아리스타 네트워크스(ANET) 2026년 3분기 실적 콘퍼런스 콜: 매출 58.5% 증가, 2027년 전망 185억 달러

핵심 요약

• 아리스타 네트웍스의 2026 회계연도 3분기 매출은 36억 6,000만 달러로, 전년 동기 대비 58.5% 증가했으며, 이는 AI 및 기업 고객 전반의 강세에 힘입은 결과입니다.
• 영업이익은 18억 달러를 기록하며 49.1%의 영업이익률을 달성했습니다. 희석 주당순이익(EPS)은 55.8% 상승한 1.20달러를 기록했습니다.
• 경영진은 2026 회계연도 전체 매출 전망을 네 번째로 상향 조정하여 133억 달러를 살짝 상회하는 수준으로 제시했으며, 이는 약 48%의 연간 성장을 의미합니다.
• 2027 회계연도의 경우 경영진은 매출 성장률을 38%~40%, 즉 중간값 기준 약 185억 달러로 예상하고 있습니다. AI 패브릭 매출은 약 70억 달러로 2배 증가하는 것을 목표로 합니다.
• 아리스타는 2027년에 스케일업 이더넷 시범 운영이 시작될 것으로 예상하지만, 경영진은 2028년까지 실질적인 스케일업 매출 기여는 없을 것으로 보고 있습니다. 스케일아웃 및 스케일어크로스 배포는 여전히 주요 AI 활용 사례로 남아 있습니다.
• AI 수요에 대비해 투자가 늘었습니다. 재고자산은 32억 달러로 증가했고, 구매 약정액은 114억 달러에 달했으며, R&D 비용은 4억 850만 달러로 증가했습니다.

핵심 재무 데이터

경영진은 수익성과 향후 가이던스를 주로 비GAAP(non-GAAP) 기준으로 제시했습니다.

사업 및 운영 실적

AI 및 기업 고객이 주요 매출 성장 동력이었습니다. 아리스타는 2026년에 100곳 이상의 이더넷 AI 고객을 돌파했으며, 자사 플랫폼으로 지원되는 배포 규모가 10가지 이상의 컴퓨팅 가속기 유형에 걸쳐 2027년 말까지 10기가와트(GW)를 초과할 것으로 예상한다고 밝혔습니다.

현재 이 회사는 스케일아웃, 스케일어크로스, 스케일업 등 세 가지 AI 네트워킹 아키텍처를 다루고 있습니다. 경영진은 2026년 스케일아웃과 스케일어크로스의 비중을 각각 약 70% 및 30%로 추산했습니다. 스케일어크로스는 2027년 AI 수요의 최소 3분의 1을 차지할 것으로 예상되며 추가로 증가할 가능성도 있습니다.

스케일업은 아직 개발 단계에 있습니다. 2027년에 시범 운영을 시작하고 2028년에 양산을 목표로 하고 있습니다. 아리스타는 수랭식 구성을 포함하여 직교형, 케이블 기반 백플레인 및 크로스 랙 디자인을 개발 중입니다. 경영진은 상업 및 이행 모델이 여전히 고객 및 제조 파트너와 함께 결정되는 과정에 있다고 밝혔습니다.

코그니티브 캠퍼스 사업도 확장되고 있습니다. 경영진은 약 20억 달러 규모의 2027년 캠퍼스 매출을 목표로 하고 있으며, 이는 약 60% 증가한 수준입니다. 목표치였던 12억 5,000만 달러 (2026년) 대비 성장하는 것입니다. 회사는 모멘텀의 원인을 네트워크 신뢰성, 보안, 자동화 및 긴 기업 교체 주기 때문이라고 보았으며, 경영진은 이것이 다년간의 기회를 뒷받침할 수 있다고 믿고 있습니다.

아리스타는 또한 네트워크 모니터링, 문제 해결 및 보안을 위한 자율 가상 비서인 AVA를 강조했습니다. AVA는 현재 CloudVision 내에서 고객 시범 운영을 위한 알파 기능으로 제공되고 있습니다. 가격 정책 및 수익화 모델은 아직 개발 중입니다.

경영진 가이던스

경영진은 약 2개 분기 분량의 직접적인 수요 가시성을 확보하고 있다고 밝혔습니다. 2027년 하반기 전망에는 주요 고객과의 장기적인 기술 논의 및 관계도 반영되어 있습니다.

리스크 및 관전 포인트

• 공급망 실행: 아리스타는 업계 전반의 부품 제약 및 부족 현상을 지속적으로 관리하고 있습니다. 첨단 AI 제품은 일반적으로 기업용 제품보다 리드 타임이 깁니다.
• 재고자산 및 약정액: 재고자산은 전 분기 대비 7억 달러 증가했으며, 구매 약정액은 17억 달러 증가했습니다. 경영진은 2027년 수요를 준비함에 따라 약정액이 더욱 증가할 수 있을 것으로 예상하고 있습니다.
• 제품 비용 인플레이션: 3분기 총마진은 공급망 효율성을 통해 일부 상쇄되었음에도 불구하고 전년 동기 수준을 하회했습니다.
• 이연매출 변동성: 고객별 인수 조건 및 신제품 양산 확대로 인해 분기별 변동성이 커질 수 있으며, 경영진은 이것이 근본적인 수요를 반영하지 않을 수 있다고 언급했습니다.
• 고객 집중도: 경영진은 제품 공급 가능 여부 및 출하 시기에 따라 달라질 수 있지만, 최소 3개 및 잠재적으로 4개의 고객사가 매출의 10% 이상을 차지할 것으로 예상하고 있습니다.
• 신제품 실행력: 스케일업 이더넷은 여전히 시범 운영 및 공동 개발 단계에 있으며, AVA의 가격 정책 및 수익화 방식은 아직 확정되지 않았습니다.

애널리스트 Q&A 주요 내용

경영진이 2027년 전망에 자신감을 보이는 이유: 아리스타는 현재 확보된 2개 분기 분량의 가시성, 고객과의 다년간에 걸친 기술적 협력, 그리고 실리콘, 메모리, PCB 용량 및 기타 부품을 포괄하는 공급 계약을 원인으로 꼽았습니다. 2027년 주문이 모두 완료된 것은 아니지만, 경영진은 전망치를 뒷받침할 수 있는 능력에 대해 높은 자신감을 나타냈습니다.

R&D 지출 증가: 전 분기 대비 증가한 지출은 시제품 비용, 수랭식 인프라, 고전력 스위칭 및 AI 소프트웨어 개발을 반영한 결과입니다. 경영진은 R&D 지출을 지속적으로 매출의 약 9%~11% 수준으로 설정하고 있으며, 특정 투자 항목에 따라 분기별로 차이가 발생할 수 있습니다.

