Item 1. Financial Statements (Unaudited)

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Item 1. Financial Statements (Unaudited)

ARISTA NETWORKS, INC.

Condensed Consolidated Balance Sheets

(Unaudited, in millions, except par value)


	June 30, 2025		December 31, 2024
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	2,225.5	$	2,762.4
Marketable securities	6,618.9		5,541.1
Accounts receivable, net	1,623.6		1,140.5
Inventories	2,059.1		1,834.6
Prepaid expenses and other current assets	976.4		632.3
Total current assets	13,503.5		11,910.9
Property and equipment, net	152.3		98.8

Goodwill	416.5		268.5


Deferred tax assets	1,802.5		1,440.4
Other assets	659.4		325.3
TOTAL ASSETS	$	16,534.2	$	14,043.9
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	543.9	$	381.1
Accrued liabilities	380.7		435.3

Deferred revenue	2,787.6		1,727.3


Other current liabilities	339.2		188.5
Total current liabilities	4,051.4		2,732.2


Deferred revenue, non-current	1,274.1		1,064.1

Other long-term liabilities	307.1		252.8
TOTAL LIABILITIES	5,632.6		4,049.1
Commitments and Contingencies (Note 5)
STOCKHOLDERS’ EQUITY:
Preferred stock, $0.0001 par value—100 shares authorized and no shares issued and outstanding as of June 30, 2025 and December 31, 2024	—		—
Common stock, $0.0001 par value—4,000 shares authorized as of June 30, 2025 and December 31, 2024; 1,256.8 and 1,261.3 shares issued and outstanding as of June 30, 2025 and December 31, 2024	0.1		0.1
Additional paid-in capital	2,635.6		2,465.4
Retained earnings	8,262.1		7,542.5
Accumulated other comprehensive income (loss)	3.8		(13.2)
TOTAL STOCKHOLDERS’ EQUITY	10,901.6		9,994.8
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	16,534.2	$	14,043.9

The accompanying notes are an integral part of these condensed consolidated financial statements (unaudited).

ARISTA NETWORKS, INC.

Condensed Consolidated Income Statements

(Unaudited, in millions, except per share amounts)


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Revenue:
Product	$	1,877.0	$	1,423.3	$	3,569.5	$	2,752.1
Service	327.8		267.1		640.1		509.7
Total revenue	2,204.8		1,690.4		4,209.6		3,261.8
Cost of revenue:
Product	707.3		540.4		1,380.0		1,062.1
Service	58.9		52.8		114.9		101.1
Total cost of revenue	766.2		593.2		1,494.9		1,163.2
Gross profit	1,438.6		1,097.2		2,714.7		2,098.6
Operating expenses:
Research and development	296.5		267.5		562.9		475.9
Sales and marketing	126.5		104.4		243.1		209.5
General and administrative	29.4		25.7		63.7		53.5

Total operating expenses	452.4		397.6		869.7		738.9
Income from operations	986.2		699.6		1,845.0		1,359.7
Other income (expense), net	94.0		70.8		190.2		133.5
Income before income taxes	1,080.2		770.4		2,035.2		1,493.2
Provision for income taxes	191.4		105.0		332.6		190.1
Net income	$	888.8	$	665.4	$	1,702.6	$	1,303.1
Net income per share (1):
Basic	$	0.71	$	0.53	$	1.35	$	1.04
Diluted	$	0.70	$	0.52	$	1.34	$	1.02
Weighted-average shares used in computing net income per share (1):
Basic	1,256.3		1,254.8		1,258.2		1,253.5
Diluted	1,271.2		1,279.7		1,275.2		1,279.6

(1) Prior period results have been adjusted to reflect the four-for-one stock split effected in December 2024. See Note 1, Organization and Summary of Accounting Policies, for details.

The accompanying notes are an integral part of these condensed consolidated financial statements (unaudited).

ARISTA NETWORKS, INC.

Condensed Consolidated Statements of Comprehensive Income

(Unaudited, in millions)


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Net income	$	888.8	$	665.4	$	1,702.6	$	1,303.1
Other comprehensive income (loss), net of tax:
Change in foreign currency translation	2.4		(1.0)		3.1		(2.4)
Available-for-sale investments:
Change in net unrealized gains (losses) on available-for-sale securities	3.3		(2.1)		13.9		(9.3)

Other comprehensive income (loss)	5.7		(3.1)		17.0		(11.7)
Comprehensive income	$	894.5	$	662.3	$	1,719.6	$	1,291.4

The accompanying notes are an integral part of these condensed consolidated financial statements (unaudited).

ARISTA NETWORKS, INC.

