2026
Notice &
Proxy Statement
2025
Annual Report
DEAR ARISTA NETWORKS STOCKHOLDERS:
Fiscal 2025 was another incredible year of progress and innovation
for Arista, evidenced by our achievement of significant financial and
operational milestones. I am so proud of the team’s execution in
continuing to deliver the ultimate combination of superior growth
and profitability. We advanced our delivery of modern platforms
enabling AI for networking and networking for AI.
Fiscal 2025 was another exceptional year full of progress for Arista. We delivered
unprecedented revenue of $9.006 billion for our fiscal year 2025, an increase of 28.6%
compared to fiscal year 2024. Meanwhile, we maintained a gross margin of 64.1%, the
same gross margin as in fiscal year 2024. This strong performance resulted in net income
for fiscal year 2025 of $3.511 billion, or $2.75 per diluted share, compared to net income
of $2.852 billion, or $2.23 per diluted share, in fiscal year 2024.
Our exceptional performance is underpinned by significant innovation and development.
For example:
• We unveiled the R4 series platforms for AI, data center, and routed backbone
deployment, which are built to deliver high performance, low AI job completion times,
low power consumption, and integrated security, while helping customers reduce
total cost of ownership.
• We launched cognitive campus switches for the industrial edge, which bring the
power, reliability, and operational simplicity of our Extensible Operating System
(“EOS”) to demanding industrial or outdoor environments.
• We collaborated with industry leaders to deliver Ethernet for Scale-Up Networks
(ESUN), which was unveiled at the OCP Global Summit in October 2025.
• We acquired the VeloCloud® SD-WAN Portfolio from Broadcom, which enables
customers to securely and efficiently interconnect data centers and distributed
campus/branch offices while complementing Arista’s existing portfolio.
• We announced AI agents to streamline network operations with the combined power of
open standards like MCP and the robust data and programmability of Arista’s EOS and
NetDL, empowering organizations to build, manage, and secure the networks of the
future.
We have much to be proud of during our more than two decades of business and will
continue to approach the future with the same hunger and quest for innovation as we
did since our founding. We are well positioned with strong leadership and we look
forward to bringing new products and technology to market that support and meet
customer needs.
I thank Arista stockholders, customers, partners and our employees for your continued
support.
JAYSHREE ULLAL
Chief Executive Officer and Chairperson
Arista Networks, Inc.
April 16, 2026
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Friday, May 29, 2026 at
11:00 a.m. Pacific Time
DATE AND TIME
www.virtualshareholdermeeting.
com/ANET2026
VIRTUAL MEETING
April 2, 2026
RECORD DATE
DEAR STOCKHOLDERS OF ARISTA NETWORKS, INC.:
The 2026 annual meeting of stockholders (the “Annual Meeting”) of Arista Networks, Inc., a Delaware corporation, will be
held on Friday, May 29, 2026 at 11:00 a.m. Pacific Time. The Annual Meeting will be conducted in a virtual format to
provide convenience to our stockholders and enable increased stockholder participation. You will be able to attend the
Annual Meeting online and submit your questions during the meeting at www.virtualshareholdermeeting.com/ANET2026.
To access the virtual meeting, you will need to enter the control number included in your Notice of Internet Availability of
Proxy Materials (the “Notice”), on your proxy card or on the instructions that accompanied your proxy materials.
Our board of directors has fixed the close of business on April 2, 2026 as the record date for the Annual Meeting or any
postponement, adjournment or continuation thereof. Only stockholders of record at the close of business on April 2,
2026 are entitled to notice of and to vote at the Annual Meeting or any postponement, adjournment or continuation
thereof. Further information regarding voting rights and the matters to be voted upon is presented in the accompanying
proxy statement. If you plan on attending the Annual Meeting as a stockholder, you must follow the instructions set forth
on page 13 of the accompanying proxy statement.
On or about April 16, 2026, we expect to mail to our stockholders the Notice, which provides instructions on how to
access our proxy statement for the Annual Meeting and our annual report to stockholders, how to vote online or by
telephone, and how to receive a paper copy of the proxy materials by mail. The accompanying proxy statement and our
annual report can be accessed directly at the following Internet address: www.proxyvote.com. All you have to do is enter
the control number located on your proxy card.
YOUR VOTE IS IMPORTANT. We urge you to submit your vote via the Internet, telephone or mail.
We appreciate your continued support of Arista Networks, Inc. and look forward to either greeting you virtually at the
Annual Meeting or receiving your proxy.