스케일업 시기 및 경제성: 경영진은 2027년 시범 운영을 거쳐 2028년부터 매출 기여가 가능할 것으로 예상하고 있습니다. 제품 구성의 변화에도 불구하고 아리스타는 장기 총마진 목표 범위를 62%~64%로 지속 유지하고 있습니다.

프론트엔드 대 백엔드 네트워킹: 현재 수요는 백엔드 AI 패브릭에 집중되어 있습니다. 경영진은 프론트엔드와 백엔드 지출이 주기적인 특성을 보이며, 6개 분기에서 2년에 걸쳐 비중이 균형을 이루는 경향이 있다고 설명했습니다.

수요 지표로서의 이연매출: 경영진은 분기별 이연매출 변동을 독립적인 예측 지표로 활용하는 것에 대해 경고했습니다. 회사는 연말 이연매출이 전년 수준을 상회할 것으로 예상하는 한편, 2027년 전망은 이연매출의 감소를 전제로 한 것이 아니라 더 광범위한 수요 신호에 기반한 것임을 강조했습니다.

실적 발표 컨퍼런스 콜 전문

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전체 실적 발표 컨퍼런스 콜 녹취록

경영진 발표

Operator

Welcome to the Third Quarter 2026 Arista Networks Financial Results Earnings Conference Call. During the call, all participants will be in a listen-only mode. [Operator Instructions] 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. Rudolph Araujo, Arista's Head of Investor Advocacy, you may begin.

Rudolph Araujo

Good afternoon, everyone, and thank you for joining us. With me on today's call are Jayshree Ullal, Arista Networks Chairperson and Chief Executive Officer; and Chantelle Breithaupt, Arista Networks' Chief Financial Officer. This afternoon, Arista Networks issued a press release announcing its fiscal third quarter results for the period ending September 30, 2026. If you want a copy of this release, you can find it 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 fourth quarter of the 2026 fiscal year, longer-term business model and financial outlook for 2027 and beyond. Our total addressable market and strategy for accessing those market opportunities across AI, campus, data center and other segments, inventory levels and management lead times, purchase commitments, component supply and product innovation, 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. This analysis of our Q3 results and our guidance for Q4 2026 and FY 2027, and is based on non-GAAP financial measures and exclude stock-based compensation expense, intangible asset amortization and other nonrecurring items as well as the income tax effect of these non-GAAP exclusions, including the recognition of direct excess tax benefits associated with stock-based awards. A full reconciliation of our selected GAAP to non-GAAP historical results is provided in our earnings release. A reconciliation of our FY '27 non-GAAP guidance to the most directly comparable GAAP measures is not available without unreasonable effort. With that, I will turn the call over to Jayshree.

Jayshree Ullal

Thank you, Rudy, and welcome, everyone, to our third quarter 2026 earnings call. Arista just delivered a standout quarter of $3.66 billion in revenue, which is translating to our annual growth of 58.5%. This marks our largest ever year-over-year revenue growth in the history of being a public company.

Before we dive into the financial specifics, I would like to emphasize our rapid Arista 2.0 success. A strategy we embarked upon just 3 years ago. It has generated meaningful customer outcomes to become the central network nervous system for us. In the 2000 era, the industry had accepted a status quo, plagued by fragile, overly complex, disparate and vulnerable operating systems.

Arista pioneered the universal cloud network and the AI Spine architecture based upon our rock solid high-quality foundation of our differentiated EOS, that 1 network operating system with a published subscribed state and data-driven foundation has governed us with 5 As, Agile security, Automation, Availability, Analytics and AI principles.

By extending our single EOS operating system from the data center, all the way from the Universal Spine to many forms of edge lead functions, we deliver structural and secure network economy. Our Arista 2.0 transformation from data centers to centers of data can be characterized as the age of network intelligence, learning from vast repositories of stream data. It has driven our strategy across locations be a client to branch, to campus, the data to cloud and AI centers for our customers.

Based on our network data lake architecture, we offer our customers automated and conversational troubleshooting agentic companions. Devoid of manual hunting through text-heavy logs, our systems proactively begin identifying and isolating issues for network workloads, workflows and work streams. In 2026, the Network Centric acceleration is well underway. Our customers have increasingly cordless the back end and the front end of AI and data centers. Arista is long-chain standard-spaced Ethernet. Customers have welcomed our open approach to modernizing cloud campus data centers, WAN centers and now AI centers with a lower total cost of ownership.

Recently, we were recognized with the leader status from Forrester for the highest strength of innovation and data center portfolio. We were also recognized by Gartner Magic Quadrant leadership for campus wired and wireless and data center segments. As HNTKI models increase in realism, compute diversity and density, we have the choice of many more training and inference accelerators. The industry, we believe, is shifting from compute-centric vertical stack to a holistic network centric approach.

A risk is committed to unleashing and breaking down the barriers between compute and networking. Arista customers can now construct an open network platform capable of handling heterogeneous models and diverse accelerators at scale. Our ethylene portfolio of at least 25 switches for scale-up scale and scale across is optimally designed to improve XPU utilization, job completion and token latency for these intense training and inference workloads.

In October of 2026 at the Open Compute Project conference, Arista showcased our rack scale up designs partnering closely with several AI accelerators in field with our Arista network diagnostics layer. Based on E.SUN, Ethernet a scale-up, options. These include orthogonal designs, cable intensive back plans and heterogeneous cross-track designs co-designed with many of our partners, including ARM, Microsoft Maya, AMD's Helios, Qualcomm, Meta's MTIA and many more ahead.

We expect scale-up trials to begin in 2027, driving Ethernet to larger ratings of 126 to 144 within racks and across 1,000 across racks with production expected for scale-up in 2028. We are witnessing the migration from highly centralized training compute to disaggregated and distributed inference prefill and decode demanding much more intelligent networking and co-location of compute, storage and KB cash resources rather than simply focusing on raw feeds and speeds and flops of compute.

A well-designed network is becoming a foundational cornerstone for optimal token deficiency. Arista's decades of EOS engineering in both multiplanar and distributed model routing at scale, be it ARC address resolution protocols or fifth tables forward information base or access list with rapid reconversions comes to the rescue. Our ethylene products are inherently designed to actively understand parameters at a deep level. including latency and bandwidth profiles of multi-tenancy to intelligently staloads for optimal placement between local and remote domains.

The need for visibility into ports packages, flows, buffer utilization and part latency across the entire scale out and scale across fabric validates real AI system level performance to avoid idling of precious compute cycles. It assures immediate and network-wide insight to the root cause as well as rapid recovery of the AI system with smart system upgrades across millions of accelerators.

When we initially began this transformational AI journey, we spoke about 4 or 5 AI customers with approximately 50,000 to 100,000 NVIDIA GPUs, and in fact, we're largely staring at a proprietary network cycle such as InfiniBand. In 2026, we are in a super cycle of AI having already surpassed 100 ethylene customers. By the end of '27, we are forecasting greater than 10 gigawatts of deployment across 10 or more different types of compute accelerators. What a stark inflection in just 3 years.