Condensed Consolidated Statements of Stockholders**’** Equity

(Unaudited, in millions)


	Three Months Ended June 30, 2025													Six Months Ended June 30, 2025
	Common Stock			Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity		Common Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity
	Shares	Amount				Shares			Amount
Balance at beginning of period	1,256.6	$	0.1	$	2,551.7		$	7,569.2		$	(1.9)	$	10,119.1	1,261.3	$	0.1	$	2,465.4	$	7,542.5	$	(13.2)	$	9,994.8

Net income	—	—		—			888.8			—		888.8		—	—		—		1,702.6		—		1,702.6
Other comprehensive income, net of tax	—	—		—			—			5.7		5.7		—	—		—		—		17.0		17.0
Stock-based compensation	—	—		85.2			—			—		85.2		—	—		178.2		—		—		178.2
Issuance of common stock in connection with employee equity incentive plans	2.6	—		3.2			—			—		3.2		6.9	—		31.3		—		—		31.3
Repurchase of common stock	(2.4)	—		—			(195.9)			—		(195.9)		(11.1)	—		—		(983.0)		—		(983.0)
Tax withholding paid for net share settlement of equity awards	—	—		(4.5)			—			—		(4.5)		(0.3)	—		(39.3)		—		—		(39.3)

Balance at end of period	1,256.8	$	0.1	$	2,635.6		$	8,262.1		$	3.8	$	10,901.6	1,256.8	$	0.1	$	2,635.6	$	8,262.1	$	3.8	$	10,901.6


	Three Months Ended June 30, 2024											Six Months Ended June 30, 2024
	Common Stock			Additional Paid-In Capital(1)		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity		Common Stock			Additional Paid-In Capital(1)		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
	Shares(1)	Amount(1)		Shares(1)		Amount(1)
Balance at beginning of period	1,254.4	$	0.1	$	2,185.1	$	5,689.0	$	(11.9)	$	7,862.3	1,249.0	$	0.1	$	2,108.3	$	5,114.0	$	(3.3)	$	7,219.1

Net income	—	—		—		665.4		—		665.4		—	—		—		1,303.1		—		1,303.1
Other comprehensive loss, net of tax	—	—		—		—		(3.1)		(3.1)		—	—		—		—		(11.7)		(11.7)
Stock-based compensation	—	—		79.3		—		—		79.3		—	—		156.5		—		—		156.5
Issuance of common stock in connection with employee equity incentive plans	4.5	—		9.4		—		—		9.4		11.2	—		34.5		—		—		34.5
Repurchase of common stock	(2.5)	—		—		(172.0)		—		(172.0)		(3.4)	—		—		(234.7)		—		(234.7)
Tax withholding paid for net share settlement of equity awards	(0.1)	—		(10.5)		—		—		(10.5)		(0.5)	—		(36.0)		—		—		(36.0)

Balance at end of period	1,256.3	$	0.1	$	2,263.3	$	6,182.4	$	(15.0)	$	8,430.8	1,256.3	$	0.1	$	2,263.3	$	6,182.4	$	(15.0)	$	8,430.8

(1) Prior period results have been adjusted to reflect the four-for-one stock split effected in December 2024. See Note 1, Organization and Summary of Accounting Policies, for details.

The accompanying notes are an integral part of these condensed consolidated financial statements (unaudited).

ARISTA NETWORKS, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited, in millions)


	Six Months Ended June 30,
	2025		2024
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	1,702.6	$	1,303.1
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	26.6		31.1
Stock-based compensation	178.2		156.5
Deferred income taxes	(337.9)		(228.5)
Other	(21.0)		(18.5)
Changes in operating assets and liabilities:
Accounts receivable, net	(483.1)		(202.2)
Inventories	(224.5)		91.4
Other assets	(403.2)		(92.6)
Accounts payable	160.0		(136.2)
Deferred revenue	1,141.4		612.6
Income taxes, net	152.4		74.1
Other liabilities	(49.7)		(88.0)
Net cash provided by operating activities	1,841.8		1,502.8
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities of marketable securities	1,651.2		952.6
Proceeds from sale of marketable securities	15.9		36.8
Purchases of marketable securities	(2,705.7)		(1,749.3)
Purchases of property and equipment	(52.4)		(12.6)
Cash paid for business combinations, net of cash acquired	(300.0)		—
Other	—		(1.0)
Net cash used in investing activities	(1,391.0)		(773.5)
CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from issuance of common stock under equity plans	31.3		34.5
Tax withholding paid on behalf of employees for net share settlement	(39.3)		(36.0)
Repurchases of common stock	(983.0)		(234.7)
Net cash used in financing activities	(991.0)		(236.2)
Effect of exchange rate changes	3.3		(2.7)
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	(536.9)		490.4
CASH, CASH EQUIVALENTS AND RESTRICTED CASH —Beginning of period	2,763.8		1,939.5
CASH, CASH EQUIVALENTS AND RESTRICTED CASH —End of period	$	2,226.9	$	2,429.9

The accompanying notes are an integral part of these condensed consolidated financial statements (unaudited).