By order of the Board of Directors,
JAYSHREE ULLAL
Chief Executive Officer and Chairperson
Santa Clara, California
April 16, 2026
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TABLE OF CONTENTS
2026 PROXY STATEMENT SUMMARY
1
Proposals and Board Recommendations
1
Director Nominees
1
2025 Business Highlights
2
Board of Directors Snapshot
3
Our Commitment to Corporate Responsibility
5
QUESTIONS AND ANSWERS
13
BOARD OF DIRECTORS & CORPORATE
GOVERNANCE
17
Nominees for Director
18
Continuing Directors
21
Key Elements of Board Independence at Arista
24
Director Commitments
24
Board Leadership Structure
25
Lead Independent Director
25
Board Structure
25
Board of Directors Evaluation Process
26
Board of Directors Meetings and Committees
27
Compensation Committee Interlocks and Insider
Participation
30
Considerations in Evaluating Director Nominees
30
Stockholder Recommendations for Nominations to
the Board of Directors
31
Stockholder Outreach
31
Communications with the Board of Directors
38
Role of Board of Directors in Risk Oversight
38
Role of Board of Directors in Oversight of
Corporate Responsibility
40
Talent Management and Succession Planning
40
Director Compensation
42
PROPOSAL NO. 1 ELECTION OF DIRECTORS
44
Nominees
44
Vote Required
44
PROPOSAL NO. 2 ADVISORY VOTE ON
EXECUTIVE COMPENSATION
45
Vote Required
45
PROPOSAL NO. 3 RATIFICATION OF
INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
46
Fees Paid to the Independent Registered Public
Accounting Firm
46
Auditor Independence
47
Audit Committee Policy on Pre-Approval of Audit
and Permissible Non-Audit Services of
Independent Registered Public Accounting Firm
47
Vote Required
47
AUDIT COMMITTEE REPORT
48
EXECUTIVE OFFICERS
49
COMPENSATION COMMITTEE REPORT
50
EXECUTIVE COMPENSATION
50
Compensation Discussion and Analysis
50
Overview
52
Effect of Most Recent Stockholder Advisory Vote
on Executive Compensation
53
Executive Compensation Philosophy and
Objectives
54
Executive Compensation Program Components
57
Named Executive Officer Employment
Arrangements
66
Fiscal 2025 Summary Compensation Table
69
Outstanding Equity Awards at 2025 Fiscal
Year-End
70
Fiscal 2025 Grants of Plan-Based Awards
74
Fiscal 2025 Option Exercises and Stock Vested
75
Pension Benefits
75
Nonqualified Deferred Compensation
75
Potential Payments Upon Termination or Change
in Control
76
2026 PROXY STATEMENT
i
Risk Assessment and Compensation Practices
77
Compensation Policies and Hedging/Pledging
Policies
77
Insider Trading Policy
78
Tax and Accounting Considerations
78
CEO Pay Ratio
79
Pay Versus Performance
80
Equity Compensation Plan Information
85
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
86
RELATED PERSON TRANSACTIONS
89
Policies and Procedures for Related Person
Transactions
89
OTHER MATTERS
90
Householding
90
Stockholder Proposals
90
Availability of Bylaws
91
Fiscal Year 2025 Annual Report and SEC Filings
91
Forward-Looking Statements
91
APPENDIX A
Reconciliation of Selected GAAP to Non-GAAP
Financial Measures
A-1
ii
Appendices
Other
Matters
Security
Ownership
Voting
Proposals
Executive Officers
& Compensation
Proxy
Summary
Board and
Corporate Governance
2026 PROXY STATEMENT SUMMARY
This proxy statement and the enclosed form of proxy are furnished in connection with the solicitation of proxies by
our board of directors for use at the 2026 annual meeting of stockholders of Arista Networks, Inc., a Delaware
corporation (“we,” “us,” “our,” the “Company” or “Arista”), and any postponements, adjournments or continuations
thereof (the “Annual Meeting”). Our principal executive offices are located at 5453 Great America Parkway, Santa
Clara, California 95054. This summary highlights information contained in this proxy statement. We encourage you to
read the entire proxy statement for more information prior to voting.
Annual
Meeting
Friday, May 29, 2026 at 11:00 a.m. Pacific Time
DATE AND TIME
www.virtualshareholdermeeting.com/ANET2026
VIRTUAL MEETING
YOUR VOTE IS IMPORTANT. We urge you to submit your vote via the Internet, telephone or mail.
April 2, 2026
RECORD DATE
Proposals and Board Recommendations
1
Proposal for your Vote: Page 44
Elect three Class III directors to serve until the 2029 annual meeting of stockholders
Board Voting Recommendation:
FOR the election of Lewis Chew, Greg Lavender and Mark B. Templeton
2
Proposal for your Vote: Page 45
Advisory vote to approve our named executive officer compensation
Board Voting Recommendation: FOR
3
Proposal for your Vote: Page 46
Ratification of the appointment of Ernest & Young LLP as our independent registered public
accounting firm
Board Voting Recommendation: FOR
Director Nominees
Name and Occupation
Age
Director Since
Independent
Committees
Lewis Chew, Director
63
2021
Audit
Greg Lavender, Director
65
2025
Audit
Mark B. Templeton, Director
73
2017
Compensation
2026 PROXY STATEMENT
1
Appendices
Other
Matters
Security
Ownership
Voting
Proposals
Executive Officers
& Compensation
Proxy
Summary
Board and
Corporate Governance
2025 Business Highlights
$9B
REVENUE
64.1%
GAAP GROSS MARGIN
$3.5B
GAAP NET INCOME
2025 Achievements
• Revenue for our fiscal year 2025 was $9.006 billion, an increase of 28.6% compared to fiscal year 2024.
• Arista unveiled the R4 series platforms for AI, data center, and routed backbone deployment, which are built to
deliver high performance, low AI job completion times, low power consumption, and integrated security, while
helping customers reduce total cost of ownership.
• Arista introduced innovations for massive scale campus mobility, including the Arista Virtual Ethernet Segment with
Proxy ARP (Arista VESPA), which enables customers to deploy large-scale WLAN mobility domains.
• Arista’s AVA (Autonomous Virtual Assistant) was extended with additional agentic AI capabilities for use cases such
as multi-domain event correlation, continuous monitoring, and network troubleshooting.
• Arista launched cognitive campus switches for the industrial edge, which bring the power, reliability, and
operational simplicity of our Extensible Operating System (“EOS”) to demanding industrial or outdoor environments.
• Arista engaged with industry leaders to deliver Ethernet for Scale-Up Networks (ESUN), which was unveiled at the
OCP Global Summit in October 2025 as an OCP workstream committed to the goal of open standards-based
solutions for scale-up AI networking.
• Arista announced AI agents to streamline network operations with the combined power of open standards like
MCP and the robust data and programmability of Arista’s EOS and NetDL. These agents empower organizations
to more efficiently build, manage, and secure modern networks.
• Arista acquired the VeloCloud® SD-WAN Portfolio from Broadcom. VeloCloud enables customers to securely and
efficiently interconnect data centers and distributed campus/branch offices while complementing Arista’s existing
portfolio.
• Arista expanded its executive ranks when Todd Nightingale was appointed President and Chief Operating Officer,
Kenneth Duda was promoted to President and Chief Technology Officer, and Tyson Lamoreaux was appointed
Senior Vice President of Cloud and AI Networking.