Central to this AI super cycle is also the expansion of Arista AVA, our autonomous virtual assist to support efficient AI in the enterprise, by providing that open programmable interface within the U.S. and utilizing the model context protocol, MCP, AVA allows emerging AI agents to reason to interact with the network stack and perform advanced multi-domain event correlation across the entire enprise.

With exponential rise of generated AI attacks and the ever-increasing sidebar threats, securing the network is key and integral and our responsibility. I would like to invite Ken Duda, our Founder, President and CTO, to shed some light on this problem. Ken?

Kenneth Duda

Thanks, Jayshree. It's hard to overstate the impact of AI on networking. First, a good news. AVA, which is Arista's autonomous virtual assistant, fueled by real-time data AVA is incredibly powerful. It seamlessly navigates networking and security infrastructure from campus to WAN to data center to cloud continuously monitoring and troubleshooting, isolating root causes without manual labor into tasks.

Having seen what AVA can do and imagine managing my own infrastructure without it, and I expect many of our customers will feel the same way. The bad news, of course, is the massive challenge AI poses for us and our customers by discovering and exploiting security vulnerabilities. This threat landscape demands secure and robust networking. Over the past few months, we've been collaborating with Anthropic, Google Open AI and many others to integrate new AI-enabled security capabilities from frontier models into our existing software security pipeline.

We are being invited early as a key infrastructure provider into partnerships like Project Class win, hold in AI-driven vulnerability discovery and assessment into our established security vulnerability management process. True network security has become a must-have, not a nice to have. And Arista's EOS operating system is the ideal architectural foundation based on 4 key principles. First, a single high-quality operating system.

Arista has maintained one of the lowest CDE counts less than 100 in the industry over the last 2 decades, while others are rising exponentially due in part to the simple fact that multiple networking operating systems tend to have more vulnerabilities than just one. Second, limiting vulnerability impact through process ization EOS keeps each software agent, management playing work controller planes architecturally separate from each other and also from hardware forwarding.

So traffic keeps moving even if there is a defect in 1 component. EOS state sharing architecture also resists lateral movement. So a defect in 1 component typically cannot be exploited to attack other agents within the switch. Third, we provide a seamless upgrade process. Process isolation also means that we can ship a targeted fix to the effective component and install the fix without a maintenance window or a network disruption.

And fourth, delivering a compliance dashboard to stay current. When a security advisory lens, Arista CloudVision brings real-time visibility to turns a stressful advisory day into a manageable one. In addition to providing secure switches, we also provide Zero Trust networking or ZTN technology to help our customers build a security structure. I'd especially like to highlight Macro Segmentation Services, or MSS, is ZTN feature allowing for dynamic security enforcement preventing undesired interactions among users, devices and applications.

Second, we provide Network Detection and Response, or NDR services that profile, analyze and proactively detect sophisticated security threats. And finally, once workload traffic leads the confines of the local data center, it becomes even more vulnerable to malicious actors. So we offer protection with wire speed ubiquitous link and total infliction native in every port with 0 performance sigation. I hope this was a helpful summary at how Arista is helping customers take advantage of AI while improving security to at the new challenges. Back over to you, Jayshree. .

Jayshree Ullal

Thank you, Ken. It was useful for me, too. With Arista's uncompromised ZTN approach, we can systematically address the security hazards and parabolic attacks. Our CVE count, a vulnerability count is often 10 to 50x better than alternatives. Our customer momentum this year has been significant to the enterprise, in the providers across data center campus and AI because they are addressing security proactively. I would like to invite Todd Nightingale, our President and Chief Operating Officer, to describe more about this. Over to you, Todd.

Todd Nightingale

Thank you, Jayshree. We're seeing phenomenal growth across our enterprise business, driven by customers building mission-critical networks, which benefit from Arista's industry-leading quality and reliability. The entire industry response to AI-powered attack exposure, customers are motivated by the fact that keeping their infrastructure current with security updates will protect, segment and defend against vulnerabilities beyond the network. .

Arista on a strategic deal at an Asian web services company as they shifted their focus strategically on the speed, scale and resilience in the new AI era. Reliability was the key to the engagement as their teams are frustrated by long-standing quality issues with their existing vendor. Arista was able to demonstrate reliability and scalability while leveraging standards-based technology and a powerful e-VPN VXLAN architecture on our 100- and 400-gig platforms. This deployment will operate as the front end for their AI deployment moving forward. In the health care sector, leading hospitals are selecting Arista for strategic data center deployment. One important hospital group chose Arista is following an exhaustive Zero Trust working evaluation.

Their primary business goal was to protect sensitive patient data through advanced network segmentation while enabling seamless integration to cloud environments. Arista secured this win by delivering an automated high-performance fabric that perfectly aligned with their trust nothing verify everything security mandate. By centralizing routing on Arista's R3 spines, we provided a powerful streamlined layer for traffic management tailored to modern health care workloads with a robust lease spine topology. We deployed CloudVision as a service alongside the Arista ABB framework for cloud-based automation and deep visibility.

And by integrating Arista's segmentation service MSS, the customer can now dynamically automate the entire system. In the hospitality sector, and an award-winning regional resort and casino selected Arista to modernize its expanding operations. realizing their legacy network was a bottleneck for innovation, they architected a truly unified standards-based architecture across their data center and campus environments to support new guest experiences and rapidly scale their services.

Arista's routing and switching platforms alongside campus access switches are delivering quality and reliability key to performing in mission-critical applications like their demanding casino gaming floor network. They utilize CloudVision and ABD to automate device provisioning and gain the deep real-time visibility required to optimize network performance. In all 3 of these examples Arista's differentiated EOS provided unmatched quality and reliability and integrated seamlessly with their overarching security ecosystem partners. Additionally, our TAC delivered the flawless experience and peace of mind to derisk these modern enterprise migrations to Arista.

2026 has really been an exciting year, building momentum across our entire enterprise business around the world in data center, campus and AI build-outs. Thank you, .

Jayshree Ullal

Thank you, Todd. Wow, that momentum is indeed unprecedented I haven't experienced anything like this until you arrived. We are pleased with Avitas accelerated net working progress across all our sectors. Our commitment to fulfilling this accelerated demand in the second half of 2026 is really playing out well with our improved execution in supply chain, partnering closely with our vendors.

I want to give actual kudos to you and to your entire manufacturing team led by Urena for the tireless work in progress despite the wide head industry-wide supply chain constraints and shortages. With this backdrop, we are now increasing our annual guidance for the fourth time in 2026 to $13.3 billion, which represents a 48% annual growth. At Arista, we find ourselves in a position to address this ever-increasing total accessible market, not just available market, which now stands at north of $200 billion in 2030, therefore, representing a multiyear growth opportunity for us.

