

Open and Programmable

For the fiscal year ended December 31, [removed: 2022][added: 2023]

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant was approximately [removed: $23,073,707,198] [added: $40.8 billion] as of June 30, [removed: 2022] [added: 2023] (the last business day of the registrant's most recently completed second fiscal quarter) based on the closing price of the registrant’s common stock on the New York Stock Exchange on such date.

On February [removed: 8, 2023, 306,395,384] [added: 7, 2024, 312,633,612] shares of the registrant’s common stock were outstanding.

Portions of the registrant’s definitive Proxy Statement relating to its [removed: 2023] [added: 2024] Annual Meeting of Stockholders to be filed pursuant to Regulation 14A within 120 days after the registrant’s fiscal year end of December 31, [removed: 2022] [added: 2023] are incorporated by reference into Part III of this Annual Report on Form 10-K.

| Item 1. | | | [removed: [Business](#icd12e8b0d5344cee987e808f459f0a3e_13)] [added: [Business](#ic034a470397a417699a027ca8e2873b3_13)] | | | | | | [removed: [1](#icd12e8b0d5344cee987e808f459f0a3e_13)] [added: [1](#ic034a470397a417699a027ca8e2873b3_13)] | | |

| Item 1A. | | | [Risk [removed: Factors](#icd12e8b0d5344cee987e808f459f0a3e_19)] [added: Factors](#ic034a470397a417699a027ca8e2873b3_19)] | | | | | | [removed: [14](#icd12e8b0d5344cee987e808f459f0a3e_19)] [added: [14](#ic034a470397a417699a027ca8e2873b3_19)] | | |

| Item 1B. | | | [Unresolved Staff [removed: Comments](#icd12e8b0d5344cee987e808f459f0a3e_22)] [added: Comments](#ic034a470397a417699a027ca8e2873b3_22)] | | | | | | [removed: [46](#icd12e8b0d5344cee987e808f459f0a3e_22)] [added: [49](#ic034a470397a417699a027ca8e2873b3_22)] | | |

| Item 2. | | | [removed: [Properties](#icd12e8b0d5344cee987e808f459f0a3e_25)] [added: [Properties](#ic034a470397a417699a027ca8e2873b3_25)] | | | | | | [removed: [46](#icd12e8b0d5344cee987e808f459f0a3e_25)] [added: [50](#ic034a470397a417699a027ca8e2873b3_25)] | | |

| Item 3. | | | [Legal [removed: Proceedings](#icd12e8b0d5344cee987e808f459f0a3e_28)] [added: Proceedings](#ic034a470397a417699a027ca8e2873b3_28)] | | | | | | [removed: [46](#icd12e8b0d5344cee987e808f459f0a3e_28)] [added: [50](#ic034a470397a417699a027ca8e2873b3_28)] | | |

| Item 4. | | | [Mine Safety [removed: Disclosures](#icd12e8b0d5344cee987e808f459f0a3e_31)] [added: Disclosures](#ic034a470397a417699a027ca8e2873b3_31)] | | | | | | [removed: [46](#icd12e8b0d5344cee987e808f459f0a3e_31)] [added: [50](#ic034a470397a417699a027ca8e2873b3_31)] | | |

| Item 5. | | | [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#icd12e8b0d5344cee987e808f459f0a3e_37)] [added: Securities](#ic034a470397a417699a027ca8e2873b3_37)] | | | | | | [removed: [47](#icd12e8b0d5344cee987e808f459f0a3e_37)] [added: [51](#ic034a470397a417699a027ca8e2873b3_37)] | | |

| Item 6. | | | [removed: [\[Reserved\]](#icd12e8b0d5344cee987e808f459f0a3e_40)] [added: [\[Reserved\]](#ic034a470397a417699a027ca8e2873b3_40)] | | | | | | [removed: [49](#icd12e8b0d5344cee987e808f459f0a3e_40)] [added: [53](#ic034a470397a417699a027ca8e2873b3_40)] | | |

| Item 7. | | | [Management's Discussion and Analysis of Financial Condition and Results of [removed: Operations](#icd12e8b0d5344cee987e808f459f0a3e_43)] [added: Operations](#ic034a470397a417699a027ca8e2873b3_43)] | | | | | | [removed: [50](#icd12e8b0d5344cee987e808f459f0a3e_43)] [added: [54](#ic034a470397a417699a027ca8e2873b3_43)] | | |

| Item 7A. | | | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#icd12e8b0d5344cee987e808f459f0a3e_67)] [added: Risk](#ic034a470397a417699a027ca8e2873b3_67)] | | | | | | [removed: [62](#icd12e8b0d5344cee987e808f459f0a3e_67)] [added: [66](#ic034a470397a417699a027ca8e2873b3_67)] | | |

| Item 8. | | | [Financial Statements and Supplementary [removed: Data](#icd12e8b0d5344cee987e808f459f0a3e_70)] [added: Data](#ic034a470397a417699a027ca8e2873b3_70)] | | | | | | [removed: [64](#icd12e8b0d5344cee987e808f459f0a3e_70)] [added: [68](#ic034a470397a417699a027ca8e2873b3_70)] | | |

| Item 9. | | | [Change in and Disagreements With Accountants on Accounting and Financial [removed: Disclosure](#icd12e8b0d5344cee987e808f459f0a3e_136)] [added: Disclosure](#ic034a470397a417699a027ca8e2873b3_133)] | | | | | | [removed: [101](#icd12e8b0d5344cee987e808f459f0a3e_136)] [added: [103](#ic034a470397a417699a027ca8e2873b3_133)] | | |

| Item 9A. | | | [Controls and [removed: Procedures](#icd12e8b0d5344cee987e808f459f0a3e_139)] [added: Procedures](#ic034a470397a417699a027ca8e2873b3_136)] | | | | | | [removed: [101](#icd12e8b0d5344cee987e808f459f0a3e_139)] [added: [103](#ic034a470397a417699a027ca8e2873b3_136)] | | |

| Item 9B. | | | [Other [removed: Information](#icd12e8b0d5344cee987e808f459f0a3e_142)] [added: Information](#ic034a470397a417699a027ca8e2873b3_139)] | | | | | | [removed: [102](#icd12e8b0d5344cee987e808f459f0a3e_142)] [added: [104](#ic034a470397a417699a027ca8e2873b3_139)] | | |

