Arista Networks, Inc.

at any time during the conference, please press the star key followed by zero. As a reminder, this conference is being recorded and will be available for replay from the Investor Relations section on the Arista website following this call. Mr. Rudolf Araujo, Arista's Head of Investor Advocacy, you may begin.

Thank you, Regina. Good afternoon, everyone, and thank you for joining us. With me on today's call are Jayshree Ullal, Arista Network's Chairperson and Chief Executive Officer, and Chantel Brightup, Arista's Chief Financial Officer. This afternoon, Arista Networks issued a press release announcing the results for its fiscal fourth quarter ending December 31st, 2024. If you want a copy of the release, you can access it online on our website. During the course of this conference call, Arista Networks management will make forward-looking statements, including those relating to our financial outlook for the first quarter of the 2025 fiscal year, longer-term business model, and financial outlooks for 2025 and beyond. our total addressable market and strategy for addressing these market opportunities, including AI, customer demand trends, supply chain constraints, component costs, manufacturing output, inventory management, and inflationary pressures on our business, lead times, product innovation, working capital optimization, and the benefits of acquisitions, which are subject to the risks and uncertainties that we discuss in detail in our documents 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 Jayshree.

Thank you, everyone, for joining us this afternoon for our fourth quarter 2024 earnings call. First, I'd like to warmly welcome our new IR leadership duo of Rudolf Araujo, our director of IR advocacy, supported by Rod Hall, that many of you may know as our leader for IR strategy. Special thanks to Liz Stein for her Kenya, both as a systems engineer and IR lead at Arista. Well, I think you'll all agree that 2024 has been a memorable and defining year for Vista. We started with an initial guidance of 10 to 12% annual revenue growth. With the momentum of generative AI, we have achieved well beyond that at almost 20% growth, achieving a record revenue of 7 billion, coupled with a non-GAAP operating margin of 47.5%. Before I dwell on that more, let me get back to Q4 2024 specifics. We delivered revenues of 1.93 billion for the quarter with a non-GAAP earnings per share of 65 cents adjusted for the recent 4 to 1 stock split. Our non-GAAP gross margins of 64.2% was influenced by efficient supply chain and manufacturing as well as a good mix of enterprise and software in the quarter. International contribution for the quarter registered at 16% with the Americas super strong at 84%. Now shifting to annual sector revenue for 2024, our cloud and AI titans contributed significantly at approximately 48%, keeping in mind that Oracle is a new member of this category. Enterprise and financials was strong at approximately 35%, while the providers, which now includes Apple, was at 17% approximately. Both Microsoft and Meta are greater than 10% concentration customers at approximately 20% and 14.6% respectively. As you know, we cherish our privileged partnerships with both of them very much. It has spanned over 14 years as we collaborate deeply with joint engineering and innovative AI and cloud products. In terms of annual 2024 product lines, our core cloud AI and data center products are built off a highly differentiated extensible OS stack and is successfully deployed across 10, 25, 100, 200, 400, and 800 gigabit Ethernet speeds. It delivers power efficiency, high availability, automation, and agility as the data centers demand insatiable bandwidth capacity and network speeds for both front-end and back-end storage, compute, and AI zones. product line drove approximately 65% of our revenue. We continue to gain market share in the highest performance of the switching category of 100, 200, and 400 gig ports to attain the number one position at greater than 40% market share according to industry analysts in ports. We have increased our 400 gig customer base to approximately 1,000 customers last year in 2024. We expect 800 gig gigabit Ethernet to emerge as an AI backend cluster in 2025. We remain optimistic about achieving our AI revenue goals of 1.5 billion in AI centers, which includes the 750 million in AI backend clusters in 2025. Our network adjacencies market comprised of routing, replacing routers, and the cognitive AI-driven campus is going well. Our investments in cognitive wired, wireless, zero-touch provisioning, and network identity as well as sensors for threat mitigation is being received extremely well by our campus customers. Our recent modern stacking introduction of SWAG, Switched Aggregation Group, is a fitting example of our compelling innovation for open and efficient networking, conserving IP addresses without proprietary methods. The post-pandemic campus is very different, and our customers are seeking alternatives to legacy incumbents with deep zero trust security, high availability, and observability embedded in the network across our software stack with cloud vision management. We are committed to the $750 million goal