ARISTA NETWORKS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Organization and Summary of Significant Accounting Policies

Organization

Arista Networks, Inc. (together with our subsidiaries, “we,” “our,” "Arista," "Company" or “us”) is an industry leader in data-driven, client-to-cloud networking for large AI, data center, campus and routing environments. Our cloud networking solutions consist of our Extensible Operating System ("EOS®"), a set of network applications and our Ethernet switching and routing platforms. We are incorporated in the state of Delaware. Our corporate headquarters are located in Santa Clara, California, and we have wholly-owned subsidiaries throughout the world, including North America, Europe, Asia and Australia.

Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements include the accounts of Arista Networks, Inc. and its wholly-owned subsidiaries and have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) and the requirements of the U.S. Securities and Exchange Commission (the “SEC”) for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by GAAP can be condensed or omitted. In management’s opinion, the unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and include all adjustments, which include only normal recurring adjustments, necessary for the fair presentation of our financial information. The results for the three and six months ended June 30, 2025, are not necessarily indicative of the results expected for the full fiscal year. The condensed consolidated balance sheet as of December 31, 2024 has been derived from the audited consolidated financial statements at that date but does not include all of the information and notes required by GAAP for complete financial statements. All significant inter-company accounts and transactions have been eliminated. Certain reclassifications of prior period amounts were made in the current year to conform to the current period presentation.

On November 7, 2024, the Company announced a four-for-one forward stock split ("Stock Split") of the Company’s common stock that was effected through the filing of an amendment to the Company's Amended and Restated Certificate of Incorporation ("Amendment") on December 3, 2024. The Stock Split proportionately increased the authorized shares of common stock, and all share and per share amounts presented herein have been retroactively adjusted to reflect the impact of the Stock Split.

Our condensed consolidated financial statements and related financial information in this Quarterly Report on Form 10-Q should be read in conjunction with the audited consolidated financial statements and related footnotes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on February 18, 2025.

Use of Estimates

The preparation of the accompanying consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the amounts reported and disclosed in the consolidated financial statements and accompanying notes. Those estimates and assumptions include, but are not limited to, valuation of inventory and contract manufacturer/supplier liabilities, accounting for income taxes, including the recognition of deferred tax assets and liabilities, valuation allowance on deferred tax assets and reserves for uncertain tax positions, revenue recognition and deferred revenue, valuation of goodwill and acquisition-related intangible assets, estimate of useful lives of long-lived assets including intangible assets, and the recognition and measurement of contingent liabilities. We evaluate our estimates and assumptions based on historical experience and other factors and adjust these estimates and assumptions when facts and circumstances dictate. Actual results could differ materially from these estimates.

Recent Accounting Pronouncements Not Yet Effective

In December 2023, the Financial Accounting Standards Board ("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. The amendments in this ASU are required to be adopted for fiscal years beginning after December 15, 2024. 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 will adopt the standard in our 2025 annual period using a prospective transition method.

In November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses (Subtopic 220-40). The ASU requires the disaggregated disclosure of specific expense categories, including purchases of inventory,

employee compensation, depreciation, and amortization, within relevant income statement captions. This ASU also requires disclosure of the total amount of selling expenses along with the definition of selling expenses. The ASU is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Adoption of this ASU can either be applied prospectively to consolidated financial statements issued for reporting periods after the effective date of this ASU or retrospectively to any or all prior periods presented in the consolidated financial statements. Early adoption is also permitted. This ASU will likely result in the required additional disclosures being included in our consolidated financial statements, once adopted. We are currently evaluating the impact of future adoption on our financial statement disclosures.

2. Fair Value Measurements

Assets measured at fair values on a recurring basis

We measure and report our cash equivalents, restricted cash, and available-for-sale marketable securities at fair value on a recurring basis. We use a fair value hierarchy to measure fair value, maximizing the use of observable inputs and minimizing the use of unobservable inputs. The two-tiers of the fair value hierarchy are as follows: Level I—Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date and Level II—Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities. We don't have any level III financial assets measured at fair value on a recurring basis. The following tables summarize the fair value of these financial assets by significant investment category and their levels within the fair value hierarchy (in millions):


	June 30, 2025								December 31, 2024
	Level I		Level II		Level III		Total		Level I		Level II		Level III		Total
Financial Assets:
Cash Equivalents:
Money market funds	$	900.5	$	—	$	—	$	900.5	$	1,707.5	$	—	$	—	$	1,707.5
Commercial paper	—		44.4		—		44.4		—		—		—		—


U.S. government notes	48.9		—		—		48.9		31.4		—		—		31.4
Agency securities	—		44.8		—		44.8		—		3.0		—		3.0
	949.4		89.2		—		1,038.6		1,738.9		3.0		—		1,741.9
Marketable Securities:
Commercial paper	—		32.6		—		32.6		—		48.8		—		48.8