Our first look at 2027 guide range puts us in the 38% to 40% range for growth annually to approximately $18.5 billion. Within this envelope, we expect our AI fabrics target to be the fastest growing segment and to double to approximately $7 billion, while our cognitive campus represents a healthy growth of 60%, much faster than the market to approximately $2 billion in 2027.

We do have an exciting times as we harness the power of cloud and AI revolution. It has certainly surpassed my expectations as we exceeded our original $10 billion goal this year to enter revenue dollars in the teens for both 2026 and 2027. We do so in the typical Arista way, bringing our unique combination of innovation, quality, profitability, efficiency, and 0 debt, making our financials very pristine.

Our results would not be possible without the cohesive Arista leadership and team, our elite customers and partners and, of course, our support of shareholders. And with that, over to you, Chantelle, to shed more light on our impressive financials.

Chantelle Breithaupt

Thank you, Jayshree. This quarter, we delivered record high revenue growth since our IPO at 58.5%, partnered with robust operating margin above 49%. At the same time, we invested ahead of demand in R&D, inventory and supply commitments to support the AI opportunity in front of us. Congratulations to the Arista team for being named to the S&P 100 in September, a great achievement within a short time frame. Let's dive into the financial details.

To start off, core revenues in Q3 were approximately $3.66 billion, up 58.5% year-over-year and above our guidance of $3.3 billion. This significant growth was driven by our continued strength in both AI and enterprise customers. International revenues for the quarter came in at $682.5 million or 18.6% of total revenue, down from 23% last quarter. This quarter-over-quarter change was primarily influenced by a shift in the geographic mix of sales to our large global customers.

Year-over-year double-digit growth was achieved in all 3 geographic segments. The overall gross margin in Q3 was 64%, down from 65.2% in the prior year with supply chain efficiency working to partially offset product cost inflation and up from 63.4% in the prior quarter, driven by end customer mix. Operating expense for the quarter were $545.3 million or 14.9% of revenue, up from the last quarter of $411 million. Our R&D spending came in at $408.5 million or 11.2% of revenue, up from the last quarter at $278.1 million.

Arista continues to demonstrate its commitment and focus on network innovation with additional investment in liquid cooling, high vatic switching and leading AI software. Sales and marketing expense was $110.9 million or 3% of revenue, down slightly from 3.6% of revenue last quarter, representative of the highly efficient Arista go-to-market methodology. Our G&A costs came in at $25.9 million or 0.7% of revenue, up slightly from $23.1 million last quarter as we continue to focus on our critical corporate systems and processes.

Our operating income for the quarter was $1.8 billion or 49.1% of revenue, demonstrating our ability to invest in innovation while expanding profitability. Other income expense for the quarter was a favorable $138.6 million, and our effective tax rate was 20.9%. Overall, this resulted in net income for the quarter of $1.5 billion or 41.9% of revenue. Our diluted share number was 1.278 billion shares, resulting in a diluted earnings per share for the quarter of $1.20, up significantly with a growth of 55.8% from $0.77 in the prior year period.

Now turning to the balance sheet. Cash, cash equivalents and marketable securities ended the quarter at approximately $14.4 billion, up from $13.3 billion at the end. Of the $1.5 billion stock repurchase program approved in May of 2025, $817.9 million remain available for repurchase in future quarters. The actual timing and amount of future repurchases will be dependent on market and business conditions, stock price and other factors.

Now turning to operating cash performance for the third quarter. We generated approximately $1.2 billion of cash from operations. This was driven by a robust earnings performance, coupled with an intentional inventory build to meet our growing customer demand. DSOs came in at 59 days, down from 68 days in Q2 due to the timing of customer shipments and invoicing. Our inventory turns dropped slightly from 1.7% in Q2 to 1.6% for the quarter. We ended the quarter with $3.2 billion in inventory, up from $2.5 billion last quarter.

Inventory level fluctuations are expected to continue as we work through the balancing of components timing and availability. This could result in quarters of elevated inventory balances affecting the timing of cash flow from operations ahead of customer deployments. Our purchase commitments at the end of the quarter were $11.4 billion, up from $9.7 billion at the end of Q2. As mentioned in prior quarters, this expected activity mostly represents purchases for chips related to new products and AI deployments.

Our total deferred revenue balance was approximately $6.8 billion, down from $6.9 billion in the prior quarter. The majority of the deferred revenue balance is product related. Our product deferred revenue decreased $86 million sequentially versus last quarter. We remain in a period of ramping our new products, winning new customers and expanding new use cases, including AI. These trends have resulted in increased customer-specific acceptance clauses and an increase in the volatility of our product deferred revenue balances.

As mentioned in prior quarters, the deferred balance can move significantly on a quarterly basis, independent of underlying business drivers. Accounts payable days were 48 days, down from 57 days in Q2, reflecting the timing of inventory receipts and payments. Capital expenditures for the quarter were $100.7 million. Our construction work to build expanded facilities in Santa Clara remains on track, and we expect construction to be completed in the coming months.

As we look ahead, the momentum is strong. We are grateful to our customers and proud of our team's continuous ability to rise to meet the demands of the networking industry. For the fourth quarter, we are forecasting a range of revenue between $3.9 billion and $4 billion. This positions fiscal year 2026 revenue just over $13.3 billion at the midpoint. Our fourth quarter gross margin outlook is 63% to 64% and operating margin is between 48% and 49%. Diluted EPS is forecasted to be between $1.26 and $1.30 with approximately 1.28 billion diluted shares and the effective tax rate is expected to be approximately 21%.

Looking further ahead to 2027, the momentum continues. For fiscal year 2027, the revenue growth outlook is between 38% and 40%, equating to approximately $18.5 billion the midpoint. Gross margin continues to be in the range of 62% to 64% and an operating margin of approximately 49%. Our effective tax rate is expected to be approximately 21%. In closing, there is a lot to be excited about here at Arista. We will continue to be focused on our innovation, execution and delighting customers in the Arista way. Now back to you, Rudy, for Q&A.

Rudolph Araujo

Thank you, Chantelle. Shane. We will now move to the Q&A portion of the Arista earnings call. To allow for greater participation, I'd like to request that everyone please limit themselves to 1 question. [Operator Instructions] Regina, please take it away. .

Operator

[Operator Instructions] Our first question comes from the line of Michael Ng with Goldman Sachs.

질의응답

Michael Ng

I wanted to ask about your comment around the greater than 10 gigawatts of deployments across 10 plus compute accelerators for next year. Could you just talk a little bit about whether that is an industry number or an Arista specific number in terms of those deployments? And how does the diversification of compute, potentially create more opportunities for Arista networking relative to just having a handful of compute suppliers.

