Arista Networks, Inc.

Welcome to the first quarter 2022 Arista Network's financial results earnings conference call. During the call, all participants will be in a listen-only mode. After the presentation, we will conduct a question and answer session. Instructions will be provided at that time. If at any time during the conference you need to reach an operator, please press the star followed by zero. As a reminder, this conference is being recorded and will be available for replay from the investor relations section at the Arista website following this call. Ms. Liz Stein, Arista's Director of Investor Relations, you may begin. Thank you, Operator.

Good afternoon, everyone, and thank you for joining us. With me on today's call are Jay Sriwal, Arista Network's President and Chief Executive Officer, and Ida Brennan, Arista's Chief Financial Officer. This afternoon, Arista Network issued a press release announcing the results for its fiscal first quarter ending March 31, 2022. If you would like a copy of the release, you can access it online at our website. During the course of this conference call, ERISA Networks Management will make forward-looking statements, including those relating to our financial outlook for the second quarter of the 2022 fiscal year, longer-term financial outlook for 2022 and beyond, our total addressable market and strategy for addressing these market opportunities, the potential impact of COVID-19, supply chain constraints, component costs, manufacturing capacity, inventory purchases, and inflationary pressures on our business, product innovation, and the benefits of acquisitions, which are subject to the risks and uncertainties that we discuss in detail in our documentations filed with the SEC, specifically in our most recent Form 10-Q and Form 10-K, and which could cause actual results to differ materially from those anticipated by these statements. These forward-looking statements apply as of today, and you should not rely on them as representing our views in the future. We undertake no obligation to update these statements after this call. Also, please note that certain financial measures we use on this call are expressed on a non-GAAP basis and have been adjusted to exclude certain charges. We have provided reconciliations of these non-GAAP financial measures to GAAP financial measures in our earnings press release. With that, I will turn the call over to Jay Shree.

Thank you, Liz. Thank you, everyone, for joining us this afternoon for our first quarter 2022 earnings call. In addition to the pandemic, we are now facing the global uncertainty with the war in Ukraine and increasing inflation trends. On behalf of Arista, we express our deep concern over the tragedies in Ukraine and thank the Arista employees for their thoughtful donations to the Ukraine humanitarian causes matched by the Arista Foundation. Back to Q1 2022. We delivered record revenues of $877.1 million for the quarter, with a non-GAAP earnings per share of 84 cents. Services software support renewals contributed approximately 19.2% of the revenue. Our non-GAAP growth margins of 63.9% was influenced by continuing supply chain constraints and elevated costs. Vendor decommits for certain components increased sharply in March 2022, with no clear relief in sight in the near term. In terms of Q1 2022 verticals, Cloud Titans was our strongest and largest vertical, followed by Enterprise, Cloud specialty providers and financials tied at third place, and service providers at fourth. Our geographical mix included strong performance in the Americas at 76%, with the international contribution at 24%. According to market analysts, in calendar 2021, Arista gained market share in overall data center high performance switching, growing to approximately 19% market share. We are proud to maintain our number one position in 100, 200, and 400 gig switching, and achieve this growth despite all the challenges of the supply chain. Arista has also been a pioneer and leader in client to cloud networking. Our customer relevance is increasing with new logos in tech enterprises, healthcare, education, and retail, as well as the provider sector. Our million dollar logos have doubled in the last three years in all categories. These categories include greater than a million, greater than five million, greater than 10 million, and greater than 25 million customers. What's clear as I personally engage across the worldwide base of CIOs and CXOs is that the planning horizon for networking has really changed. Our visibility and demand has never been stronger. The nature of our discussions with our customers is also most strategic in nature. Let me try to illustrate with a few examples. For example, on AI Spines, we're building upon our cloud heritage to expand scale for AI workloads that are both data and compute intensive, thereby requiring 100, 400, and 800 gig performance in the future with rich EOS software features. In the cognitive campus, threat hunting is now becoming integral to the network instead of being an afterthought, and it's changing the way cybersecurity and virulent threats can be detected and managed holistically. Network security is clearly migrating to secure, zero-trust networking based on AI and AVA sensors. In larger enterprises, Network as a Service, based on Cloud Vision, is enabling our customers to manage their data sets across client to cloud domains with superior unmatched automation and analytics. Our decade-long preferred partnership with Cloud Titans, especially Microsoft and Meta, have helped forge joint engineering products for hypercloud scale all the way now to edge use cases. Clearly, Arista is in the midst of an exciting and growing total available market or TAM expansion to fulfill our customers' quest for proactive, predictive, and prescriptive networking. All this with the right data-driven foundation and architecture. This network data lake EOS stack that we launched last November is resonating well, and it's validating our customer network design. In conclusion, I'm so proud of Arista's progress and traction, and look forward to multiple years of double-digit growth. And with that, I'd like to turn it over to Ida for Q1 2022 financial specifics.