U.S. government notes	2,235.4		—		—		2,235.4		1,921.5		—		—		1,921.5
Corporate bonds	—		3,219.5		—		3,219.5		—		2,593.6		—		2,593.6
Municipal bonds	—		1.5		—		1.5		—		—		—		—
Agency securities	—		1,129.9		—		1,129.9		—		977.2		—		977.2

	2,235.4		4,383.5		—		6,618.9		1,921.5		3,619.6		—		5,541.1
Other Assets:
Money market funds - restricted	1.4		—		—		1.4		1.4		—		—		1.4
Total Financial Assets	$	3,186.2	$	4,472.7	$	—	$	7,658.9	$	3,661.8	$	3,622.6	$	—	$	7,284.4

During the three and six months ended June 30, 2025, the Company did not make any transfers between the levels of the fair value hierarchy.

Debt securities

The following table summarizes the amortized cost, unrealized gains and losses, and fair value of our debt securities measured at fair value on a recurring basis (in millions):


	June 30, 2025								December 31, 2024
	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value		Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
Commercial paper	$	77.0	$	—	$	—	$	77.0	$	48.8	$	—	$	—	$	48.8
U.S. government	2,280.4		5.3		(1.4)		2,284.3		1,954.8		2.7		(4.6)		1,952.9
Corporate bonds	3,210.9		10.1		(1.5)		3,219.5		2,595.7		4.4		(6.5)		2,593.6
Municipal bonds	1.5		—		—		1.5		—		—		—		—
Agency securities	1,173.8		1.6		(0.7)		1,174.7		981.0		1.6		(2.4)		980.2

Total	$	6,743.6	$	17.0	$	(3.6)	$	6,757.0	$	5,580.3	$	8.7	$	(13.5)	$	5,575.5

For debt securities in unrealized loss positions, it is not likely that we will be required to sell such securities before recovery of their amortized cost basis nor do we have the intent to sell such securities before maturity. We invest in debt securities that have maximum maturities of three years and are generally deemed to be low risk based on their credit ratings from the major rating agencies. The longer the duration of these marketable securities, the more susceptible they are to changes in market interest rates and bond yields. Given the short-term and conservative nature of our portfolio, our debt securities are generally not subject to credit risk; therefore, we did not recognize any credit losses or non-credit-related impairments related to such securities for the three and six months ended June 30, 2025. All unrealized losses were recognized in other comprehensive income (loss). Realized gains or losses were immaterial for the three and six months ended June 30, 2025.

The following table is an analysis of our debt securities in unrealized loss positions (in millions):


	June 30, 2025
	Unrealized Losses within 12 months				Unrealized Losses 12 months or greater				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
U.S. government notes	$	925.8	$	(1.4)	$	—	$	—	$	925.8	$	(1.4)
Corporate bonds	732.6		(1.5)		—		—		732.6		(1.5)
Municipal bonds	1.5		—		—		—		1.5		—
Agency securities	614.5		(0.7)		—		—		614.5		(0.7)
Total	$	2,274.4	$	(3.6)	$	—	$	—	$	2,274.4	$	(3.6)

As of June 30, 2025, we had no marketable debt securities with contractual maturities that exceeded three years. The fair values of marketable debt securities, by remaining contractual maturities, are as follows (in millions):


	June 30, 2025
	Fair Value
Due in 1 year or less	$	2,617.0
Due in 1 to 3 years	4,001.9
Total debt securities	$	6,618.9

The weighted-average remaining duration of our marketable debt securities is approximately 1.3 years as of June 30, 2025. As we view these marketable debt securities as available to support current operations, we classify marketable debt securities with maturities beyond 12 months as current assets under the caption "Marketable securities" on the condensed consolidated balance sheets.

3. Financial Statements Details

Inventories

Inventories consist of the following (in millions):


	June 30, 2025		December 31, 2024
Raw materials	$	601.2	$	565.4
Finished goods(1)	1,457.9		1,269.2
Total inventories	$	2,059.1	$	1,834.6

(1) The balance includes evaluation inventory totaling $335.0 million and $422.1 million as of June 30, 2025 and December 31, 2024, respectively.

Property and Equipment, net

Property and equipment, net consists of the following (in millions):


	June 30, 2025		December 31, 2024
Land	$	47.3	$	47.2
Equipment and machinery	174.1		160.7
Computer hardware and software	65.4		63.9
Leasehold improvements	37.1		34.7
Furniture and fixtures	3.7		3.5
Construction-in-process	58.1		8.2
Property and equipment, gross	385.7		318.2
Less: accumulated depreciation	(233.4)		(219.4)
Property and equipment, net	$	152.3	$	98.8

Depreciation expense was $7.7 million and $8.5 million for the three months ended June 30, 2025 and 2024, respectively, and $15.7 million and $17.1 million for the six months ended June 30, 2025 and 2024, respectively.