Jayshree Ullal

Yes. Thanks, Michael. As you know, I think much of AI, even in our world, started initially being compute-centric, and we're seeing that change to network-centric. And so as part of the accelerated networking strategy, we are supporting 3 types of AI fabrics, scale up, scale out and scale across. So our guess is by the end of '27, we will deploy largely in '27 is where the exponential ramp happened across or greater than 10 gigawatts. Now -- some of that -- much of that gigawatt may be new, but remember, in scale across, we can also have existing gigawatts being deployed.

So we're talking about new distributed 10 gigawatts, but they may already be multiple gigawatts deployed across. So the rationale here is -- while we are new to scale up, we are touching a variety of XPUs and scale out and scale across, across the rack and across data centers. And we already know with our scale across, we are touching multiple XPUs, 4 or 5 of them. With the advent of scale up, we will add another 5 in 2027.

Operator

Our next question will come from the line of Meta Marshall with Morgan Stanley. .

Meta Marshall

Congrats on the quarter. I guess just Jayshree, if you could give an update just on how you see that mix of scale across and scale out and scale up just as a mix of your business, clearly, scale up, nothing today. I think last quarter, you had said you expected 1/3 of the demand this year to be from scale across just as you've continued to increase guidance? And as you look into '27, just what do you see those mixes being?

Jayshree Ullal

Yes. I think in '27, Meta, thank you for the kind wishes. We've been working hard for this day. The scale-up will still be in early trials. So I don't think there's a material number associated with scale up in '27. I do think it could contribute in '28. So then that -- if scale-up is virtually 0, then we're basically left with most of the use case being scale out and scale across. And as you've heard us say in the past, scale across, we think, will be at least 1/3, we'll probably go higher in '27. And so the split this year is roughly 70-30. The split next year may be -- I can't venture to guess, but I think the 70% may come down and the 30% would go up when it comes to scale across because it's a very strong use case for us.

Arista is highly differentiated with our 7800 scale across platform. And unsurprisingly, the word scale means a lot to us there and our customers, scale for security, scale for performance, scale for reliability and there's just no room for error when you're connecting million of XPUs. So we feel very comfortable that these are our 2 strongest use cases. I also think it will fuel -- I mean, a lot of this is back in AI fabric. We will come back to revisit the question of front end as well as we move to more inference and the line between back and front becomes thinner.

Operator

Our next question will come from the line of Ben Reitzes with Melius Research.

Benjamin Reitzes

Jayshree, a pretty good quarter and guide there. So I just want you've previously referred to potentially 2 10%-plus customers into the fourth quarter. Do you mind talking about whether they're landing in that range. And what the use cases are for? And if you're excited about those customers still and into '27?

Jayshree Ullal

Yes, yes, yes. So I guess diversity is the name of the game and the team today, right, Chantelle? We have diverse accelerators. We have diverse models. We want to have diverse 10% customers, too. So as we said before, our dearest ones are M&M, we fully expect our top prior 10% customers to continue to be with us in 2016, and we hope beyond and we expect to add at least 1, maybe 2. And a lot of that depends on whether Todd and Nehemia can ship enough product. So we'll let them decide and we'll give them all the way into December 31st.

Benjamin Reitzes

We'll take every day. .

Jayshree Ullal

So we're feeling very good about at least 3 and maybe 4. .

Operator

Our next question will come from the line of George Notter with Wolfe Research.

George Notter

I was just curious about the big sequential jump in R&D. It was really, really significant. I'm just wondering if that included some onetime items. Also, is this the new run rate in R&D going forward? Any perspective there would be great.

Jayshree Ullal

Okay. So over to you, Ken, why do you spend so much money this year? .

Kenneth Duda

So much new stock. The opportunity is Simona A, these AI tolerating systems. We are -- our success with the hyperscaler AI companies depends on our ability to partner. Our ability to partner is based on our understanding of each of their unique requirements and constraints. And also, there's a new technology introduction around liquid cooling. This requires a major infrastructure upgrades and technology upgrades on our part. So I think that's what's really driving the expansion spending there.

Chantelle Breithaupt

Sorry, George. And just in your comment is the new run rate. I'll still put the framework between 9% and 11% as we work through. So some quarters like we've talked about, we'll hit this range as we have specific investments. And so I would still keep it on that into 11% more to come as we guide next year in more detail.

Jayshree Ullal

But I noticed the prototype bill was very high this quarter, Ken.

Kenneth Duda

That's right because of the opportunities in the hyperscaler AI space.

Operator

Our next question will come from the line of Amit Daryanani with Evercore ISI.

Amit Daryanani

Thanks a and congrats on a really good set of numbers over here. Jayshree, you talked initially about the industry moving towards a more network network-centric architecture. As customers deploy different type of accelerators, does Arista become involved earlier in designing the overall systems rather than connecting them afterwards. And as you have to work with a more distributed disaggregated compute network? Does that change your networking content per deployment?

I know you talked about 10 gigawatts. I'm just sort of wondering is the network intensity start to change as well? And then maybe for Chantelle, as you think about the 38%, 40% guide for '27, which is extremely impressive, can you just touch on your confidence around the supply chain execution to meet this demand? What's in the bag versus what's to needs to be closed?

Jayshree Ullal

This is a very good question. I think until now, we've enforced our architecture mostly on scale out and scale across. And a lot of that had to do with distributed power location, moving to regional edge edges a very software defined type of network with the intensity, like I described of package, flows, performance, predictable latency, et cetera. As we start participating with new accelerators we get a greater chance early in the cycle to see the behavior of these exact accelerators. 2 or 3 examples I'd like to highlight is our close work with Cerebrus, our work with Microsoft and Maya. These have been going on in the last couple of years and has allowed us to tune our buffers, tune our software performance and maximize the IL-2, if you will.

The recognition of those scale-up designs are still in the works, but they're already manifesting itself and scale out and scale across. So you wrap a very good point, not only in the actual work we're doing with these accelerators, but the aggregate impact it has on our network design in terms of scale, performance and reliability.

Chantelle Breithaupt

Yes. And then I think to part 2 of your question, Amit, and thank you for the kind words at the beginning. I think -- so I am confident in the guide and I am continent in the supply chain. What makes me confident in the supply chain is internally, coding Yohan and the team doing a fantastic job every day being scrappy to make sure we can do what we need to do to deliver to our customers. And also I have confidence in a lot of great conversations and agreements with some of our key suppliers, and that's why you see our purchase commitments increasing because we have that confidence.

So internally, externally confident. As far as visibility, I think we have 2 quarters of visibility as we always have, and we need into the other 2. But given our preyfungible portfolio, we're pretty clear where to make that bet. So we're pretty excited about next year.

Operator

Our next question will come from the line of Tim Long with Barclays. .

