Arista Q3 2026 Revenue Jumps 58.5%, 2027 Growth Seen at 38%-40%

Arista Networks (NYSE: ANET) reported a 58.5% year-over-year increase in fiscal third-quarter 2026 revenue to $3.658 billion, its fastest quarterly growth since its initial public offering. The networking company attributed the performance to strong demand across product sectors, particularly AI and enterprise deployments, and projected revenue growth of 38% to 40% for 2027.

Non-GAAP operating income rose 60.1% to $1.796 billion, outpacing revenue growth, while non-GAAP operating margin widened to 49.1% from 48.6% a year earlier. GAAP operating income increased to $1.642 billion from $978 million, with GAAP operating margin reaching 44.9% compared with 42.4%.

Non-GAAP net income climbed 56.3% to $1.531 billion. Diluted non-GAAP earnings per share increased to $1.20 from $0.77 and exceeded the company’s guidance range of $1.06 to $1.08. GAAP net income was $1.560 billion, or $1.22 per diluted share, up from $853 million, or $0.67 per share, in the prior-year quarter.

AI and enterprise demand drive broad-based growth

Revenue increased across all reported regions. The Americas, Arista’s largest market, generated $2.975 billion, up 62% year over year. EMEA revenue rose 59% to $381 million, while APAC revenue grew 32% to $302 million. The company said enterprise growth led by campus networking continued to increase strongly in EMEA and APAC.

Non-GAAP gross margin was 64.0%, down from 65.2% a year earlier but above Arista’s guidance of about 63%. The company attributed the year-over-year change to customer mix, while product and customer mix drove the result above guidance. Disciplined manufacturing execution helped offset higher product costs. GAAP gross margin was 63.6%, compared with 64.6% in the third quarter of 2025.

Non-GAAP operating expenses declined to 14.9% of revenue from 16.6% a year earlier, even as Arista invested in liquid-cooling research and development. GAAP operating expenses totaled $683 million, or 18.7% of revenue, compared with $512 million, or 22.2%, in the prior-year period.

Arista generated $1.2 billion in quarterly operating cash flow, supported by net income. The company also said it was building inventory to support demand.

Commitments rise as Arista plans for capacity

Deferred revenue remained elevated at $6.840 billion at the end of the quarter, consisting of $5.1 billion in short-term deferred revenue and $1.7 billion in long-term deferred revenue. That compared with total deferred revenue of $6.866 billion in the second quarter. Arista said growth in product shipments and service renewals provides a foundation for future revenue recognition.

Purchase commitments increased to $11.4 billion from $9.7 billion in the preceding quarter and $6.8 billion at the end of fiscal 2025. About 80% of the commitments are expected to be used within 12 months. The company described the increase as part of long-term capacity planning for critical components and said supplier partnerships had helped it secure supply for demand.

Fourth-quarter and 2027 outlook

For the fourth quarter of 2026, Arista expects revenue of approximately $3.9 billion to $4.0 billion. It forecast a non-GAAP gross margin of about 63% to 64%, a non-GAAP operating margin of 48% to 49%, and diluted non-GAAP earnings of $1.26 to $1.30 per share. The forecast assumes 1.280 billion diluted shares and a non-GAAP tax rate of 21%.

For 2027, management expects revenue to grow 38% to 40% year over year, with a non-GAAP gross margin of 62% to 64% and a non-GAAP operating margin of about 49%. Arista set revenue goals of approximately $7 billion for AI fabrics and $2 billion for campus products, alongside an expected non-GAAP tax rate of about 21%.

The outlook remains subject to risks including tariffs and trade countermeasures, import and export restrictions, constrained or limited-source components, dependence on a predominant merchant silicon supplier, customer concentration and uncertain technology spending. Arista also identified rapid changes in networking technology, intense competition, currency movements, cybersecurity incidents, reliance on third-party manufacturers and uncertainty surrounding AI regulation among factors that could cause actual results to differ from its expectations.