Contract Liabilities, Deferred Revenue and Other Performance Obligations

Contract Liabilities

A contract liability is recognized when we have received customer payments in advance of our satisfaction of a performance obligation under a cancellable contract. The following table summarizes the activity related to our contract liabilities (in millions):


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Contract liabilities, beginning balance	$	160.5	$	139.6	$	160.8	$	133.2
Less: Revenue recognized from beginning balance	(14.1)		(12.4)		(31.1)		(29.2)

Add: Contract liabilities recognized, net	41.7		16.9		58.4		40.1
Contract liabilities, ending balance	$	188.1	$	144.1	$	188.1	$	144.1

As of June 30, 2025 and December 31, 2024, $83.6 million and $65.7 million of our contract liabilities, respectively, were included in "Other current liabilities" with the remaining balances included in "Other long-term liabilities" on the condensed consolidated balance sheets.

Deferred Revenue

Deferred revenue is comprised mainly of unearned revenue related to multi-year post-contract support ("PCS") contracts, services and product deferrals related to contracts with acceptance clauses. The following table summarizes the activity related to our deferred revenue (in millions):


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Deferred revenue, beginning balance	$	3,088.8	$	1,663.2	$	2,791.4	$	1,506.2
Less: Revenue recognized from beginning balance	(337.4)		(249.9)		(735.8)		(467.5)
Add: Deferral of revenue in current period, excluding amounts recognized during the period	1,310.3		705.5		2,006.1		1,080.1
Deferred revenue, ending balance	$	4,061.7	$	2,118.8	$	4,061.7	$	2,118.8

Other Performance Obligations

Other performance obligations totaling $442.3 million as of June 30, 2025 include unbilled multi-year PCS and service contract amounts of $385.9 million, and $56.4 million of binding contractual agreements with certain customers that are primarily related to future product shipments.

Revenue from Total Remaining Performance Obligations

Total revenue from our contract liabilities, deferred revenue and other performance obligations that is expected to be recognized in future periods amounts to $4.7 billion as of June 30, 2025. Approximately 88% of this future revenue is expected to be recognized over the next two years and the remaining 12% is expected to be recognized during the third to the fifth year.

Other Income (Expense), net

Other income (expense), net consists of the following (in millions):


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Interest income	$	90.4	$	71.4	$	180.6	$	135.3

Other income (expense), net	3.6		(0.6)		9.6		(1.8)
Total	$	94.0	$	70.8	$	190.2	$	133.5

4. Acquisition

On June 30, 2025, we completed the acquisition of the VeloCloud business ("VeloCloud") from Broadcom for total cash consideration of $300.0 million. VeloCloud's secure, AI-optimized cloud WAN portfolio provides seamless connectivity to customer sites of any type, complementing Arista's leading data center and campus wired/wireless portfolio. The preliminary purchase price allocation based on the estimated fair values of the assets acquired and liabilities assumed as of the acquisition date, included $268.4 million of intangible assets, $148.0 million of goodwill and $116.4 million of net tangible liabilities assumed. The change in the carrying value of goodwill for the three months ended June 30, 2025 was solely related to the acquisition, and a portion of the goodwill is deductible for tax purposes.

Acquisition-Related Intangible Assets

Acquisition-related intangible assets, included in other assets, are subject to amortization on a straight-line basis over their estimated useful lives, as we believe this method most closely reflects the pattern in which the economic benefits of the assets will be consumed. Acquisition-related intangible assets, excluding those that are fully amortized, were as follows (in millions, except years):


	June 30, 2025							December 31, 2024
	Weighted-Average Remaining Useful Lives (in years)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Developed technology	4.5	$	241.1	$	(125.0)	$	116.1	$	154.9	$	(119.2)	$	35.7
Customer relationships	6.6	224.3		(33.4)		190.9		54.6		(29.5)		25.1
Trade name	4.9	24.9		(12.1)		12.8		12.4		(11.2)		1.2
Total	5.8	$	490.3	$	(170.5)	$	319.8	$	221.9	$	(159.9)	$	62.0

Future estimated amortization expense related to acquisition-related intangible assets is as follows (in millions):


	Future Amortization Expense
Remainder of 2025	$	31.1
2026	61.2
2027	57.4
2028	54.0
2029 and thereafter	116.1
Total	$	319.8

5. Commitments and Contingencies

Purchase Commitments

We outsource most of our manufacturing and supply chain management operations to third-party contract manufacturers, who procure components and assemble products on our behalf. A significant portion of purchase orders to our contract manufacturers for finished products consist of non-cancellable purchase commitments. In addition, we purchase strategic component inventory from certain suppliers under non-cancellable purchase commitments, including integrated circuits, which are consigned to our contract manufacturers. As of June 30, 2025, we had non-cancellable purchase commitments not recorded on our balance sheet of $3.6 billion, of which $3.1 billion have expected receipt dates within 12 months, and $0.5 billion have expected receipt dates greater than 12 months. These open purchase orders are considered enforceable and legally binding, and while we may have some limited ability to reschedule, and adjust our requirements based on our business needs prior to the delivery of goods or performance of services, this can only occur with the agreement of the related supplier.