| Item 9C. | | | [Disclosure Regarding Foreign Jurisdictions that Prevent [removed: Inspections](#icd12e8b0d5344cee987e808f459f0a3e_145)] [added: Inspections](#ic034a470397a417699a027ca8e2873b3_142)] | | | | | | [removed: [102](#icd12e8b0d5344cee987e808f459f0a3e_145)] [added: [104](#ic034a470397a417699a027ca8e2873b3_142)] | | |

| Item 10. | | | [Directors, Executive Officers, and Corporate [removed: Governance](#icd12e8b0d5344cee987e808f459f0a3e_151)] [added: Governance](#ic034a470397a417699a027ca8e2873b3_148)] | | | | | | [removed: [103](#icd12e8b0d5344cee987e808f459f0a3e_151)] [added: [105](#ic034a470397a417699a027ca8e2873b3_148)] | | |

| Item 11. | | | [Executive [removed: Compensation](#icd12e8b0d5344cee987e808f459f0a3e_154)] [added: Compensation](#ic034a470397a417699a027ca8e2873b3_151)] | | | | | | [removed: [103](#icd12e8b0d5344cee987e808f459f0a3e_154)] [added: [105](#ic034a470397a417699a027ca8e2873b3_151)] | | |

| Item 12. | | | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#icd12e8b0d5344cee987e808f459f0a3e_157)] [added: Matters](#ic034a470397a417699a027ca8e2873b3_154)] | | | | | | [removed: [103](#icd12e8b0d5344cee987e808f459f0a3e_157)] [added: [105](#ic034a470397a417699a027ca8e2873b3_154)] | | |

| Item 13. | | | [Certain Relationships and Related Transactions and Director [removed: Independence](#icd12e8b0d5344cee987e808f459f0a3e_160)] [added: Independence](#ic034a470397a417699a027ca8e2873b3_157)] | | | | | | [removed: [103](#icd12e8b0d5344cee987e808f459f0a3e_160)] [added: [105](#ic034a470397a417699a027ca8e2873b3_157)] | | |

| Item 14. | | | [Principal Accountant Fees and [removed: Services](#icd12e8b0d5344cee987e808f459f0a3e_163)] [added: Services](#ic034a470397a417699a027ca8e2873b3_160)] | | | | | | [removed: [103](#icd12e8b0d5344cee987e808f459f0a3e_163)] [added: [105](#ic034a470397a417699a027ca8e2873b3_160)] | | |

| Item 15. | | | [Exhibits and Financial Statement [removed: Schedules](#icd12e8b0d5344cee987e808f459f0a3e_169)] [added: Schedules](#ic034a470397a417699a027ca8e2873b3_166)] | | | | | | [removed: [104](#icd12e8b0d5344cee987e808f459f0a3e_169)] [added: [106](#ic034a470397a417699a027ca8e2873b3_166)] | | |

| Item 16. | | | [Form 10-K [removed: Summary](#icd12e8b0d5344cee987e808f459f0a3e_175)] [added: Summary](#ic034a470397a417699a027ca8e2873b3_172)] | | | | | | [removed: [107](#icd12e8b0d5344cee987e808f459f0a3e_175)] [added: [109](#ic034a470397a417699a027ca8e2873b3_172)] | | |

This Annual Report on Form 10-K, including the sections entitled “Business,” “Risk Factors,” [removed: “Use of Proceeds,”] and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, [removed: as] [added: and] Section 21E of the Securities Exchange Act of 1934, as amended, which statements involve substantial risks and uncertainties.

The words “believe,” “may,” “will,” “potentially,” [added: "likely"] “estimate,” “continue,” “anticipate,” “intend,” “could,” “would,” [added: "should",] “project,” “plan,” “predict,” [removed: “expect”] [added: “expect”, the negative of any of these words] and similar expressions that convey uncertainty of future events or outcomes are intended to identify forward-looking statements.

- our ability to expand our leadership position in the networking industry and to develop new products and expand our business into new markets such as the [added: AI Ethernet switching,] campus workspace, enterprise data center and security markets;

- our ability to satisfy the requirements for networking solutions and to successfully anticipate technological shifts and market needs, [added: including the impact of artificial intelligence,] innovate new products, rapidly develop new features and applications, and bring them to market in a timely manner;

- our ability to fulfill our [removed: end] customers’ orders despite supply chain delays, access to key commodities or technologies or geopolitical events that impact our manufacturers or their suppliers such as the recent U.S. trade [removed: wars] [added: wars, the Russia-Ukraine and Israel-Hamas conflicts, the Houthi attacks on marine vessels in the Red Sea] or the impact of [added: global pandemics such as] the global coronavirus ("COVID-19") pandemic;

- our ability to [removed: integrate] [added: identify, complete] and realize the benefits of [removed: our] recent and future [removed: acquisitions;][added: acquisitions of, or investments in, complementary companies, products, services or technologies;]

- our ability to retain and increase sales to existing customers and attract new [removed: end] customers, including large [removed: end] customers;

- the budgeting cycles and purchasing practices of [removed: end] customers, including large [removed: end] customers who may receive lower pricing terms due to volume discounts or who may elect to re-assign allocations to multiple vendors based upon specific network roles or projects;

- the growth and buying patterns of our large [removed: end] customers [added: and resulting volatility] in [added: our customer concentration in] which large bulk purchases may or may not occur in certain quarters or may be deferred into future quarters or cancelled due to adjustments in their capital expenditure forecasts;

- the deferral or cancellation of orders by [removed: end] customers, warranty returns or delays in acceptance of our products;

- [added: the impact of] global economic and political conditions that introduce instability into the U.S. and other economies;

- the impact of tariffs imposed by the U.S. on goods from other countries and tariffs imposed by other countries on U.S. goods; [added: and]

- our belief that our existing cash and cash equivalents together with cash flow from operations will be sufficient to meet our working capital requirements and our growth strategies for the foreseeable [removed: future; and][added: future.]