2
Appendices
Other
Matters
Security
Ownership
Voting
Proposals
Executive Officers
& Compensation
Proxy
Summary
Board and
Corporate Governance
Board of Directors Snapshot
The following tables set forth information as of April 2, 2026, for each of our directors with terms expiring at the
Annual Meeting and for each of the continuing members of our board of directors:
DIRECTORS WITH TERMS EXPIRING AT THE ANNUAL MEETING/DIRECTOR NOMINEES
BOARD COMMITTEES
Name
Class Age
Director
Since
Current Term
Expires
Expiration of
Term for
Which
Nominated Audit Comp Nom. & Gov Independent
Lewis Chew
(Director Nominee)
III
63
2021
2026
2029
CHAIR
✓
Greg Lavender
(Director Nominee)
III
65
2025
2026
2029
+
✓
Mark B. Templeton
(Director Nominee)
III
73
2017
2026
2029
+
✓
CONTINUING DIRECTORS
BOARD COMMITTEES
Name
Class
Age
Director
Since
Current Term
Expires
Audit
Comp Nom. & Gov Independent
Kelly Battles
I
59
2020
2027
+
✓
Charles Giancarlo
II
68
2013
2028
CHAIR
✓
Kenneth Duda
I
54
2023
2027
Daniel Scheinman
II
63
2011
2028
+
CHAIR
✓
Jayshree Ullal
I
65
2008
2027
Yvonne Wassenaar
II
57
2022
2028
+
+
✓
77%
7/9 of our directors are
independent
2
7
INDEPENDENT
33%
3/9 of our directors
are women
6
3
FEMALE
55%
5/9 of our directors
have served for less
than 6 years
5
4
<6 YR TENURE
2026 PROXY STATEMENT
3
Appendices
Other
Matters
Security
Ownership
Voting
Proposals
Executive Officers
& Compensation
Proxy
Summary
Board and
Corporate Governance
BOARD SKILLS MATRIX
The following table summarizes the key qualifications, skills and attributes of our director nominees and the
continuing members of our board of directors. A mark indicates a specific area of focus or expertise on which our
board of directors particularly relies. Not having a mark does not mean the director does not possess that
qualification or skill. Our directors’ biographies describe each director’s background and relevant experience in
greater detail.
Battles
Chew
Duda
Giancarlo
Lavender
Scheinman
Templeton
Ullal
Wassenaar
Industry Expertise
Insight in the cloud and software industry to oversee
our business and the risks we face.
+
+
+
+
+
+
+
+
+
Senior Leadership
Experience in senior leadership positions to analyze,
advise and oversee management in decision making,
operations and policies.
+
+
+
+
+
+
+
+
+
Financial Knowledge and Expertise
Knowledge of financial markets, financing and
accounting and financial reporting processes.
+
+
+
+
+
+
+
+
Backgrounds and Experiences
Backgrounds and experiences that provide unique
perspectives and enhance decision-making.
+
+
+
+
Cybersecurity/Information Security
Expertise to oversee cybersecurity, privacy, and
information security management.
+
+
+
+
+
Sales, Marketing and Brand Management
Sales, marketing and brand management experience
to provide expertise and guidance to grow sales and
enhance our brand.
+
+
+
+
+
Global/International Experience and Knowledge
Experience and knowledge of global operations,
business conditions and culture to advise and oversee
our global business.
+
+
+
+
+
+
+
+
Governance, Risk Oversight and Compliance
Experience in public company corporate governance,
risk oversight and management, compliance, policy
and creating long term sustainable value.
+
+
+
+
+
+
+
+
Emerging Technologies and Business Models
Experience identifying and developing emerging
technologies and business models to advise, analyze
and strategize regarding emerging technologies,
business models and potential acquisitions disrupting
our industry, business and company.
+
+
+
+
+
+
+
+
+
Human Capital Management
Experience attracting and retaining top talent to advise
and oversee our people and compensation policies.
+
+
+
+
+
+
+
+
+
Public Company Board Experience
Experience to understand the dynamics and operation
of a public company and the applicable legal and
regulatory landscape and risks.
+
+
+
+
+
+
+
+
+
Corporate Responsibility Experience
Experience addressing governance, environmental
and social issues, including climate risk.
+
+
+
+
+
+
+
4
Appendices
Other
Matters
Security
Ownership
Voting
Proposals
Executive Officers
& Compensation
Proxy
Summary
Board and
Corporate Governance
Our Commitment to Corporate Responsibility
Arista is committed to continued transparency, proactive engagement and consistent communication of our
corporate responsibility strategies and programs. Our core competency remains designing, manufacturing and
delivering leading software-driven cloud networking solutions. However, Arista is also dedicated to delivering a
superior customer experience, increasing stockholder value, serving our communities and creating a workplace
where talent is rewarded and can thrive. To maximize our efforts, we continue to focus our corporate programs on
key material aspects related to good governance, environmental stewardship, supply chain management, and social
responsibility.
Arista is committed to achieving excellence in our governance practices and
to maintaining a strong foundation for our long-term success. We emphasize
a culture of accountability and conduct our business in a manner that is fair,
ethical, and responsible to earn the trust of our stakeholders, including
customers, employees, investors, partners, and regulators.
Governance
We are committed to sound corporate governance principles that we believe serve the best interest of all our
stockholders and to maintaining the highest level of professional and ethical standards in the conduct of our business
around the world. Our board of directors and senior leadership team recognize the continued importance of striving
to meet all our responsibilities. We believe our reputation for integrity and fair dealing is an important component of
our success and the personal satisfaction of our employees. We are also dedicated to driving additional progress in
initiatives to enhance sustainability, employee engagement and transparency through continuous improvement.
The core values of Arista reflect what is truly important to us as an organization. Arista was founded on the principle
of doing things the “Arista Way,” which is to drive for customer success in every aspect of what we do. We build and
deliver innovative, high-quality products and services through commitment, innovation and uncompromising focus on
customer needs. This includes a commitment to designing, manufacturing and delivering leading software-driven
cloud networking solutions in an environmentally and socially responsible manner and our corporate governance
practices, such as those listed below, are meant to further our pursuit of the “Arista Way.”