We also had deposits to our contract manufacturers to secure our purchase commitments in the amount of $66.8 million and $95.8 million as of June 30, 2025 and December 31, 2024, respectively, which were recorded within prepaid expenses and other current assets, as well as other assets in the condensed consolidated balance sheets.

Property Project

During the year ended December 31, 2021, we purchased land and the improvements thereon in Santa Clara, California to construct a building for office, lab and data center space. The estimated remaining capital expenditures related to this project are expected to be approximately $190.0 million to $215.0 million through the end of fiscal 2026 when we expect construction to be completed.

Guarantees

We have entered into agreements with some of our direct customers and channel partners that contain indemnification provisions relating to potential situations where claims could be alleged that our products infringe the intellectual property rights of a third party. We have, at our option and expense, the ability to repair any infringement, replace product with a non-infringing equivalent-in-function product or refund our customers all or a portion of the value of the product. Other guarantees or indemnification agreements include guarantees of product and service performance and standby letters of credit for leased facilities and corporate credit cards. We have not recorded a liability related to these indemnification and guarantee provisions and our guarantee and indemnification arrangements have not had a significant impact on our consolidated financial statements to date.

Legal Proceedings

WSOU Investments, LLC

On November 25, 2020, WSOU Investments LLC ("WSOU") filed a lawsuit against us in the Western District of Texas asserting that certain of our products infringe three WSOU patents. WSOU's allegations are directed to certain features of our wireless and switching products. WSOU seeks remedies including monetary damages, attorney's fees and costs. On February 4, 2021, we filed an answer denying WSOU's allegations. On November 5, 2021, the case was transferred to the Northern District of California. On March 30, 2022, WSOU dismissed one of the patents with prejudice, removing Arista wireless products from those accused of infringement. On July 1, 2022, the court stayed the case pending the resolution of an inter partes review of one of the patents-in-suit. On May 30, 2023, the US Patent Trial and Appeal Board (“PTAB”) ruled all challenged claims in the inter partes review unpatentable. On March 10, 2025, the Federal Circuit affirmed the PTAB’s decision. The parties subsequently agreed to stay the litigation to allow WSOU to change counsel and that stay was extended pending the result of proceedings in a WSOU case against another company.

We intend to vigorously defend against the claims brought against us by WSOU; however, we cannot be certain that any of WSOU's claims will be resolved in our favor, regardless of the merits of those claims. Any adverse litigation ruling could result in a significant damages award against us and injunctive relief.

With respect to the legal proceedings described above, it is our belief that while a loss is not probable, it may be reasonably possible. Further, at this stage in the litigation, any possible loss or range of loss cannot be estimated; however, the outcome of litigation is inherently uncertain. Therefore, if this legal matter were resolved against us in a reporting period for a material amount, our consolidated financial statements for that reporting period could be materially adversely affected.

Other matters

In the ordinary course of business, we are a party to other claims and legal proceedings including matters relating to commercial, employee relations, business practices and intellectual property.

We record a provision for contingent losses when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. As of June 30, 2025, provisions recorded for contingent losses related to other claims and matters have not been significant. Based on currently-available information, management does not believe that any additional liabilities relating to other unresolved matters are probable or that the amount of any resulting loss is estimable, and believes these other matters are not likely, individually and in the aggregate, to have a material adverse effect on our financial position, results of operations or cash flows; however, litigation is subject to inherent uncertainties and our view of these matters may change in the future. Were an unfavorable outcome to occur, there exists the possibility of a material adverse impact on our financial position, results of operations or cash flows for the period in which the unfavorable outcome occurs, and potentially in future periods.

6. Stockholders’ Equity and Stock-Based Compensation

Stock Repurchase Programs

In May 2025 we completed repurchases under our previous $1.2 billion stock repurchase program (the "Prior Repurchase Program") and our board of directors authorized a new $1.5 billion stock repurchase program (the “New Repurchase Program”, and together with the Prior Repurchase Program, the "Repurchase Programs"). This authorization allows us to repurchase shares of our common stock that will be funded from working capital. Repurchases may be made at management's discretion from time to time on the open market, through privately negotiated transactions, transactions structured through investment banking institutions, block purchases, trading plans under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or a combination of the foregoing. The New Repurchase Program does not obligate us to acquire any of our common stock and may be suspended or discontinued by the Company at any time without prior notice. During the three months ended June 30, 2025, we repurchased a total of $133.9 million of our common stock under our Prior Repurchase Program and $62.0 million of our common stock under our New Repurchase Program. During the six months ended June 30, 2025, we repurchased a total of $921.0 million of our common stock under our Prior Repurchase Program and $62.0 million of our common stock under our New Repurchase Program. As of June 30, 2025, the remaining authorized amount for repurchases under the New Repurchase Program was $1.4 billion.