Timothy Long

Maybe if we could shift a little bit and talk about the campus and branch. A pretty good year this year and guiding it to 60% next year. Could you talk a little bit about kind of what's enabling you to grow so much faster than the industry? And is this something that you see as a multiyear type of dynamic? Obviously, you got strength in enterprise data centers. But curious what else is helping this much higher than industry growth.

Kenneth Duda

Yes. Thanks for the question. In a lot of ways, I think the enterprise app market is coming to us. Arista has always led the way in quality and reliability. And over the past few years, just practically every significant enterprise has shifted gears and really considered their campus networks, their branch now works mission critical with the highest need for reliability. This is only accelerated because of the glass wing and ethos effect where people are really focused deeply not only on providing the highest level of reliability, but being able to do that as a rapidly patch and adjust their infrastructure over time, and the differentiation with EOS and the ability for Arista software to be able to do this with practically no downtime with extremely, extremely high uptime. It's highly differentiated in the market. And I really think that's the core of what's driving market share gains here. .

Todd Nightingale

I think the other thing that makes us an incremental process is that campus refresh cycles are pretty long, believe in customers understand the Arista advantage may take some time to adopt us because of the schedule in which they depreciate and upgrade their year. So I think we can expect this to be a multiyear cycle.

Operator

Our next question will come from the line of David Vogt with UBS. .

David Vogt

So maybe, Chantelle, one for you, and I'll wrap 2 together in 1 question. Can you kind of help us understand sort of your purchase commitment dynamic and your deferred revenue dynamic against strong revenue guide that you provided for 2027. So obviously, we recognize that you're confident in the number, but deferred revenue, I understand that it's volatile and it varies quarter-to-quarter. But just help us understand how to think about that metric in the context of a 38% to 40% guide, particularly also with purchase commitments going up a couple of billion dollars sequentially.

Chantelle Breithaupt

Yes. Thank you. Thanks, David. I think there's a few things. I don't know if they correlate directly, but they're all in purpose and designed to serve the customers as we need to, exiting Q4 and into 2027. Purchase commitments from that perspective, some things additionally we added. Now we have memory in there a memory agreement, which has been that. So that's a multiyear agreement that you'll see as the Q comes out. I think on the purchase commitment side, you can probably expect that to go up a little bit more as we exited Q4 as we get ready for this 2027 guide we have.

As far as the deferred revenue, deferred revenue actually had the largest churn in and out and still remained flat and still delivered a 58.5% revenue growth quarter, which I think is a fantastic outcome. So there, you're seeing things exiting getting released and things to get booked back to the deferred balance, which I think is a really healthy sign of the demand that's fueling that 38% -- excuse me, to 40% revenue growth next year. So I think they're all related purchase comes grow to serve that demand in the first day flat to deliver that outcome to the P&L, and we're pretty excited to see how that continues through 2027.

Operator

Our next question will come from the line of Simon Leopold with Raymond James.

Simon Leopold

Appreciate that. I wanted to get 1 quick clarification. You gave us targets for 2027 for campus in AI. Just wanted to check on what the baselines are for 2026. And the question was really on a topic that I think Andy has been vocal about, but your thoughts about the evolution of switching with the inclusion of either CPO or NPL, what does that mean to Arista?

Jayshree Ullal

Okay. Just to clarify, the baseline upon 38% to 40% is the '26 guide we gave of 13...

Chantelle Breithaupt

Yes, $13.3 billion. Yes. And within that AI is $3.5 billion and campus is $1.25 billion.

Jayshree Ullal

Yes. We're staying with the target numbers because we'll only know actuals after we ship everything end of the year. And to your second question on Optics. Optics is very integral to Arista strategy. Andy Bessen, our Chief Architect, lives and read this. It doesn't mean we build everything, but we actually systematically put it together. We, first of all, strongly believe in copper when you can and optics a few months because when you go beyond 1 or 2-meter radius, the flexibility of pluggable optics and lasers is probably the most widely deployed and accepted.

Andy was a pioneer of OSFP that gave us a very wide density of thermal limits and widely used. And now our new coherent optics LPO models is something that goes long distance without requiring DSP. And then to meet higher front-panel density, we're very excited about extra rent pluggable Optics that can -- that is being supported by over 150 vendors. So we think the world is going to remain in a very majority fashion on pluggable optics.

Having said that, I think there's always room for complementing the pluggables with a strong adoption at higher speeds to what we call near packaged optics or open CPO. We don't want to build proprietary co-package optics and to solve these constraints, Arista is pioneering this open CPO. That instead of sovereign components, we can use socketed optical engines and picaybers to allow these modules to be pretested, et cetera. So we are big fans of these. We think they'll come on to the market in the '28 to '30 time frame. It's not imminent. But meanwhile, long live pluggable optics.

Operator

Our next question will come from the line of Joseph Cardoso with JPMorgan. .

Joseph Cardoso

Congrats on the results as well. Maybe the question that I wanted to touch on and maybe it kind of dovetails off of a clarification on the last one. When we take a look at the initial full year guide for 2020, particularly as it relates to maybe the non-AI noncampus business. I think growth is being implied to moderate from the strong 2026 levels. I was just wondering if you can kind of touch on the underlying assumptions or factors that may be driving a little bit more moderation here into 2027 and whether that's maybe just tough compares or conservatism in terms of supply, et cetera, just trying to understand directionally what's the drivers of the 2027 forecast that relates to the maybe core business?

Jayshree Ullal

Thank you, Joe. Well, listen, when some things are growing 60% and 100%, and then you say the overall growth is 38% to 40%, then obviously, some of the things are not growing as fast, right? We are very comfortable that everything is going to grow double digits, some more, some less. And we're also very comfortable that given a first guide literally over a year before that all sectors are doing well for us. AI, enterprise, specialty cloud providers, front-end networks.

So we started out 2026, wondering with front end to grow -- so it's a cyclical thing. When the back end grows, the front end may go a little slower and the bet slows down the front end, may grow a little faster. So I wouldn't read any conservatism into these numbers. These are widely higher and optimistic than we had once projected. So enjoy them for a moment and hopefully, they'll get better.

Operator

Our next question will come from the line of James Fish with Piper Sandler.

James Fish

Fantastic quarter and guide here to start for '27 ladies. And can pose gentlemen and 2 ladies yes. And Todd, I didn't forget about you, Todd. But look, I appreciate the early outlook, but you guys always talk about 1 to 2 quarters of visibility. You tend to be a very prudent team. And so maybe going back to, I think it was Amit's question, I guess the confidence in providing this durability of this scale, this early and why we're going to see this kind of strength persist why Arista for scale up in 2028.

Chantelle Breithaupt

Well, I'll just go back and thank you for the kind words...

Jayshree Ullal

The kind words for ladies and gentlemen. .