Board
Oversight
Oversees the Company’s strategy, annual business plans, Enterprise Risk
•
Management framework, cybersecurity and culture, values and conduct
• Regularly reviews succession plans for our Chief Executive Officer ("CEO")
and other key executives
• Oversees Company initiatives in areas such as supply chain and human
capital management
Independent
Board
• Executive sessions of independent directors at each regularly scheduled
board meeting
• Strong Lead Independent Director facilitates independent board oversight
of management and has expansive duties including setting agendas for
the board meetings
Annual
Evaluations
•
Annual board of directors and committee self-assessments enhance
performance
• Encompasses board and committee structure and composition, culture,
process and relationship with management
• Supplemented by continuing director education
2026 PROXY STATEMENT
5
Appendices
Other
Matters
Security
Ownership
Voting
Proposals
Executive Officers
& Compensation
Proxy
Summary
Board and
Corporate Governance
Stockholder
Engagement
• Active, year-round stockholder engagement process where we meet with
our stockholders and other key stakeholders
• Host Investor Day
• In 2025 and into 2026, we engaged with stockholders representing
approximately 45% of outstanding shares
• Present at investor conferences
Corporate
Governance
Policies
• Stock Ownership Guidelines for directors, CEO, Chief Financial Officer ("CFO")
and Presidents
• Clawback Policy for executive officers
• Proxy access for director nominees (available to eligible stockholders who
have for at least 3 years maintained continuous ownership of at least 3% of
our common stock) to not exceed the greater of 2 or 20% of directors in office
• Robust Corporate Governance Guidelines
• Insider Trading Policy prohibits, among other things, hedging and pledging
Arista has robust and comprehensive policies and procedures in place that support honest business conduct and
solid business ethics. The full text of several of these policies, including our Code of Ethics and Business Conduct,
Corporate Governance Guidelines, and Whistleblower Policy are available in the Governance section of our website
at https://investors.arista.com.
Code of Ethics
and Business
Conduct
Our Code of Ethics and Business Conduct emphasizes the importance of
honest business conduct and solid business ethics. Our Code of Ethics and
Business Conduct applies to all personnel employed by or engaged to provide
services to Arista including, but not limited to, our employees, officers and
directors, including our CEO, CFO, and other executive and senior financial
officers. Arista provides periodic training on our Code of Ethics and Business
Conduct. Our Code of Ethics and Business Conduct addresses, among other
things, conflicts of interest, business practices, compliance with laws and
regulations, and interacting fairly and respectfully with each other, our customers,
partners, suppliers and host communities.
Anti-Corruption
Policy
We are committed to complying with applicable international and domestic
anti-corruption laws, including the U.S. Foreign Corrupt Practices Act, the
U.K. Bribery Act and applicable local laws. Our Anti-Corruption Compliance
Policy & Guidelines outline the parameters of what is acceptable and what is not
acceptable from an anti-corruption perspective. We have established procedures
for conducting due diligence on our partners, manufacturers, suppliers, logistics
providers and other third parties that may interact with foreign officials on
our behalf.
Whistleblower
Policy
Our Whistleblower Policy further supports our governance goals by encouraging
transparency, facilitating confidentiality, and providing multiple avenues for
employees and non-employees to submit concerns about accounting, auditing
or other matters.
6
Appendices
Other
Matters
Security
Ownership
Voting
Proposals
Executive Officers
& Compensation
Proxy
Summary
Board and
Corporate Governance
Artificial
Intelligence
Policy
We have an internal Artificial Intelligence ("AI") Policy that establishes the basic
principles for the responsible, secure, and ethical development, deployment,
and use of artificial intelligence technologies within Arista. Our AI Policy
acknowledges that a formal AI governance structure and risk management
program are required to ensure consistent oversight and control of AI, and
establishes a cross-functional executive AI governance committee.
Risk
Management
Our internal risk management teams oversee compliance with applicable laws
and regulations and coordinate with subject matter experts throughout our
business to identify, monitor and mitigate risk including information security risk
management and cybersecurity programs. Arista performs an enterprise risk
assessment that is reviewed by the Audit Committee on an annual basis and
monitored on a quarterly basis by the Audit Committee. The enterprise risk
assessment is an assessment of key risks, including cybersecurity, data privacy,
supply chain, human capital, and other risks.
STOCKHOLDER OUTREACH
We regularly evaluate our corporate governance practices against prevailing best practices and emerging and
evolving topics identified through stockholder outreach, current literature and corporate governance organizations.
We are receptive and responsive to the perspectives of our stockholders as expressed through their engagement
with us. As we have in previous years, we again engaged in meaningful, robust and proactive stockholder outreach
throughout 2025 and into 2026, with participation by several of our independent directors, including our Lead
Independent Director and the Chair of our Compensation Committee, senior leadership, and investor relations team.
* Only includes outreach to and engagement with institutional stockholders. The number of outstanding shares held by any
particular stockholder was determined as of December 31, 2025 or, as needed, the latest date available to us. The number
of our outstanding shares was determined as of December 31, 2025.
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PROACTIVELY CONTACTED
stockholders representing over
40%
of outstanding shares*
ENGAGED WITH
stockholders representing
approximately
45%
of outstanding shares*
HELD OVER
100
engagement meetings
These discussions covered a wide variety of topics, including executive compensation, corporate governance, and
sustainability. We take our stockholders’ feedback on all matters, including executive compensation, seriously, as
discussed further in the section entitled “Board of Directors & Corporate Governance — Stockholder Outreach.”
Furthermore, we are committed to meaningful outreach and engagement with our stockholders again in the coming
year.