A summary of the stock repurchase activity under the Repurchase Programs for the three and six months ended June 30, 2025 is as follows (in millions, except per share amounts):


	Three Months Ended		Six Months Ended
	June 30, 2025		June 30, 2025
Aggregate purchase price	$	195.9	$	983.0
Shares repurchased	2.4		11.1
Average price paid per share	$	80.7	$	88.7

The aggregate purchase price of repurchased shares of our common stock is recorded as a reduction to retained earnings in our unaudited condensed consolidated statements of stockholders' equity. All shares repurchased have been retired.

Equity Award Plan Activities

2014 Employee Stock Purchase Plan

In April 2014, our board of directors and stockholders approved the 2014 Employee Stock Purchase Plan (“ESPP”). The ESPP became effective on the first day that our common stock was publicly traded. The number of shares reserved for issuance under the ESPP increases automatically on January 1 of each year by the number of shares equal to 1% of our shares outstanding on the immediately preceding December 31, but not to exceed 40 million shares, unless our board of directors, in its discretion, determines to make a smaller increase. As of June 30, 2025, there remained approximately 104.5 million shares available for issuance under the ESPP.

Under our ESPP, eligible employees are permitted to acquire shares of our common stock at 85% of the lower of the fair market value of our common stock on the first trading day of each offering period or on the exercise date. Each offering period lasts approximately two years starting on the first trading date after February 15 and August 15 of each year, and includes purchase dates every six months on or after February 15 and August 15 of each year. Participants may purchase shares of common stock through payroll deductions up to 15% of their eligible compensation, subject to Internal Revenue Service mandated purchase limits.

During the six months ended June 30, 2025, we issued 0.4 million shares at a weighted-average purchase price of $62.31 per share under the ESPP.

2014 Equity Incentive Plan

On April 16, 2024, our board of directors adopted an amended and restated Arista Networks, Inc. 2014 Equity Plan ("Restated Plan"), effective April 17, 2024 ("Effective Date") subject to the approval of our stockholders, which was approved at the 2024 Annual Meeting of Stockholders on June 7, 2024.

The Restated Plan provides for the grant of equity-based awards, including stock options, restricted stock units, restricted stock, stock appreciation rights, and performance awards. The share pool available under the prior version of the Company's 2014 Equity Incentive Plan ("Prior Plan") was extinguished, and the Restated Plan provides for a new share pool not to exceed (i) 52.8 million shares of our Common Stock (“Shares”), plus (ii) any Shares subject to awards under the Prior Plan that, on or after the Effective Date, expired or otherwise terminated without having been exercised in full, or that were forfeited to or repurchased by us, including net settlement of Shares subject to restricted stock units, with the maximum number of Shares to be added to the Restated Plan as a result of clause (ii) equal to 40.2 million Shares. The Restated Plan’s terms are substantially similar to the Prior Plan’s terms, including with respect to treatment of equity awards in the event of a “change in control” as defined under the Restated Plan, but with certain modifications, including the elimination of the automatic “evergreen” share reserve increase provided for under the Prior Plan. As of June 30, 2025, there remained approximately 47.7 million shares available for grant under the Restated Plan.

Stock Option Activities

The following table summarizes the option activity under our stock plans and related information (in millions, except years and per share amounts):


	Number of Shares Underlying Outstanding Options	Weighted- Average Exercise Price per Share		Weighted- Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value
Balance—December 31, 2024	3.1	$	6.71	1.5	$	320.9
Options granted	—	—
Options exercised	(1.8)	3.99
Options canceled	(0.1)	14.49
Balance—June 30, 2025	1.2	$	10.56	2.5	$	109.4
Vested and exercisable—June 30, 2025	1.1	$	10.37	2.5	$	105.2

Restricted Stock Unit (RSU) Activities

A summary of the RSU activity is presented below (in millions, except years and per share amounts):


	Number of Shares	Weighted- Average Grant Date Fair Value Per Share
Unvested balance—December 31, 2024	28.6	$	45.46
RSUs and PRSUs granted	6.7	91.70
RSUs and PRSUs vested	(4.7)	35.13
RSUs and PRSUs forfeited/canceled	(1.5)	46.87
Unvested balance—June 30, 2025	29.1	$	58.20

Stock-Based Compensation Expense

The following table summarizes the stock-based compensation expense related to our equity awards (in millions):


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Cost of revenue	$	5.8	$	4.0	$	11.3	$	7.4
Research and development	53.2		50.7		110.2		94.5
Sales and marketing	18.8		16.8		38.7		35.7
General and administrative	7.4		7.8		18.0		18.9
Total stock-based compensation	$	85.2	$	79.3	$	178.2	$	156.5

As of June 30, 2025, there were $1.4 billion of unamortized compensation costs related to all unvested awards. The unamortized compensation costs are expected to be recognized over a weighted-average period of approximately 4.6 years.