| [PART I](#ic034a470397a417699a027ca8e2873b3_13) | | | | | | | | | | | |

| Item 1C. | | | [C](#ic034a470397a417699a027ca8e2873b3_1718)[ybersecurity](#ic034a470397a417699a027ca8e2873b3_1718) | | | | | | [49](#ic034a470397a417699a027ca8e2873b3_22) | | |

| [PART II](#ic034a470397a417699a027ca8e2873b3_34) | | | | | | | | | | | |

| [PART III](#ic034a470397a417699a027ca8e2873b3_145) | | | | | | | | | | | |

| [PART IV](#ic034a470397a417699a027ca8e2873b3_163) | | | | | | | | | | | |

| | | | [Signatures](#ic034a470397a417699a027ca8e2873b3_175) | | | | | | [110](#ic034a470397a417699a027ca8e2873b3_175) | | |

- our relationships with and expectations concerning third parties, including, but not limited to our large customers, suppliers, distributors, systems integrators, channel partners and value-added resellers;

- the impact of climate change and natural disasters;

[Table](#ic034a470397a417699a027ca8e2873b3_7) [of](#ic034a470397a417699a027ca8e2873b3_7) [Contents](#ic034a470397a417699a027ca8e2873b3_7)

| [PART I](#icd12e8b0d5344cee987e808f459f0a3e_13) | | | | | | | | | | | |

| [PART II](#icd12e8b0d5344cee987e808f459f0a3e_34) | | | | | | | | | | | |

| [PART III](#icd12e8b0d5344cee987e808f459f0a3e_148) | | | | | | | | | | | |

| [PART IV](#icd12e8b0d5344cee987e808f459f0a3e_166) | | | | | | | | | | | |

| | | | [Signatures](#icd12e8b0d5344cee987e808f459f0a3e_178) | | | | | | [108](#icd12e8b0d5344cee987e808f459f0a3e_178) | | |

- our expectations concerning relationships with third parties;

- our ability to identify, complete and realize the benefits of future acquisitions of or investments in complementary companies, products, services or technologies.

Cybersecurity Risk Management and Strategy

We have developed and implemented a cybersecurity risk management program intended to protect the confidentiality, integrity, and availability of our critical systems and information.

In addition, our Legal and Information Technology (IT)/Information Security (IS) teams work together to oversee our compliance with applicable laws and regulations and coordinate with subject matter experts throughout our business to identify, monitor and mitigate risk including information security risk management and cyber defense programs.

Our cybersecurity risk management program is aligned with our overall enterprise risk management programs and shares common methodologies, reporting channels and governance processes that apply across the enterprise risk management programs to other legal, compliance, strategic, operational, and financial risk areas.

Our cybersecurity risk management program includes:

- an information security management systems policy, including a business continuity policy, acceptable use and physical security policies, and an incident response policy and plan for responding to cybersecurity incidents, among others;

- risk assessments designed to help identify material cybersecurity risks to our critical systems, information, products, services, and our broader enterprise IT environment;

- a security team principally responsible for managing (1) our cybersecurity risk assessment processes, (2) our security controls, and (3) our response to cybersecurity incidents;

- the use of internal audit teams and external service providers, where appropriate, to assess, test or otherwise assist with aspects of our security controls;

- cybersecurity awareness, data protection, and privacy training of our employees, incident response personnel, and senior management; and

- a vetting and management process for third party service providers, suppliers, and vendors

Through this program, our IT/IS team identifies and executes improvements based upon its own assessments, public cybersecurity events and the identification of new risks by third parties, including our external cybersecurity consultants.

As part of these continuous improvement efforts, there may be times when the IT/IS team prioritizes certain cybersecurity fixes or program improvements over other measures, which could lead to new known or unknown risks being identified on an ongoing basis.

Cybersecurity threat actors are often highly sophisticated and nimble in their attacks.

Despite these efforts, we cannot guarantee that our priorities and efforts will prevent any cybersecurity incident from happening.

We also engage in periodic testing programs, using both internal assets and external consultants, including penetration testing, and incorporate multiple layers of physical, logical and written controls into our cybersecurity risk management program.

Our IT/IS team leverages centralized identity management, encryption configurations and technologies on the systems, devices, and third-party connections used in our operations.

We also maintain cyber liability insurance coverage.

While we currently hold such coverage, we cannot be certain that our insurance coverage will be adequate for liabilities actually incurred, that insurance will continue to be available to us on economically reasonable terms, or at all, or that any future claim will not be excluded or otherwise be denied coverage by any insurer.

As of the date of this report, we have not identified any risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, that we believe have, or are likely to, materially affect us, our business strategy, results of operations, or financial condition.

For additional information concerning risks from cybersecurity threats, please refer to Item 1A, “Risk Factors,” in this annual report on Form 10-K, including the risk factors in the category entitled, “Risks Related to Cybersecurity and Data Privacy”.

Cybersecurity Governance

Our Board considers cybersecurity risk as part of its risk oversight function and has delegated to the Audit Committee (Committee) oversight of cybersecurity and other information technology risks.

The Committee oversees management’s implementation of our cybersecurity risk management program.

The Committee receives quarterly reports from our Vice President and Chief Information Security Officer (CISO), in conjunction with other senior managers, on cybersecurity risks.

In

addition, these managers update the Committee, as necessary, regarding any material cybersecurity incidents, as well as incidents with lesser impact potential.

The Committee reports to the full Board on cybersecurity no less frequently than once annually.

The full Board also receives briefings from management on our cyber risk management program on a periodic basis.

Our cybersecurity program includes an annual funding and forecast process, and we have further established processes to secure additional funding in response to emerging risks, threats and identified improvement opportunities.

Our IS team, led by one of our Vice Presidents who also serves as our CISO, is responsible for assessing and managing risks from cybersecurity threats.

The IS team has primary responsibility for our overall cybersecurity risk management program and supervises both our internal cybersecurity personnel and our external cybersecurity consultants.

Our CISO has over 20 years of experience in the cybersecurity industry and has been instrumental in building several key security technologies, viz.

Network Intrusion Prevention Systems (NIPS), Host Intrusion Prevention Systems (HIPS), Web Application Firewalls (WAF), Whitelisting, Endpoint/Server Host Monitoring (EDR) and Virtualization Based Security (VBS).

Previously, our CISO served in senior executive and technical leadership roles in several security companies.