In particular, we understand the importance of stockholder input on our executive compensation, particularly in light
of our say-on-pay vote in 2025. As discussed in detail in the section entitled, “Board of Directors & Corporate
Governance — Stockholder Outreach — Response to 2025 Say-On-Pay,” members of our board of directors,
including the Chair of the Compensation Committee, senior leadership and the investor relations team reached out to
our stockholders for input specifically about our executive compensation program. During this focused outreach, we
obtained feedback from 18 stockholders, collectively representing over 30% of our shares outstanding, including 10
of our top 25 institutional stockholders. Our Compensation Committee took the feedback from our stockholders
seriously when considering the design of our executive compensation programs.
2026 PROXY STATEMENT
7
Appendices
Other
Matters
Security
Ownership
Voting
Proposals
Executive Officers
& Compensation
Proxy
Summary
Board and
Corporate Governance
EXECUTIVE COMPENSATION HIGHLIGHTS
We are committed to aligning executive compensation incentives with the best interests of Arista and our
stockholders. Therefore, a significant portion of the direct compensation opportunity for Named Executive Officers
(“NEOs”) is variable and “at-risk” because it is contingent on the achievement of defined performance goals.
Furthermore, the equity vesting structure for our NEOs requires long service periods before equity awards vest in full,
incentivizing retention and a long-term perspective. As discussed further in the section entitled “Executive
Compensation,” we believe that our executive compensation program is designed to align executive compensation
with performance and promote retention.
As part of designing an effective executive compensation program, we have adopted many compensation-related
best practices. The following compensation governance standards in our executive compensation policies and
practices are currently in effect:
What We Do
What We Do Not Do
Annual Review. We perform annual reviews of
our executive compensation program.
Performance-Based Equity. In 2025, we
continued to use performance-based equity as a
significant part of our compensation program for
our NEOs.
Independence. Our Compensation Committee is
made up solely of independent directors and
makes all executive compensation decisions.
Compensation Consultant. Our Compensation
Committee engages its own independent
compensation consultant to assist with its
compensation reviews.
Stock Ownership Guidelines. To align the long-
term interests of our CEO, CFO, and Presidents
with those of our stockholders, these executives
are required to own specified minimum levels of
Company stock.
Clawback Policy. We may seek the recovery of
cash incentive compensation and performance-
based equity compensation paid to our executive
officers.
Robust Stockholder Engagement. We engaged in an
active, year-round stockholder engagement
process where we meet with our stockholders and
other key stakeholders to discuss, among other
topics, our executive compensation programs.
Annual Advisory Say-On-Pay. We solicit an advisory
vote on executive compensation on an annual
basis.
No Executive-Only Retirement Programs.
We do not offer pension arrangements,
retirement plans, or nonqualified deferred
compensation plans or arrangements to our
executive officers, other than the plans generally
available to all employees.
No Excise Tax Gross-Ups. We do not offer
golden parachute tax gross-ups to any of our
NEOs or other executive officers.
No “Single-Trigger” Benefits and Limited
“Double-Trigger” Benefits. Potential change in
control payments and benefits are limited in
nature and are received only in connection with
the termination of employment without cause or
for good reason in connection with or following a
change in control.
No Equity Award Repricing or Exchange. Awards
under our 2014 Equity Incentive Plan (the “2014
Plan”) may not be repriced or exchanged without
stockholder approval.
No Dividends or Distributions. No dividends or
distributions are paid with respect to the
unvested portion of awards under our 2014 Plan.
8
Appendices
Other
Matters
Security
Ownership
Voting
Proposals
Executive Officers
& Compensation
Proxy
Summary
Board and
Corporate Governance
Environment
Arista is dedicated to responsible environmental practices that include climate
change resilience, conservation of natural resources, pollution prevention and
reduction of waste. We foster environmental awareness in our employees and
partners, engaging them to reduce their footprint and waste, while collaborating
to innovate powerfully efficient sustainable data technology solutions.
Arista’s Environmental Policy, ethos, and culture of
efficiency and innovation continue to drive our
passionate and pragmatic approach to environmental
sustainability. Through our Environmental
Management System, Arista implements our
objectives for achieving pollution prevention,
environmental protection and monitoring,
environmental sustainability, greenhouse gas (“GHG”)
emissions and climate risk management, and ongoing
proactive monitoring and continuous improvement in
the environmental performance of our operations.
In 2025, Arista’s Science-Based Targets were validated and
approved by the Science Based Targets Initiative (“SBTi”),
and Arista is now implementing these targets in earnest, with
great dedication, with an expanded team to support greater
net zero supplier and customer engagement. We continue to
lead in transparency, disclosing the results of our third-party
verified, comprehensive inventory of Scope 1, 2, and 3 GHG
emissions. 2025 was a year of integration and internal
capacity building to enhance cross-functional alignment to
better serve our customer needs in the age of AI datacenter
energy challenges and ever-increasing global resource
constraints through further innovations in product energy
and resource efficiency. We also convened a cross-
functional team to complete an updated climate risk
assessment to support enhanced readiness for potential
transitional, market and physical risks.
Each new generation of our products demonstrates
improved network capacity and energy efficiency for
high performance data center installations. This
evolution supports reductions in GHG emissions
intensity and power consumption for our customers
to advance their sustainability goals. In addition,
Arista’s new products continue to use power supplies
that are rated 80-Plus Platinum or better, which helps
reduce the total product power consumption and
heat generated from the power supplies.
2026 PROXY STATEMENT
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We are committed to integrating sustainability in every
aspect of our products’ life cycles across the value
chain, from the materials and components that make
up our products, to the end of life of the product, while
meeting Arista customers’ requirements and supporting
their sustainability aspirations. For example, our certified
recycling partners ensure environmentally responsible
disposal in compliance with ISO 14001 standards. We
continue to implement Design for Environment
principles in our development process with the goal of
minimizing the overall adverse environmental impact of
our products. Specifically, Arista focuses on reducing
material diversity and weight, selecting more
environmentally friendly materials, designing for ease of
disassembly and recycling, energy efficiency, longevity,
upgradeability, and efficient and sustainable packaging.
Providing an amazing customer and product experience and technological
leadership all starts with a great team. We are focused on growing our team
of employees and prioritize providing resources that enrich their professional
development and personal total wellness. We believe that our ongoing success
depends upon a skilled, satisfied, and valued workforce.