7. Net Income Per Share

Basic net income per share is computed using the weighted-average number of shares of common stock outstanding during the period. Diluted net income per share is computed using the weighted-average number of shares of common stock outstanding during the period, including potential common shares assuming the dilutive effect of outstanding stock options, restricted stock units, and the employee stock purchase plan using the treasury stock method. Potential common shares whose effect would have been antidilutive are excluded from the computation of diluted net income per share. The following table sets forth the computation of our basic and diluted net income per share (in millions, except per share amounts):


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Numerator:
Net income	$	888.8	$	665.4	$	1,702.6	$	1,303.1
Denominator:
Basic weighted-average shares outstanding	1,256.3		1,254.8		1,258.2		1,253.5
Add weighted-average effect of dilutive securities:
Employee equity awards	14.9		24.9		17.0		26.1
Diluted weighted-average shares outstanding	1,271.2		1,279.7		1,275.2		1,279.6
Net income per share:
Basic	$	0.71	$	0.53	$	1.35	$	1.04
Diluted	$	0.70	$	0.52	$	1.34	$	1.02

The following weighted-average outstanding shares of common stock equivalents were excluded from the computation of diluted net income per share for the periods presented because their effect would have been anti-dilutive for the periods presented (in millions):


	Three Months Ended June 30,		Six Months Ended June 30,
	2025	2024	2025	2024


Employee equity awards	3.2	0.1	2.0	0.4

8. Income Taxes (in millions, except percentages)


	Three Months Ended June 30,						Six Months Ended June 30,
	2025			2024			2025			2024
Income before income taxes	$	1,080.2		$	770.4		$	2,035.2		$	1,493.2
Provision for income taxes	191.4			105.0			$	332.6		190.1
Effective tax rate	17.7		%	13.6		%	16.3		%	12.7		%

The increase in the effective tax rates in the three and six months ended June 30, 2025, as compared to the same periods in 2024, was primarily due to a decrease in tax benefits attributable to equity-based compensation.

On July 4, 2025, the One Big Beautiful Bill Act ("OBBB Act") was signed into law in the U.S.. This legislation contains a broad range of tax reform provisions affecting businesses. We are evaluating the full effects of the legislation on our estimated annual effective tax rate and cash tax position. As the legislation was signed into law after the close of our second quarter, such impacts are not included in our operating results for the six months ended June 30, 2025.

9. Segment and Geographical Information

We operate as one reportable segment. The accounting policies of the reportable segment are the same as those described in the summary of significant accounting policies. Our chief operating decision maker ("CODM") is our President, Chief Executive Officer and Chairperson of the Board, who reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance. The financial information reviewed by the CODM reflects quarterly and year-to-date operating results, with a primary focus on revenue, gross margin, operating margin and net income as reported on the consolidated statements of income. Consolidated financial information is used by the CODM to evaluate performance and make decisions regarding resource allocation and other strategic initiatives. This consolidated financial information is also what is used to establish and approve operating budgets and forecasts. The measure of segment assets is reported on the consolidated balance sheets in total. There was no change for each of the periods presented in the measurement methods used to determine reported segment profit and loss.

The CODM reviews the following significant segment expenses, which are presented separately on the Company’s consolidated statements of income: cost of product, cost of services, selling and marketing expenses, general and administrative expenses, and research and development expenses. Other segment items that are included in the calculation of the Company’s net income include other income (expense), net, which is further described in Note 3. Financial Statements Details and income taxes, which is further described in Note 8. Income Taxes. Other segment disclosures such as depreciation and amortization and stock-based compensation are disclosed in the Consolidated Statements of Cash Flows.

The following table represents revenue based on customers’ shipping addresses (in millions):


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Americas(1)	$	1,724.1	$	1,374.2	$	3,322.6	$	2,629.6
Europe, Middle East and Africa	281.6		178.8		456.2		320.4
Asia-Pacific	199.1		137.4		430.8		311.8
Total revenue	$	2,204.8	$	1,690.4	$	4,209.6	$	3,261.8

(1) Includes $1,712.1 million and $1,362.7 million revenue generated from the U.S. for the three months ended June 30, 2025 and June 30, 2024, respectively, and $3,293.6 million and $2,595.5 million for the six months ended June 30, 2025 and June 30, 2024, respectively.

Long-lived assets, net, excluding intercompany receivables, investments in subsidiaries, privately-held equity investments and deferred tax assets, by location are summarized as follows (in millions):


	June 30, 2025		December 31, 2024
United States	$	135.2	$	83.5
International	17.1		15.3
Total	$	152.3	$	98.8

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