AI Takeaway
Arista Networks delivered a strong Q1 2026 with revenue surging 35.1% YoY to $2.71B and net income rising 25.7% to $1.02B, driven by robust demand for cloud networking solutions, while operating cash flow more than doubled to $1.69B.
Revenue
$2.71B
++35.13% YoY
EPS (Basic)
$0.81
++24.62% YoY
Gross Margin
61.9%
-1.75% YoY
Operating Income
$1.16B
++34.82% YoY
Filed · Source: SEC EDGAR 10-Q filing
Revenue grew 35.1% YoY from $2.00B to $2.71B in Q1 2026, reflecting sustained strong demand for Arista's cloud networking products and services across hyperscaler and enterprise customers.
Source: Source: 10-Q Income Statement, Q1 2026
Gross margin declined modestly by approximately 1.8 percentage points YoY to 61.9% (from 63.7%), likely reflecting a higher mix of hardware revenue and elevated cost of revenue which grew 41.6% YoY — faster than revenue growth of 35.1%.
Source: Source: 10-Q Income Statement & Key Ratios, Q1 2026
Operating income grew 34.8% YoY to $1.16B, with operating margin holding nearly flat at 42.7% (vs. 42.8% prior year), demonstrating Arista's ability to scale efficiently despite increased R&D investment of $343.7M (+29.0% YoY).
Source: Source: 10-Q Income Statement, Q1 2026
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Upgrade to unlockCost of revenue grew 41.6% YoY, outpacing revenue growth of 35.1%, compressing gross margin by ~180 basis points to 61.9%. If hardware-intensive deals continue to dominate the revenue mix, further margin erosion is possible in subsequent quarters.
Source: Source: 10-Q Income Statement & Key Ratios, Q1 2026
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Upgrade to unlockReported EPS of $0.87 versus the $0.82 analyst consensus — a +5.8% beat for Q1 FY2026.
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue | $2.71B | $2B | +35.13% |
Cost of Revenue | $1.03B | $728.7M | +41.65% |
Gross Profit | $1.68B | $1.28B | +31.40% |
Operating Income | $1.16B | $858.8M | +34.82% |
Net Income | $1.02B | $813.8M | +25.69% |
EPS (Basic) | $0.81 | $0.65 | +24.62% |
EPS (Diluted) | $0.80 | $0.64 | +25.00% |
R&D Expense | $343.7M | $266.4M | +29.02% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Total Assets | $21.66B | $14.51B | +49.20% |
Current Assets | $18.56B | $12.28B | +51.16% |
Total Liabilities | $8.17B | $4.4B | +85.86% |
Current Liabilities | $6.56B | $3.12B | +110.15% |
Stockholders' Equity | $13.49B | $10.12B | +33.28% |
Cash & Equivalents | $2.79B | $1.85B | +51.18% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Cash Flow | $1.69B | $641.7M | +163.91% |
Investing Cash Flow | $-865.3M | $-765.9M | -12.98% |
Financing Cash Flow | $0 | $-793.8M | +100.00% |
Share Buybacks | $0 | $787.1M | -100.00% |
D&A | $23.3M | $13.8M | +68.84% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Gross Margin | 61.9% | 63.7% | -1.75% |
Operating Margin | 42.7% | 42.8% | -0.10% |
Net Margin | 37.8% | — | — |
ROE | 7.6% | — | — |
ROA | 4.7% | — | — |
Current Ratio | $2.829 | — | — |
Debt to Equity | $0.606 | — | — |
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Arista Networks delivered a strong Q1 2026, with revenue of $2.71B (+35.1% YoY) and net income of $1.02B (+25.7% YoY). Diluted EPS came in at $0.80, up 25% from $0.64 in Q1 2025, reflecting continued strong demand for cloud networking solutions.
The standout highlights were revenue growth of 35.1% to $2.71B, operating cash flow surging 163.9% to $1.69B, and operating margin holding nearly flat at 42.7%. Gross margin compressed slightly by ~180 basis points to 61.9% due to faster-growing cost of revenue, and share buybacks were paused entirely compared to $787.1M in Q1 2025.
Arista's gross margin fell from 63.7% to 61.9% YoY because cost of revenue grew 41.6% — faster than revenue growth of 35.1%. This suggests a shift toward a more hardware-intensive product mix, which typically carries lower margins than software and services.
Arista's financial health appears strong: it holds $2.79B in cash, a current ratio of 2.83x, and a debt-to-equity ratio of 0.61x. However, current liabilities more than doubled YoY to $6.56B, which warrants monitoring, though the overall liquidity position remains comfortable.
Yes, Arista Networks reported $0 in share buybacks in Q1 2026, compared to $787.1M in Q1 2025 — a 100% YoY decline. This is a notable shift in capital allocation strategy, though the company's strong operating cash flow of $1.69B suggests ample financial flexibility going forward.