In addition, our CISO has experience as a pen-tester and has in-depth knowledge of operating system, networking and security products.

Our CISO holds a bachelor’s degree in computer science and a master’s degree in software systems.

In addition, our IS team includes over 20 members each with experience in network security related roles, with the two IS leads reporting to our CISO each having more than 20 years of security experience.

Our management team, including our CISO in consultation with our Chief Technology Officer and Chief Financial Officer, supervises efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents, which may include: briefings from internal security personnel; threat intelligence and other information obtained from governmental, public or private sources, including external cybersecurity consultants; and alerts and reports produced by security tools deployed in our IT environment.

However, as indicated above, we cannot guarantee that our efforts will prevent any cybersecurity incident from occurring.

Our corporate headquarters are located in Santa Clara, California where we [removed: currently] lease approximately [removed: 210,000] [added: 180,000] square feet of space under a lease agreement that expires in [removed: 2023.][added: September 2026.]

During the year ended December 31, 2021, we purchased land and the improvements thereon in Santa Clara, California to [removed: develop space] [added: construct a building] for [removed: our future data centers.][added: office and lab space.]

In February 2023, we extended the lease agreement to 2026 and reduced the leased space to approximately 180,000 square feet.

As of February [removed: 8, 2023,] [added: 7, 2024,] there were [removed: 56] [added: 52] holders of record of our common stock.

The following graph compares the cumulative total return of our common stock with the total return for the NYSE Composite Index and the Standard & Poor’s 500 Index (the “S&P 500”) from December [removed: 29, 2017] [added: 31, 2018] (the last trading day of the year) to December 31, [removed: 2022.][added: 2023.]

The graph assumes $100 was invested at the market close on December [removed: 29, 2017] [added: 31, 2018] in the Company’s common stock and in each of the aforementioned indices with the re-investment of dividends, if any.

[removed: ][added: ]

There were no sales of unregistered securities during fiscal year [removed: 2022.][added: 2023.]

During the fourth quarter of [removed: 2022,] [added: 2023,] there were no repurchases of unvested shares of our common stock made pursuant to our equity incentive plans as a result of us exercising our rights nor pursuant to any publicly-announced plan or program.

Stock Repurchase [removed: Programs][added: Program]

In [removed: April 2019,] [added: October 2021,] our board of directors authorized a $1.0 billion stock repurchase program (the “Repurchase Program”).

This authorization allows us to repurchase shares of our common stock [removed: and will be] funded from working capital.

The [removed: New] Repurchase Program [removed: commenced] [added: expires] in the fourth quarter of [removed: 2021, and expires on the three-year anniversary thereof.][added: 2024.]

The [removed: New] Repurchase Program does not obligate us to acquire any of our common stock and may be suspended or discontinued by us at any time without prior notice.

For our repurchase activities made during the [removed: rest of the] year ended December 31, [removed: 2022,] [added: 2023,] please refer to Note 6.

We did not repurchase any shares during the three months ended December 31, 2023.

This authorization allowed us to repurchase shares of our common stock over three years and we completed our repurchases under the Repurchase Program during the fourth quarter of 2021.

In the fourth quarter of 2021, our board of directors authorized an additional $1.0 billion stock repurchase program (the “New Repurchase Program”).

Our repurchases for the three months ended December 31, 2022 are disclosed as below (in thousands, except per share amounts).

| | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | Total Number of Shares Purchased | | | | | | Average Price Paid Per Share | | | | | | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | | | | | | Approximate Dollar Value of Shares That May Yet Be Purchased Under the Publicly Announced Plans or Programs | | |

| October 1, 2022 - October 31, 2022 | | | | | | 28 | | | | | | $ | 99.62 | | | | | 28 | | | | | | $ | 256,752 | |

| November 1, 2022 - November 30, 2022 | | | | | | — | | | | | | — | | | | | | — | | | | | | 256,752 | | |

| December 1, 2022 - December 31, 2022 | | | | | | — | | | | | | — | | | | | | — | | | | | | 256,752 | | |

| | | | | | | 28 | | | | | | | | | | | | 28 | | | | | | | | |

| [Reports of Independent Registered Public Accounting Firm (PCAOB [removed: ID:](#icd12e8b0d5344cee987e808f459f0a3e_73) 42[)](#icd12e8b0d5344cee987e808f459f0a3e_73)] [added: ID:](#ic034a470397a417699a027ca8e2873b3_73) 42[)](#ic034a470397a417699a027ca8e2873b3_73)] | | | | | | [removed: [65](#icd12e8b0d5344cee987e808f459f0a3e_73)] [added: [69](#ic034a470397a417699a027ca8e2873b3_73)] | | |

| [Consolidated Balance [removed: Sheets](#icd12e8b0d5344cee987e808f459f0a3e_79)] [added: Sheets](#ic034a470397a417699a027ca8e2873b3_79)] | | | | | | [removed: [68](#icd12e8b0d5344cee987e808f459f0a3e_79)] [added: [72](#ic034a470397a417699a027ca8e2873b3_79)] | | |

| [Consolidated Statements of [removed: Operations](#icd12e8b0d5344cee987e808f459f0a3e_82)] [added: Operations](#ic034a470397a417699a027ca8e2873b3_82)] | | | | | | [removed: [69](#icd12e8b0d5344cee987e808f459f0a3e_82)] [added: [73](#ic034a470397a417699a027ca8e2873b3_82)] | | |

| [Consolidated Statements of Comprehensive [removed: Income](#icd12e8b0d5344cee987e808f459f0a3e_85)] [added: Income](#ic034a470397a417699a027ca8e2873b3_85)] | | | | | | [removed: [70](#icd12e8b0d5344cee987e808f459f0a3e_85)] [added: [74](#ic034a470397a417699a027ca8e2873b3_85)] | | |

| [Consolidated Statements of Stockholders' [removed: Equity](#icd12e8b0d5344cee987e808f459f0a3e_88)] [added: Equity](#ic034a470397a417699a027ca8e2873b3_88)] | | | | | | [removed: [71](#icd12e8b0d5344cee987e808f459f0a3e_88)] [added: [75](#ic034a470397a417699a027ca8e2873b3_88)] | | |

| [Consolidated Statements of Cash [removed: Flows](#icd12e8b0d5344cee987e808f459f0a3e_91)] [added: Flows](#ic034a470397a417699a027ca8e2873b3_91)] | | | | | | [removed: [72](#icd12e8b0d5344cee987e808f459f0a3e_91)] [added: [76](#ic034a470397a417699a027ca8e2873b3_91)] | | |

| [Notes to the Consolidated Financial [removed: Statements](#icd12e8b0d5344cee987e808f459f0a3e_94)] [added: Statements](#ic034a470397a417699a027ca8e2873b3_94)] | | | | | | [removed: [73](#icd12e8b0d5344cee987e808f459f0a3e_94)] [added: [77](#ic034a470397a417699a027ca8e2873b3_94)] | | |