Social Responsibility
As such, Arista provides opportunities for our employees to gain necessary and desired skills and knowledge as well
as upskill via a library of on-demand classes, webinars and in-person training.
Arista’s employees participate in incentive stock and
bonus plans that support our organizational philosophy
of allowing employees to share in our performance and
success. Our executive compensation program is
designed to attract, retain, and reward performance
and align incentives with achievement of Arista’s
strategic plan and both short- and long-term operating
objectives. In accordance with our compensation
philosophy established by the Compensation
Committee and the board of directors, we believe our
executive pay is well aligned with performance, creating
a positive relationship between our operational
performance and stockholder returns.
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Arista is all about respect, integrity, innovation, passion, pride, and trust. We conduct employee engagement surveys
globally on an annual basis to gather information and feedback from our team members. We use a holistic
organization-wide approach to respond to the results of the surveys, analyzing the data for potential actions and
positive change that can be taken in the areas of leadership, communication, culture, inclusion, professional
development and other areas. Beyond the workplace, the health and wellbeing of our colleagues is among our top
priorities and in recognition of this, Arista offers ongoing wellness webinars and quarterly wellness weeks focused on
mental, physical and financial health, social activity and professional development.
We strive to build an inclusive culture that encourages, supports and celebrates the voices of all our employees. It
fuels our innovation and connects us closer to the customers and communities we serve. We believe that the voices
of our employees are the ultimate barometer in evaluating our success. In 2025, Arista was extremely honored and
humbled to receive a record number of external recognitions primarily based on enthusiastic employee feedback.
These recognitions include:
We are committed to developing a qualified and motivated workforce to power
our continued evolution. The health and safety of our employees is among our
top priorities. Our policy is to maintain our facilities and run our business
operations in a manner that does not jeopardize the occupational health and
safety of our employees. We provide necessary and legally required training to
employees on safety standards and protocols. Our Global Facilities team
continues to proactively work to reduce and eliminate potential risks and
ensures compliance with local laws and regulations. To evaluate performance,
we regularly measure and monitor workplace safety and implement continuous
improvements.
We are aware of how our presence and partnership can positively impact others.
Therefore, we are consciously and continuously working to systemically create
positive change in our communities by partnering with impactful nonprofits
through fundraising and sponsorship activities as well as volunteer events. The
Arista Foundation’s giving priorities are aligned with the United Nations’
Sustainable Development Goals and are generally focused on education, hunger,
environmental sustainability, and disaster relief. In 2025, we are proud to have:
• Continued our partnership and support of Arizona State University, including
their Technical Upskilling program, providing workforce readiness training and
technical certification opportunities.
• Rapidly hosted an employee fundraiser with matching Arista Foundation support
to provide aid for those impacted by the fires in Southern California and the
floods in Punjab, India.
• Planted trees globally through partnerships with a number of nonprofits.
• Provided over a million meals to people in need through a combination of
employee donations and matching Arista Foundation funds as part of our annual
Global Giving Drive through our partners, Second Harvest of Silicon Valley,
Feeding America, New Hampshire Food Bank, Central Texas Food Bank,
Greater Vancouver Food Bank, and Foodbank Australia.
2026 PROXY STATEMENT
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Through strategic nonprofit partnerships, pro bono work, volunteerism and philanthropy, our corporate responsibility
efforts are focused on contributing to the creation of a better world. Going forward, Arista will continue to partner with
nonprofit organizations that work to increase the number of individuals having access to education, decrease the
number of individuals facing economic barriers and support the communities in which we operate and our employees
work and live.
Supply Chain
We engage proactively with external stakeholders because manufacturing
our products creates environmental and social impacts that extend far
beyond the walls of Arista.
We engage responsibly and proactively with suppliers throughout our global supply chain to conserve resources,
save costs, and ensure ethical practices and sustainable sourcing. Our Supply Chain Sustainability Expectations
Policy defines explicit requirements designed to reflect industry-leading practices. As a proud member of the
Responsible Business Alliance (“RBA”), which strives to develop a global supply chain that consistently operates with
social, environmental and economic responsibility, we work to embed RBA practices in our operations.
In accordance with the commitments in our Human Rights Policy, Arista takes measures to continuously ensure the
absence of slavery, human trafficking and forced labor in our supply chain and therefore, ensure compliance with the
California Transparency in Supply Chains Act, Australian Modern Slavery Act and the UK Modern Slavery Act. We
perform supplier risk assessments and encourage our suppliers to adhere to the RBA Code of Conduct, which
outlines comprehensive standards across labor practices, health and safety, environmental stewardship, business
ethics, and management systems. Furthermore, we continue to be a member of the Responsible Minerals Initiative
and have management systems in place to ensure that the components of our products are sourced responsibly.
Arista’s website contains more information on our corporate responsibility programs. We routinely engage with our
stockholders to better understand their views, carefully considering the feedback we receive and acting when
appropriate. For more information, please visit our corporate website: arista.com.
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QUESTIONS AND ANSWERS
The information provided in the “question and answer” format below is for your convenience only and is merely a
summary of the information contained in this proxy statement. You should read this entire proxy statement carefully.
Information contained on, or that can be accessed through, our website is not intended to be incorporated by
reference into this proxy statement and references to our website address in this proxy statement are inactive textual
references only.
Q How do I vote?
Q Can I change my vote?
A
If you are a stockholder of record, you can
vote in one of the following ways:
A
Yes. Subject to the voting deadlines noted
above, if you are a stockholder of record, you
can change your vote or revoke your proxy
any time before the Annual Meeting by:
• by Internet at http://www.proxyvote.com, 24 hours
a day, seven days a week, until 11:59 p.m. Eastern
Time on May 28, 2026 (have your proxy card in
hand when you visit the website);
• by toll-free telephone at 1-800-690-6903 until
11:59 p.m. Eastern Time on May 28, 2026 (have
your proxy card in hand when you call);
• by signing, dating, and returning your proxy card (if
you received printed proxy materials); or
• by attending and voting at the Annual Meeting at
www.virtualshareholdermeeting.com/ANET2026. To
attend and participate in the Annual Meeting, you
will need the control number included in your Notice
of Internet Availability of Proxy Materials (the
“Notice”), on your proxy card or on the instructions
that accompanied your proxy materials.
