CEO Jayshree Ullal speaking at an event. Source: utkaltoday.com
Ullal noted in February that Microsoft (MSFT) is the only customer to account for greater than 10% of sales.
The big attraction is Arista's CloudVision software. The platform facilitates cloud-based, network virtualization.
This is a fancy way of saying software services like security can be bolted on a scale with little fuss.
Arista is currently working with cybersecurity firms Check Point Software (CHKP), F5 Networks (FFIV), Fortinet ( FTNT), Palo Alto Networks ( PANW) and VMWare (VMW).
The cloud brings scale, reduced costs and modularity. This means those add-ons can also be modified on demand. It also provides the type of flexibility that is simply not possible in the legacy IT environment.
A typical legacy deployment requires one administration staff for every 1,000 servers.
Out of the box, the Arista solution provides a tenfold improvement. It's programmatic, automated and can be scaled to millions of users. The company says clients have noted cost savings of 10- to 40-fold.
This explains why growth has been off the charts.
Arista is number one in market share for 100-gig and 400-gig ports, a key metric for the fastest networks.
Sales of these products doubled in 2021 to $200 million, and Ullal says they will double again in 2022 to $400 million. The numbers speak for themselves.
Overall sales in 2021 jumped to $2.95 billion, a gain of 27%. Annual cash flow exceeded $1 billion for the first time. And the number of CloudVision customers exceeded 1,300, also a record.
Customers are bypassing legacy hardware solutions offered up by Cisco because Arista provides the type of data-driven networking that big clients need to fulfill their digital transformation objectives. It really is that simple.
The global market for data center switching alone reached $15.2 billion, according to analysis from Research and Markets, a specialty analytics firm. Analysts expect the market to swell to $19.9 billion by 2026, a compound average growth rate of 5.2%.
Jim Suva, the senior tech analyst at Citigroup, believes Cisco will continue to lose networking market share to more nimble, focused competitors like Arista.
Suva now rates Cisco shares as "Sell," a rarity among large Wall Street firms.
And the Arista growth story is far from over. The development of hyperscale data centers and the renewed enterprise focus on cybersecurity should help Arista executives meet the lofty 2022 growth projections.
Shares trade at 30 times forward earnings and 13.4 times sales. While these numbers may seem relative to Cisco (13.9 times forward earnings and 4.2 times sales), investors should focus on growth and market share gains.
Post a Comment
Note: Only a member of this blog may post a comment.