We have audited the accompanying consolidated balance sheets of Arista Networks, Inc. (the Company) as of December 31, [removed: 2022] [added: 2023] and [removed: 2021,] [added: 2022,] the related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, [removed: 2022,] [added: 2023,] and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, [removed: 2022] [added: 2023] and [removed: 2021,] [added: 2022,] and the results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2022,] [added: 2023,] in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, [removed: 2022,] [added: 2023,] based on criteria established in Internal [removed: Control - Integrated] [added: Control—Integrated] Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 [removed: framework)] [added: framework),] and our report dated February [removed: 13, 2023] [added: 12, 2024] expressed an unqualified opinion thereon.

| | | | Inventory Valuation [removed: &] [added: and] Contract Manufacturer/Supplier Liabilities | | |

| Description of the Matter | | | As discussed in Note 1 of the consolidated financial statements, the Company’s inventories are stated at the lower of cost (computed using the first-in, first-out method) and net realizable value. The Company’s inventory balance totaled [removed: $1.3] [added: $1.9] billion on December 31, [removed: 2022.] [added: 2023.] The Company records a provision when inventory is determined to be in excess of anticipated demand, or obsolete, to adjust inventory to its estimated realizable value. The Company records a contract manufacturer/supplier liability and a corresponding charge for non-cancellable, non-returnable purchase commitments with contract manufacturers or suppliers for quantities in excess of the Company’s demand forecasts, or that are considered obsolete. Auditing management’s assessment of net realizable value for inventory and contract manufacturer/supplier liabilities was complex and highly judgmental due to the assessment of management’s estimates of forecasted product demand, which can be impacted by changes in overall customer demand, changes in the timing of the introduction and customer adoption of new products, adjustments to manufacturing and engineering schedules, and overall general economic and market conditions. | | |

San [removed: Jose,] [added: Mateo,] California

We have audited Arista Networks, Inc.’s internal control over financial reporting as of December 31, [removed: 2022,] [added: 2023,] based on criteria established in Internal [removed: Control - Integrated] [added: Control—Integrated] Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

In our opinion, Arista Networks, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2022,] [added: 2023,] based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, [removed: 2022] [added: 2023] and [removed: 2021,] [added: 2022,] the related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, [removed: 2022,] [added: 2023,] and the related notes and our report dated February [removed: 13, 2023] [added: 12, 2024] expressed an unqualified opinion thereon.

The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s [removed: Annual] Report on Internal Control over Financial Reporting.

| | | | | | | [added: 2023 | | | | | |] 2022 | | | | | | 2021 | | |

| Cash and cash equivalents | | | | | | $ | [removed: 671,707] [added: 1,938,606] | | | | | $ | [removed: 620,813] [added: 671,707] | |

| Marketable securities | | | | | | [removed: 2,352,022] [added: 3,069,362] | | | | | | [removed: 2,787,502] [added: 2,352,022] | | |

| Accounts receivable, net | | | | | | [removed: 923,096] [added: 1,024,569] | | | | | | [removed: 516,509] [added: 923,096] | | |

| Inventories | | | | | | [removed: 1,289,706] [added: 1,945,180] | | | | | | [removed: 650,117] [added: 1,289,706] | | |

| Prepaid expenses and other current assets | | | | | | [removed: 314,217] [added: 412,518] | | | | | | [removed: 237,735] [added: 314,217] | | |

| Total current assets | | | | | | [removed: 5,550,748] [added: 8,390,235] | | | | | | [removed: 4,812,676] [added: 5,550,748] | | |

| Property and equipment, net | | | | | | [removed: 95,009] [added: 101,580] | | | | | | [removed: 78,634] [added: 95,009] | | |

| Acquisition-related intangible assets, net | | | | | | [removed: 122,205] [added: 88,768] | | | | | | [removed: 93,555] [added: 122,205] | | |

| Goodwill | | | | | | [removed: 265,924] [added: 268,531] | | | | | | [removed: 188,397] [added: 265,924] | | |

| Operating lease right-of-use assets [added: (included in other assets)] | | | | | | [removed: 53,390] [added: $] | [added: 55,890] | | | | | [removed: 65,182] [added: $] | [added: 53,390] | |

| Deferred tax assets | | | | | | [removed: 574,912] [added: 945,792] | | | | | | [removed: 442,295] [added: 574,912] | | |

| TOTAL ASSETS | | | | | | $ | [removed: 6,775,410] [added: 9,946,806] | | | | | $ | [removed: 5,734,429] [added: 6,775,410] | |

| Accounts payable | | | | | | $ | [removed: 232,572] [added: 435,059] | | | | | $ | [removed: 202,636] [added: 232,572] | |

| Accrued liabilities | | | | | | [removed: 292,487] [added: 407,302] | | | | | | [removed: 226,643] [added: 292,487] | | |

| Deferred revenue | | | | | | [removed: 637,432] [added: 915,204] | | | | | | [removed: 593,578] [added: 637,432] | | |

| Other current liabilities | | | | | | [removed: 131,040] [added: 152,041] | | | | | | [removed: 86,972] [added: 131,040] | | |

| Total current liabilities | | | | | | [removed: 1,293,531] [added: 1,909,606] | | | | | | [removed: 1,109,829] [added: 1,293,531] | | |

| Income taxes payable | | | | | | [removed: 89,839] [added: 95,751] | | | | | | [removed: 69,916] [added: 89,839] | | |