If you are a street name stockholder, you will receive
voting instructions from your broker, bank or other
nominee. You must follow the voting instructions
provided by your broker, bank or other nominee in
order to instruct your broker, bank or other nominee
on how to vote your shares. Street name stockholders
should generally be able to vote by returning an
instruction card, or by telephone or on the Internet.
However, the availability of telephone and Internet
voting will depend on the voting process of your
broker, bank or other nominee. If you are a street
name stockholder, you may not vote your shares at
the Annual Meeting unless you obtain a legal proxy
from your broker, bank or other nominee.
Whether or not you plan to attend the Annual Meeting,
we urge you to vote by proxy to ensure your vote is
counted.
• entering a new vote by Internet or by telephone;
• returning a later-dated proxy card;
• notifying the Secretary of Arista Networks, Inc., in
writing, at Arista Networks, Inc., 5453 Great
America Parkway, Santa Clara, California 95054; or
• attending and voting at the Annual Meeting at
www.virtualshareholdermeeting.com/ANET2026.
If you are a street name stockholder, your broker,
bank or other nominee can provide you with
instructions on how to change your vote.
Q Who is entitled to vote?
A
Holders of our common stock as of
the close of business on April 2, 2026,
the record date, may vote at the Annual Meeting. As
of the record date, there were 1,259,169,438 shares
of our common stock outstanding. In deciding all
matters at the Annual Meeting, each stockholder will
be entitled to one vote for each share of our common
stock held by them on the record date. We do not
have cumulative voting rights for the election of
directors.
Stockholders of Record. If shares of our common stock
are registered directly in your name with our transfer
agent, you are considered the stockholder of record
with respect to those shares, and the Notice was
provided to you directly by us. As the stockholder of
record, you have the right to grant your voting proxy
directly to the individuals listed on the proxy card or to
vote on your own behalf at the Annual Meeting.
2026 PROXY STATEMENT
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Street Name Stockholders. If shares of our common
stock are held on your behalf in a stock brokerage
account or by a bank or other nominee, you are
considered the beneficial owner of those shares held
in “street name,” and the Notice was forwarded to you
by your broker or nominee, who is considered the
stockholder of record with respect to those shares. As
the beneficial owner, you have the right to direct your
broker or nominee how to vote your shares. Beneficial
owners are also invited to attend the Annual Meeting.
However, since a beneficial owner is not the
stockholder of record, you may not vote your shares
of our common stock at the Annual Meeting unless
you follow your broker’s procedures for obtaining a
legal proxy. Throughout this proxy, we refer to
stockholders who hold their shares through a broker,
bank or other nominee as “street name stockholders.”
Q
How do I ask questions during the Annual
Meeting?
You will be able to attend the Annual
Meeting online and submit your questions
during the meeting at
www.virtualshareholdermeeting.com/ANET2026. To
access the virtual meeting, you will need to enter the
control number included in the Notice, on your proxy
card or on the instructions that accompanied your
proxy materials.
Questions pertinent to meeting matters will be
answered during the meeting, subject to time
constraints. Questions regarding personal matters are
not pertinent to meeting matters and, therefore, will
not be answered. If we receive substantially similar
questions, we may group such questions together
and provide a single response to avoid repetition.
Q What is a quorum?
Q
How can I get help if I have trouble
checking in or listening to the meeting
online?
A quorum is the minimum number of
shares required to be present at the
Annual Meeting for the Annual Meeting to
If you encounter any difficulties accessing the
virtual meeting during the check-in or meeting
time, please call the technical support
be properly held under our amended and restated
bylaws and Delaware law. The presence (including by
proxy) of a majority of all issued and outstanding
shares of our common stock entitled to vote at the
Annual Meeting will constitute a quorum at the Annual
Meeting. Abstentions, withhold votes and broker non-
votes are counted as shares present and entitled to
vote for purposes of determining a quorum.
number that will be posted on the Virtual Shareholder
Meeting log-in page.
Q What is the effect of giving a proxy?
Proxies are solicited by and on behalf of our
board of directors. Jayshree Ullal, Chantelle
Breithaupt and Sean Christofferson have
been designated as proxies by our board of directors.
When a proxy is properly dated, signed and returned,
the shares represented by such proxy will be voted at
the Annual Meeting in accordance with the
instructions of the stockholder contained on such
proxy. If no specific instructions are given, however,
the shares will be voted in accordance with the
recommendations of our board of directors as
described above. If any matters not described in this
proxy statement are properly presented at the Annual
Meeting, the proxy holders will use their own
judgment to determine how to vote the shares.
Q
Do I have to do anything in advance if I
plan to attend the Annual Meeting?
The Annual Meeting will be a completely
virtual meeting, which will be conducted via
a live webcast. You are entitled to
participate in the Annual Meeting only if you were a
stockholder of record as of the close of business on
April 2, 2026 or if you hold a valid proxy for the Annual
Meeting.
You will be able to attend the Annual Meeting online
and submit your questions during the meeting at
www.virtualshareholdermeeting.com/ANET2026. To
access the virtual meeting, you will need to enter the
control number included in the Notice, on your proxy
card or on the instructions that accompanied your
proxy materials.
We encourage you to access the meeting prior to the
start time. Online check-in will begin at 10:45 a.m.
Pacific Time, and you should allow ample time for the
check-in procedures.
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Q
Why did I receive a Notice of Internet
Availability of Proxy Materials instead of
a full set of proxy materials?