in 2025 and much more ahead. We are successfully also deployed in routing edge and peering use cases. Just in 2024 alone, we introduced six EOS software releases with greater than 600 new features across our core and adjacent offering. The campus and routing adjacencies together contribute approximately 18% of revenue. Our third category is network software and services based on subscription models, such as Avista ACARE, Cloud Vision, DMF, observability, and advanced security sensors for network detection and response. We added over 350 Cloud Vision customers, translating to literally one new customer a day. Cloud Vision is pivotal to building our network as a service and deploying Arista validated designs in the enterprise. Arista subscription-based network services and software contributed approximately 17% of total revenue. Note that perpetual licenses do not count here and go into the core or adjacent sections. While the 2024 headline has clearly been about generative AI, Arista continues to diversify its business globally with multiple use cases and verticals. We are viewed as the modern network innovator of choice for client to campus to cloud and AI networking, ideally positioned with our differentiated foundation. We celebrated two milestones in 2024, our 10th anniversary of going public at the New York Stock Exchange and our 20th anniversary of founding. In the past decade, we have exceeded 10,000 customers with a cumulative of 100 million ports of installed base. as Arista drives the epicenter of mission critical network transactions. Arista 2.0 strategy is resonating exceptionally well with our customers. Customers are not only looking to connect, but unify and consolidate their data across silos for optimal networking outcomes. Our modern networking platforms are foundational for transformation from incongruent silos to centers of data, and it places us in a very unique position as the best of breed innovator for data-driven networking. These centers of data, as we call it, can reside in the campus as a campus center or data centers or WAN centers or AI centers, regardless of their location. Networking for AI is also gaining traction as we move into 2025, building some of the world's greatest Arista AI centers at production scale. These are constructed with both back-end clusters, and front-end networks. And as I've shared with you often, the fidelity of the AI traffic differs greatly from cloud workloads in terms of diversity, duration, and size of flow. Just one slow flow can slow the entire job completion time for a training workload. Therefore, Arista AI centers seamlessly connect to the front-end of compute, storage, WAN, and classic cloud networks with our back-end Arista EtherLink portfolio. This AI-accelerated networking portfolio consists of three families and over 20 EtherLink switches, not just one point switch. Our AI for networking strategy is also doing well, and it's about curating the data for higher-level network functions. We instrument our customers' networks with our public-subscribed state foundation with our software called Network Data Lake to deliver proactive, predictive, and prescriptive platforms that have superior AI ops with ACARE support and product function. We are pleased to surpass for the first time the $1 billion revenue mark in 2024 for the software and subscription service category. In 2024, we conducted three very large customer events in London, New York, and Santa Clara, California. Our differentiated strategy and superior products are resonating deeply as we touched over a thousand strategic customers and partners in these exclusive events. Simply put, we outpace the industry in quality and support with the highest net promoter score of 87, which translates to 93% of customer respondent satisfaction. Of course, we do that with the lowest security and vulnerabilities and steadfast network innovation. In summary, 2024 has been a pivotal turning point for Vista. It has been a key breakaway year as we continue to aim for 10 billion annual revenue with a CAGR of double digits that we set way back in November 2022, Analyst Day. While I do appreciate the exuberant support from our analyst community on our momentum, I would encourage you to pay attention to our stated guidance. We live in a dynamic world of changes, most of which have resulted in positive outcomes for RISTA. We reiterate, at the upper range of our 2025 guidance, of our double digit growth at 17%, now aiming for approximately 8.2 billion in 2025 in revenue. The Arista leadership team has driven outstanding progress across multiple dimensions. In 2024, we are at approximately 4,465 employees rooted in engineering and customer investments. I'm incredibly proud of how we've executed and navigated the year based on our core principles and culture. While customers are struggling with customer fatigue from our legacy incumbents, Arista is redefining the future of data-driven networking intimately with our strategic customers. With that, I'd like to turn it over to Chantelle, who has transitioned to become our core Aristan and Chief Financial Officer in record time, less than a year. Over to you, Chantelle, and welcome again, and happy one-year anniversary.