| Operating lease liabilities, non-current [added: (included in other long-term liabilities)] | | | | | | [removed: 43,964] [added: 44,413] | | | | | | [removed: 56,527] [added: 43,964] | | |

| Deferred revenue, non-current | | | | | | [removed: 403,814] [added: 591,000] | | | | | | [removed: 335,734] [added: 403,814] | | |

| Deferred tax liabilities, non-current | | | | | | [removed: 42] [added: —] | | | | | | [removed: 129,074] [added: (42)] | | |

| Other long-term liabilities | | | | | | [removed: 58,400] [added: 131,390] | | | | | | [removed: 54,749] [added: 102,406] | | |

| | | | | | |

| | | | | | |

February 12, 2024

San Mateo, California

February 12, 2024

| | | | | | | 2023 | | | | | | 2022 | | |

| Other assets | | | | | | 151,900 | | | | | | 166,612 | | |

| Net income | | | | | | $ | 2,087,321 | | | | | $ | 1,352,446 | | | | | $ | 840,854 | |

| Net income | | | | | | — | | | | | | — | | | | | | — | | | | | | 2,087,321 | | | | | | — | | | | | | 2,087,321 | | |

| Repurchase of common stock | | | | | | (954) | | | | | | — | | | | | | — | | | | | | (112,279) | | | | | | — | | | | | | (112,279) | | |

| Common stock issued for business acquisition | | | | | | 32 | | | | | | — | | | | | | 2,331 | | | | | | — | | | | | | — | | | | | | 2,331 | | |

| Balance — December 31, 2023 | | | | | | 312,245 | | | | | | $ | 31 | | | | | $ | 2,108,331 | | | | | $ | 5,114,025 | | | | | $ | (3,328) | | | | | $ | 7,219,059 | |

| Net income | | | | | | $ | 2,087,321 | | | | | $ | 1,352,446 | | | | | $ | 840,854 | |

| Gain on strategic investments | | | | | | (18,699) | | | | | | (27,479) | | | | | | — | | |

| Other assets | | | | | | (66,401) | | | | | | (117,465) | | | | | | (130,222) | | |

| Other liabilities | | | | | | 123,694 | | | | | | 70,704 | | | | | | 78,187 | | |

As we exit 2023, the business is emerging from a period of unprecedented global supply chain disruptions.

Throughout this period, we made significant supply chain investments, including funding additional working capital and incremental purchase commitments in response to extended visibility to deployment plans from our customers.

This increased capacity has allowed us to ship products against previously committed demand/deployment plans and accelerate some deployments where needed, while trying to limit building customer inventory and to some extent balancing customer lead times with those currently experienced from our key suppliers.

As a result, some shipments against these previously committed demand/deployment plans have extended into 2024.

As the global supply chain has experienced some improvements and as customer lead times have been reduced from their peak, we have seen and expect to continue to see a commensurate reduction in visibility to customer demand and a gradual return to shorter demand-planning horizons resulting in lower demand levels.

Given these shipment and order patterns, near term revenue trends may not be solely reflective of current demand levels, but as discussed above will benefit from demand/deployment plans that had been previously committed.

While inventory and working capital levels may remain elevated in the near term, we expect that purchase commitments will continue to decline as supplier lead times shorten.

The larger magnitude of these balances, combined with a reduction in customer demand-planning horizons and shifting customer product priorities, has resulted in increased risk that we may not be able to sell all of this inventory, which in turn has resulted, and may in the future result, in additional excess and obsolete inventory and supplier liability charges.

The extent of the impact of these factors on our operational

In addition, any continued or renewed disruption in manufacturing and supply resulting from these factors could negatively impact our business.

We also believe that some of our customers, following a year of elevated purchases, must now consider changing technology roadmaps and priorities, including the need for the rapid deployment of AI and related technologies, resulting in some uncertainty as to future investment plans and a more constrained approach to some forecasts and orders in the near term.

For the year ended December 31, 2023, there were two end customers who represented 21% and 18% of total revenue.

Cash equivalents,

As customer lead times reduce more broadly, we have seen and expect to continue to see a commensurate reduction in visibility to customer demand and a gradual return to shorter demand-planning horizons resulting in lower demand levels.

While inventory and working capital levels may remain elevated in the near term, we expect that purchase commitments will continue to decline as supplier lead times shorten.

There is however no guarantee that all suppliers will meet their

commitments in the time frame committed or that actual customer demand will directly match our demand forecasts.

There

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740)-Improvements to Income Tax Disclosures.

The ASU requires that an entity disclose specific categories in the effective tax rate reconciliation as well as provide additional information for reconciling items that meet a quantitative threshold.

Further, the ASU requires certain disclosures of state versus federal income tax expense and taxes paid.

Early adoption is permitted for annual financial statements that have not yet been issued.

The amendments should be applied on a prospective basis although retrospective application is permitted.

we have not early adopted ASU 2023-09 for December 31, 2023.

| | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

February 13, 2023

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Investments | | | | | | 39,468 | | | | | | 20,247 | | |

| Other assets | | | | | | 73,754 | | | | | | 33,443 | | |

*The accompanying notes are an integral part of these consolidated financial statements.*

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | Year Ended December 31, | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Balance — December 31, 2019 | | | | | | 305,556 | | | | | | $ | 30 | | | | | $ | 1,106,283 | | | | | $ | 1,788,230 | | | | | $ | 143 | | | | | $ | 2,894,686 | |

| Net income | | | | | | — | | | | | | — | | | | | | — | | | | | | 634,557 | | | | | | — | | | | | | 634,557 | | |

| Repurchase of common stock | | | | | | (8,048) | | | | | | — | | | | | | — | | | | | | (395,173) | | | | | | — | | | | | | (395,173) | | |

| Vesting of early-exercised stock options | | | | | | — | | | | | | — | | | | | | 164 | | | | | | — | | | | | | — | | | | | | 164 | | |

| Unrealized gain on equity investments | | | | | | (27,479) | | | | | | — | | | | | | (4,164) | | |

| Other assets | | | | | | (32,299) | | | | | | (4,220) | | | | | | 4,965 | | |

| Accrued liabilities | | | | | | 66,586 | | | | | | 83,524 | | | | | | 2,728 | | |

| Other liabilities | | | | | | 4,118 | | | | | | (5,337) | | | | | | 17,102 | | |

| Escrow receipts from past business acquisitions | | | | | | — | | | | | | 1,299 | | | | | | — | | |

| Property and equipment included in accounts payable and accrued liabilities | | | | | | 1,411 | | | | | | 3,497 | | | | | | 1,565 | | |

| Vesting of early exercised stock options and restricted stock awards | | | | | | — | | | | | | — | | | | | | 164 | | |

On November 1, 2021, we announced a four-for-one split of the Company’s common stock effected in the form of a stock dividend (the “Stock Split”).