Chantelle Breithaupt

That's right to all of us. I think that -- so let's go back and reiterate the confidence level. There was a lot of thought obviously put into a guide that's strong this early. So there's a lot of attention with Ken and Jayshree and myself and team. So we had to get comfortable first, and we're very comfortable with all the things we've done to see what we need to go ahead. And again, the 2 quarters visibility, 2 years of relationship and technical conversations. So somewhere between the second half lands and it's the usual kind of cadence we have. So nothing has changed there. I think from -- and then the second part of your question was about scale up going into 2027, 2028, Jayshree?

Jayshree Ullal

Yes. So listen, I think scale-up has been a tough market for us because it doesn't have all the software advantages that we bring, but it absolutely has the hardware skills and all the non-NVIDIA accelerators that Arista is in the best position to connect to. So this movement from stand-alone basic switches to that scale is something that Andy, Alex, you hold book, the entire team has been working on and codeveloping for a couple of years. It's hard work. .

Just as we are staring at InfiniBand and now we can do, of course, it's going to be Ethernet. We're looking forward to a time where we were staring at proprietary UA Link or NVLink and we're going to go, of course, it's going to be ESUN, but these type of migrations to do are multiyear. And so we're very confident not only in our '27 guide, but a promising '28 ahead as well. And the reason we are is because even though we have two quarters of visibility, we have 2 years of work behind us.

Operator

Our next question will come from the line of Tal Liani with Bank of America.

Tal Liani

Ladies and gentlemen, sorry, I'll start from the beginning. Thank you, I missed the call last time, and you raised the guidance substantially, and now you are doing it again. And on the other hand, I heard Chantelle explanation about deferred revenues, but the sequentials are slowing down. If I look at total Ferd and current deferreds are slowing down. But you are feeling more comfortable with next year and you're guiding well, well above the Street.

So the question is, when you look at orders versus recognizing from deferred because of the availability of components because of releasing kind of deferred revenues because of completion of build-out, et cetera. So what are the drivers for -- like same question about from different angles, what are the drivers for the growth? Is it orders? Or is there some part there of recognition of historical orders? And then is deferred revenue actually losing some of its predicting ability just because I see some decoupling between the deferred revenue trends and revenue growth trends.

Jayshree Ullal

Okay. Let me start and then, maybe Chantelle, will you take over? So I think, first you tell -- we missed you last quarter because we don't get this level of detail from anyone else on exactly what are the puts and takes. I just broadly look at you and say, hey, it's great demand. And if you want to dissect demand into how much is fitting into deferred, how much is fitting into our orders, how much is getting shipped into revenue, you're turning demand into a physics problem that I don't have the answer for. Because I don't predict or forecast deferred.

Deferred is a strong function of a new use case or a new product that eventually is not a new use case or a new product. So we had millions of dollars come out of deferred if this use case is satisfied. We had millions of dollars go in as deferred. And generally, that number, if you look at it over the last few quarters or if you look at it over the entire year, it's trending up but deferred is never going to be infinite.

It is going to come out and other new deferred will go in or the product becomes familiar and less new, right? So it's important to just look at this big picture and say, we got demand. We've got demand in AI, in enterprise, in campus, in data centers, and we're just in the best position we've been in a long, long time in my 18-year career. Over to you, Chantelle, you want to.

Chantelle Breithaupt

The only thing I think it was very well said, and I think that's the right perspective to take on this, so we don't get too lost in the means of a quarter-to-quarter basis. We're very confident in the demand in the guide. Burgas a balance sheet account that will reflect whatever happens in the quarter. So that is what it is. The only thing I would add, like I said before, Tal, we did it do last quarter, was that we anticipate the end of this year from a deferred balance to be higher than we ended last year, which shows that the P&L did what the P&L needed to do without deferred. And so if that helps you feel more comfortable with that and that's the only thing I do with.

Operator

Our next question will come from the line of Ryan Koontz with Needham & Company.

Ryan Koontz

I wanted to follow up on some of your scale-up commentary and ask about some of the technical design changes a little bit here with obviously, including more optics and including liquid cooling. And how will that change your fulfillment model? What things are you including in your sale versus partner to reference third parties? And maybe you can expand a little bit on your product plans around scale up and how we should think about the product changes?

Jayshree Ullal

Yes. Actually, that's a really good question, Ryan. We're still figuring it out ourselves. Because Arista's value in the rack scale is still the switch. But however, we have to design the whole rack and then work with different partners differently on whether they want the whole rack from us or the rest gets shipped through our manufacturing partners, while we basically ascertain the switch.

So each different stocks for different books because we've got 3 different designs going on with the orthogonal, the cable black plan and the cross rack designs, each one a little bit different. Give us a chance in the next few quarters to share with you what's going on with each one. There isn't one answer to your question.

The one last thing I do want to add to that is, but what's very clear is there's a lot of switches simming and water. A lot of it's liquid cool.

Operator

Our next question will come from the line of Karl Ackerman with BNP Paribas.

Karl Ackerman

Chantelle or Jayshree, I'd like to ask a question that was similar to peers, but in a slightly different way. In the context of your 2027 revenue outlook, can you speak to whether your revenue outlook is predicated on new permitting or financing of power shell infrastructure to achieve these forecasts? And as you address that, can you speak to whether you require an aggressive drawdown of your deferred revenue balance to achieve your outlook? I think I know the answer, but we love your view.

Jayshree Ullal

What do you think our answer is.

Chantelle Breithaupt

Yes. It's so nice to sometimes ask a question ourselves.

Karl Ackerman

I don't think you need to, but I would love clarification.

Jayshree Ullal

Okay. .

Chantelle Breithaupt

Yes, we're not -- we don't guide deferred. So I think that was the answer you were expecting to secondhand. I would say from the perspective of the guide next year, -- we are looking at what we know ahead of us, 2 quarters visibility taking a lien on the second half of the next year in the sense of what we've had conversations with some of our largest customers. the run rate we have in Cloud's business in a sense of enterprise and all that comes to other, but we don't guide deferred.

Jayshree Ullal

This question was are we counting on data center.

Chantelle Breithaupt

The first part, the second part was are we preparing to draw down deferred to hit the number?

Jayshree Ullal

Yes.

Chantelle Breithaupt

So we don't guide deferred, but I would say that we see a very strong demand signal and demand environment back to the momentum theme, but Jayshree, do you want to comment.

Jayshree Ullal

Right, exactly. So I think while we don't guide deferred, let me be clear that we do see plenty of new use cases and new products. 2027, like '26 is going to be filled with lots of new products. .

Operator

Our next question will come from the line of Jin Marcote with Deutsche Bank.

Unknown Analyst

Congrats on a full set of great numbers. As SU-144 moves towards production in '28, how should we think about gross margin economics relative to your existing switching portfolio. And how much customer commits do you already have behind those programs? .