Each stockholder of record on November 11, 2021 received three additional shares of common stock for each then-held share, and such shares were distributed after close of trading on November 17, 2021.

All share and per share amounts presented herein have been retroactively adjusted to reflect the impact of the Stock Split.

Although we saw some improvement in our manufacturing and supply chain operations in the latter part of 2022, we continue to experience constraints, with some lingering component shortages, extended lead times, and elevated component and supply chain costs.

Although we have worked diligently to drive improvements in these areas, including funding additional working capital and incremental purchase commitments, these delays have negatively impacted our ability to supply products to our customers on a timely basis.

Our demand planning horizon remains extended with high levels of purchase commitments and increased investments in working capital to address delays in component sourcing and the risk of future supply chain disruptions, but we cannot be certain that such delays or disruptions will not occur, or that our extended demand planning horizon will adequately address these disruptions should they occur.

results and trends, and as of the date of issuance of these consolidated financial statements, the extent to which these factors may materially impact the Company's financial condition, liquidity, or results of operations in the future is uncertain.

As of December 31, 2022 and 2021, we had restricted cash of $4.3 million and $4.2 million respectively, and that primarily included $4.0 million pledged as collateral representing a security deposit required for a facility lease.

Our restricted cash is classified as other assets in the accompanying consolidated balance sheets.

We use a fair value

Depreciation is calculated using

Assets Recognized from Costs to Obtain a Contract with a Customer

We recognize an asset for the incremental costs of obtaining a contract with a customer if we expect the benefit of those costs to be longer than one year.

We have determined that certain sales commissions earned by our sales force meet the requirements for capitalization.

These costs are deferred and then amortized over a period of benefit that we have determined to be five years.

Total capitalized costs to obtain a contract are included in other current and long-term assets on our consolidated balance sheets.

As of December 31, 2022 and 2021, total capitalized costs to obtain contracts were $13.1 million and $11.5 million, respectively.

Warranty

We generally offer a one-year warranty on all of our hardware products and a 90-day warranty against defects in the software embedded in the products.

Management, with the participation of our Chief Executive Officer (“CEO”) and our Chief Financial Officer (“CFO”), evaluated the effectiveness of our disclosure controls and procedures as of December 31, [removed: 2022.][added: 2023.]

Based on the evaluation of our disclosure controls and procedures as of December 31, [removed: 2022,] [added: 2023,] our CEO and CFO concluded that, as of such date, our disclosure controls and procedures are designed at a reasonable assurance level and are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission (SEC) rules and forms, and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Securities and Exchange Act of 1934, as amended, that occurred during the [removed: year] [added: quarter] ended December 31, [removed: 2022] [added: 2023] that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Management assessed the effectiveness of our internal control over financial reporting as of December 31, [removed: 2022,] [added: 2023,] based on the framework set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control - Integrated Framework (2013 framework).

Based on that assessment, management concluded that, as of December 31, [removed: 2022,] [added: 2023,] its internal control over financial reporting was effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with U.S. GAAP.

The effectiveness of our internal control over financial reporting, as of December 31, [removed: 2022,] [added: 2023,] has been audited by Ernst & Young LLP, the independent registered public accounting firm that audits our Consolidated Financial Statements, as stated in their report included in Item 8 of this Annual Report on Form 10-K, which expresses an unqualified opinion on the effectiveness of our internal control over financial reporting as of December 31, [removed: 2022.][added: 2023.]

Securities Trading Plans of Directors and Executive Officers

During our last fiscal quarter, the following directors and officer, as defined in Rule 16a-1(f), adopted a “Rule 10b5-1 trading arrangement” as defined in Regulation S-K Item 408, as follows:

On December 5, 2023, Ita Brennan, our Senior Vice President and Chief Financial Officer, modified the Rule 10b5-1 trading arrangement previously adopted June 8, 2023 providing for the sale from time to time of an aggregate of up to 58,000 shares of our common stock to adjust scheduled sales dates as a result of her planned departure from the Company.

The trading arrangement is intended to satisfy the affirmative defense in Rule 10b5-1(c).

The duration of the trading arrangement is until September 8, 2024, or earlier if all transactions under the trading arrangement are completed.

On December 14, 2023, Jayshree Ullal, our Chairperson and Chief Executive Officer, adopted a Rule 10b5-1 trading arrangement providing for the sale from time to time of an aggregate of up to 538,270 shares of our common stock.

The trading arrangement is intended to satisfy the affirmative defense in Rule 10b5-1(c).

The duration of the trading arrangement is until March 14, 2025, or earlier if all transactions under the trading arrangement are completed.

On December 14, 2023, Anshul Sadana, our Chief Operating Officer, adopted a Rule 10b5-1 trading arrangement providing for the sale from time to time of an aggregate of up to 126,861 shares of our common stock.

The trading arrangement is intended to satisfy the affirmative defense in Rule 10b5-1(c).

The duration of the trading arrangement is until March 13, 2025, or earlier if all transactions under the trading arrangement are completed.

No other officers or directors, as defined in Rule 16a-1(f), adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” as defined in Regulation S-K Item 408, during the last fiscal quarter.

In February 2023, we extended the lease agreement of our corporate headquarters to 2026 and reduced the leased space to approximately 180,000 square feet.

A copy of this amendments is filed as an Exhibit to this report.

Information required by this Item is incorporated herein by reference to our definitive proxy statement with respect to our [removed: 2023] [added: 2024] Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.

Information required by this Item is incorporated herein by reference to our definitive proxy statement with respect to our [removed: 2023] [added: 2024] Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.

Information required by this Item is incorporated herein by reference to our definitive proxy statement with respect to our [removed: 2023] [added: 2024] Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.

Information required by this Item is incorporated herein by reference to our definitive proxy statement with respect to our [removed: 2023] [added: 2024] Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.

Information required by this Item is incorporated herein by reference to our definitive proxy statement with respect to our [removed: 2023] [added: 2024] Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.

| 3.2 | | | | | | [Amended and Restated Bylaws of Arista Networks, Inc. dated [removed: October 20, 2022](https://www.sec.gov/Archives/edgar/data/1596532/000159653222000282/exhibit31amendedandrestate.htm)] [added: December 18, 2023](https://www.sec.gov/Archives/edgar/data/1596532/000159653223000349/bylaws_revisedxproxyacce.htm)] | | | | | | 8-K | | | | | | 001-36468 | | | | | | 3.1 | | | | | | [removed: 10/25/2022] [added: 12/20/2023] | | | | | | | | |

| 4.2 | | | | | | [Description of Registrant’s securities registered under Section 12 of the Exchange [removed: Act](https://www.sec.gov/Archives/edgar/data/1596532/000159653223000016/ex42descriptionofcapitalst.htm)] [added: Act](https://www.sec.gov/Archives/edgar/data/1596532/000159653224000043/ex42descriptionofcapitalst.htm)] | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ü | | |

| 21.1 | | | | | | [List of Subsidiaries of the [removed: Registrant](https://www.sec.gov/Archives/edgar/data/1596532/000159653223000016/ex211listofsubsidiariesq42.htm).] [added: Registrant](https://www.sec.gov/Archives/edgar/data/1596532/000159653224000043/ex211listofsubsidiariesq42.htm).] | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ü | | |

| 23.1 | | | | | | [Consent of Independent Registered Public Accounting [removed: Firm.](https://www.sec.gov/Archives/edgar/data/1596532/000159653223000016/ex231independentauditorcon.htm)] [added: Firm.](https://www.sec.gov/Archives/edgar/data/1596532/000159653224000043/ex231independentauditorcon.htm)] | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ü | | |

| 31.1 | | | | | | [Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of [removed: 2002.](https://www.sec.gov/Archives/edgar/data/1596532/000159653223000016/ex311ceocertificationq42022.htm)] [added: 2002.](https://www.sec.gov/Archives/edgar/data/1596532/000159653224000043/ex311ceocertificationq42023.htm)] | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ü | | |

| 31.2 | | | | | | [Certification of the Chief Financial Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of [removed: 2002](https://www.sec.gov/Archives/edgar/data/1596532/000159653223000016/ex312cfocertificationq42022.htm).] [added: 2002](https://www.sec.gov/Archives/edgar/data/1596532/000159653224000043/ex312cfocertificationq42023.htm).] | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ü | | |

| 32.1* | | | | | | [Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of [removed: 2002](https://www.sec.gov/Archives/edgar/data/1596532/000159653223000016/ex321ceoandcfo906certifica.htm).] [added: 2002](https://www.sec.gov/Archives/edgar/data/1596532/000159653224000043/ex321ceoandcfo906certifica.htm).] | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ü | | |

| 10.27 | | | | | | [Letter Agreement by and between the Company and Chantelle Breithaupt, dated October 15, 2023](https://www.sec.gov/Archives/edgar/data/1596532/000159653223000324/ex101.htm) | | | | | | 8-K | | | | | | 001-36468 | | | | | | 10.1 | | | | | | 12/1/2023 | | | | | | | | |

| 10.28 | | | | | | [Form of Severance Agreement by and between the Company and Chantelle Breithaupt](https://www.sec.gov/Archives/edgar/data/1596532/000159653224000043/cfoseveranceagreement_ch.htm) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ü | | |

| 24.1 | | | | | | [Power of Attorney](#ic034a470397a417699a027ca8e2873b3_175) (contained on signature page hereto) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ü | | |

| 97.1 | | | | | | [Compensation Recovery Policy](https://www.sec.gov/Archives/edgar/data/1596532/000159653224000043/final_aristaxclawbackpol.htm) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ü | | |

| Dated: | | | February [removed: 13, 2023] [added: 12, 2024] | | | By: | | | /s/ JAYSHREE ULLAL | | |

| | | | | | | | | | President, Chief Executive Officer and [removed: Director] [added: Chairperson of the Board] | | |

| /s/ JAYSHREE ULLAL | | | | | | President, Chief Executive Officer and [removed: Director] [added: Chairperson of the Board] (Principal Executive Officer) | | | | | | February [removed: 13, 2023] [added: 12, 2024] | | |

| /s/ ITA BRENNAN | | | | | | Chief Financial Officer (Principal Accounting and Financial Officer) | | | | | | February [removed: 13, 2023] [added: 12, 2024] | | |

| /s/ KELLY BATTLES | | | | | | Director | | | | | | February [removed: 13, 2023] [added: 12, 2024] | | |

| /s/ LEWIS CHEW | | | | | | Director | | | | | | February [removed: 13, 2023] [added: 12, 2024] | | |

| /s/ CHARLES GIANCARLO | | | | | | Director | | | | | | February [removed: 13, 2023] [added: 12, 2024] | | |

| /s/ DAN SCHEINMAN | | | | | | Director | | | | | | February [removed: 13, 2023] [added: 12, 2024] | | |

| /s/ MARK TEMPLETON | | | | | | Director | | | | | | February [removed: 13, 2023] [added: 12, 2024] | | |

| /s/ YVONNE WASSENAAR | | | | | | Director | | | | | | February [removed: 13, 2023] [added: 12, 2024] | | |

| | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | |

| /s/ KENNETH DUDA | | | | | | Chief Technology Officer, Senior Vice President, Director | | | | | | February 12, 2024 | | |

| Kenneth Duda | | | | | | | | | | | | | | |

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| | | | | | | | | | | | | | | |

| /s/ ANDY BECHTOLSHEIM | | | | | | Founder, Chief Development Officer and Chairman of the Board of Directors | | | | | | February 13, 2023 | | |

| Andy Bechtolsheim | | | | | | | | | | | | | | |

| /s/ NIKOS THEODOSOPOULOS | | | | | | Director | | | | | | February 13, 2023 | | |

| Nikos Theodosopoulos | | | | | | | | | | | | | | |