Jayshree Ullal

You're talking about '27 or '28?

Unknown Analyst

It's about gross in for...

Jayshree Ullal

Look, since we went public, our long-term gross margin has always been in the 60% to $65. I think we've tightened the rain now to more like 62% to 64%. We don't see any change. .

Operator

Our next question will come from the line of Daniel Zhu with Bernstein.

Daniel Zhu

Well, congrats on a great quarter. I just want to ask how concentrated the customer base will scale across. Should we think about this as really being driven by the cloud titans for synchronous training? Or are we also seeing telcos deployments even among smaller customers or for infant use cases?

Jayshree Ullal

Yes. No, I think there are both small use cases and colos for scale across, which would be a smaller footprint switching and routing platforms like the 7280, but the concentration of our large customers also is high with our larger customers opting for the very large AI spine across data centers and requiring that kind of 576 port density and terabit scale and multi-gigawatt deployments for securities and performance. So we do see both. But I think the revenue concentration favors the 7800. The location concentration of multiple sites favors the 7280. .

Operator

Our next question will come from the line of Sean O'Loughlin with TD Cowen.

Sean O'Loughlin

Congrats on the fantastic results, ladies and gentleman. To just check in broadly on where we are actually in the front-end cycle. I think we've spent so much time talking about scale out, scale across back-end deployments and the focus on 800 gig and above in those deployments that maybe we collectively have lost track of where we are in the sort of more traditional front-end compute. I'm just wondering if you could comment on that and what you see in terms of market trends on the front-end specifically?

Jayshree Ullal

Yes. No, Sean, it's a very good question. I think there are -- it's like a sine wave. When everybody is focused on the back end, then there's -- in those customers, they're thinking less about the front end. And then sometimes when they're focusing a lot on the front end, they're not worrying as much about the back. If you look at it over a period of time, like 6 quarters to 2 years, you can capture both -- but in a given year, we had one 10% customer, for example, put a lot of thought into the multi-hundred-gig refresh of their front end before enhancing their back end. And so that particular year, the front end is very high, but the back end was low. The following year may be the reverse.

So if you tend to look at it over multiple quarters and years they even out. But if you go to look at it in a concentrated period of time, you'll usually see more of 1 than the other. Right now, in general, we're seeing more back end and AI fabrics, and I think the front end will catch up later.

Operator

Our next question will come from the line of Antoine Chkaiban with New Street Research.

Antoine Chkaiban

Congratulations on a very strong set of results. Ken, maybe 1 for you, I want to ask about AVA with all the recent high-profile infrastructure security breaches that we've been hearing about. It looks like that technology can address a very large opportunity. So how should we think about sizing it? How do you plan to monetize AVA? And is that going to fall into products? Or could you drive actually a meaningful acceleration in your services revenue?

Kenneth Duda

We are at early days in understanding all of that. We have just turned AVA on as an alpha feature for customer trial within our CloudVision service. And we are currently working on pricing models. I don't think I have any forecast or data to share with you at this time on that.

Jayshree Ullal

But I think it's very promising, Antoine, because back again to Ken's point that he repeatedly makes with me is the architecture of the U.S. is so sound that adding AVO CloudVision our capability to look at deeper details and get more analysis starts with the foundation, right? So we feel very privileged that we can sit here and make a tell, well, oh my god, our vulnerabilities doubled from 30 to 67 and we fix them. And therefore, we can go apply AVA. Everybody else is dealing with a game of wakamol where they've got thousands of vulnerabilities and no AVA can possibly keep track of it. So I think we feel in a very good position to monetize AVA in the next few years. .

Operator

Our next question will come from the line of Ben Bollin with Cleveland Research.

Benjamin Bollin

Jayshree and Todd, I suppose, I'm interested in your thoughts on where lead times are across the portfolio if we kind of carve it up into enterprise-centric and hyperscale centric? Just what those look like today? And I was hoping, Todd could talk maybe a little bit more big picture about the go-to-market effort, the execution within enterprise share capture and how that's building and where that goes from here?

Todd Nightingale

Yes, on the lead times, and it goes both for the component lead times on the finished good lead times. In the enterprise side of our business, we tend to have shorter lead times, somewhat shorter. And that's driven by the fact that those switching model is in the absolute cutting edge. They're not leading brand-new technologies requiring the highest process, silicon, et cetera. And we're able to -- they also tend to be at a lower price point, we're able to hold a little bit more buffered inventory there. So we tend to have lower component lead times there and lower lead times to our customers on the AI side, on the ultra advanced hyperscale data center lead times tend to be a little bit longer.

As far as the build-out on the go-to-market side, we were really -- we have been just really pleased with the momentum we've seen this year and the herd that's being built into the whole go-to-market on the kind of thought leadership side and the awareness side, we saw great momentum on the -- from webinars and from events. In fact, we have our largest customer event coming up in December, which we're very excited about. And on the sales execution side, it's been just phenomenal efficiency from that team, and we're looking forward to continuing to build out next year.

Jayshree Ullal

I just want to add, Todd, also I see that you and Chris Schmidt, Postea, you really heightened the investment not only in the United States, but with key verticals and international as well. So I think all of the go-to-market investments we've been making over the last year and in fact, the last 3 years is really paying off. .

Todd Nightingale

Absolutely.

Rudolph Araujo

Regina, we have time for one last question.

Operator

Our final question will come from the line of Mehdi Hosseini with Susquehanna.

Mehdi Hosseini

I have 2 quick follow-ups. Going back to your revenue guide for '27 is $8.5 billion. Should we assume that all the sell have been planned for? And then the second question, if you could elaborate on the mix between cloud and enterprise. I just want to get a better understanding how enterprises are investing as it relates to hyperscalers.

Todd Nightingale

Sorry, you asked is all the silicon planned for already in the $18.5 billion. .

Mehdi Hosseini

Should we -- since you are providing additional assessment on 2027 revenue target, should we assume that you have already planned with your suppliers and selling in secure for both compute and memory. And there are some that argue that ties is going to get worse in '27. I just want to make sure that there is no downside to this target as it relates to inventory management.

Todd Nightingale

Understand, understand. Yes. We work very, very closely. We're sort of proud of our strategic partnerships, and we've been investing heavily in long-term strategic agreements in order to secure supply, not just in silicon, but PCB capacity memory, which Chantelle mentioned earlier. So we're incredibly -- we have very high confidence in the ability to deliver supply to the forecast. We -- of course, we would not want to place everything to 5 quarters lead time for all of next year. So not every order is placed.

Rudolph Araujo

This concludes Arista Networks Third Quarter 2026 Earnings Call. We have posted presentations that provide additional information on our results, which you can access on the Investors section of our website. Thank you for joining us today and for your interest in ourself.

Operator

Thank you for joining, ladies and gentlemen. This concludes today's call, and you may now disconnect.