In accordance with the rules of the
Securities and Exchange Commission
(“SEC”), we have elected to furnish our proxy
materials, including this proxy statement and our
annual report, primarily via the Internet. The Notice
containing instructions on how to access our proxy
materials is first being mailed on or about April 16,
2026, to all stockholders entitled to vote at the
Annual Meeting. Stockholders may request to
receive all future proxy materials in printed form by
mail or electronically by e-mail by following the
instructions contained in the Notice. We encourage
stockholders to take advantage of the availability of
our proxy materials on the Internet to help reduce
the environmental impact of our annual meetings of
stockholders.
Q
How are proxies solicited for the Annual
Meeting?
Our board of directors is soliciting proxies
for use at the Annual Meeting. All
expenses associated with this solicitation will be
borne by us. Copies of solicitation materials will also
be made available upon request to brokers, banks
and other nominees to forward to the beneficial
owners of the shares held of record by such
brokers, banks or other nominees. The original
solicitation of proxies may be supplemented by
solicitation by telephone, electronic communication,
or other means by our directors, officers and
employees.
No additional compensation will be paid to these
individuals for any such services, although we may
reimburse such individuals for their reasonable
out-of-pocket expenses in connection with such
solicitation. We may also reimburse brokerage firms,
banks and other agents for the cost of forwarding
proxy materials to beneficial owners. We will
reimburse brokers or other nominees for reasonable
expenses that they incur in sending our proxy
materials to you if a broker or other nominee holds
shares of our common stock on your behalf.
Q
How may my brokerage firm or other
intermediary vote my shares if I fail to
provide timely directions?
Brokerage firms and other intermediaries
holding shares of our common stock in
street name for customers are generally
required to vote such shares in the manner directed
by their customers. In the absence of timely
directions, your broker will have discretion to vote your
shares on our sole “routine” matter: the proposal to
ratify the appointment of Ernst & Young LLP. Absent
direction from you, your broker will not have discretion
to vote on the election of directors or on the approval,
on an advisory basis, of executive compensation of
our named executive officers, which are “non-routine”
matters.
Q
Where can I find the voting results of the
Annual Meeting?
We will announce preliminary voting results
at the Annual Meeting. We will also
disclose voting results on a Current Report
on Form 8-K that we will file with the SEC within four
business days after the Annual Meeting. If final voting
results are not available to us in time to file a Current
Report on Form 8-K within four business days after
the Annual Meeting, we will file a Current Report on
Form 8-K to publish preliminary results and will
provide the final results in an amendment to this
Current Report on Form 8-K as soon as they become
available.
Q
How many votes are needed for approval
of each proposal?
Proposal One: The election of directors
requires a plurality of the voting power of
the shares of our common stock present
in person or represented by proxy at the Annual
Meeting and entitled to vote thereon to be approved.
“Plurality” means that the nominees who receive the
largest number of votes cast “FOR” such nominees
are elected as directors. As a result, any shares not
voted “FOR” a particular nominee, whether as a result
of stockholder abstention or a broker non-vote (in
other words, where a broker has not received voting
instructions from the beneficial owner and for which
the broker does not have discretionary power to vote
on a particular matter), will not be counted in such
nominee’s favor and will have no effect on the
outcome of the election. You may vote “FOR” or
“WITHHOLD” on each of the nominees for election as
a director.
2026 PROXY STATEMENT
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Proposal Two: The approval, on an advisory basis, of
the compensation of our named executive officers
requires the affirmative vote of a majority of the voting
power of the shares of our common stock present in
person or represented by proxy at the Annual Meeting
and entitled to vote on the subject matter to be
approved. You may vote “FOR,” “AGAINST,” or
“ABSTAIN” with respect to this proposal. Abstentions
are considered shares present and entitled to vote on
the subject matter, and thus, will have the same effect
as a vote “AGAINST” this proposal. Broker non-votes
will have no effect on the outcome of this proposal.
Proposal Three: The ratification of the appointment of
Ernst & Young LLP as our independent registered
public accounting firm for our fiscal year ending
December 31, 2026 requires the affirmative vote of a
majority of the voting power of the shares of our
common stock present in person or represented by
proxy at the Annual Meeting and entitled to vote on the
subject matter to be approved. You may vote “FOR,”
“AGAINST,” or “ABSTAIN” with respect to this
proposal. Abstentions are considered shares present
and entitled to vote on the subject matter, and thus, will
have the same effect as a vote “AGAINST” this
proposal. Broker non-votes will have no effect on the
outcome of this proposal.
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BOARD OF DIRECTORS & CORPORATE GOVERNANCE
Our business affairs are managed under the direction of our board of directors. Our board of directors is divided into
three staggered classes of directors. At each annual meeting of stockholders, a class of directors will be elected for a
three-year term to succeed the same class whose term is then expiring. Our board of directors is committed to good
corporate governance practices. These practices provide an important framework within which our board of directors
and management can pursue our strategic objectives for the benefit of our stockholders. Our board of directors has
adopted Corporate Governance Guidelines that address items such as the qualifications and responsibilities of our
directors and director candidates and corporate governance policies and standards applicable to us in general. The
full text of our Corporate Governance Guidelines is available in the Governance section of our website at http://
investors.arista.com. We believe that good governance leads to high board effectiveness, promotes the long-term
interests of our stockholders, strengthens the accountability of the board of directors and management, and
improves our standing as a trusted member of the communities we serve.
BOARD EFFECTIVENESS
WORKING DYNAMICS
• Candid discussions
• Open access to management and information
• Established processes for director feedback
• Regular non-executive directors’ meetings
BOARD OF DIRECTORS STRUCTURE
•
•
Strong lead independent director
3 standing committees
GOVERNANCE PRACTICES
• Oversight of CEO/management performance
• Board/management succession planning
• Code of Ethics and Business Conduct for our directors
and employees
• Stock ownership requirements for our directors,
CEO, CFO and Presidents
• Clawback policy for our executives
• Robust Corporate Governance Guidelines
• Proxy access for director nominees (available to
eligible stockholders who have for at least 3 years
maintained continuous ownership of at least 3%
of our common stock) to not exceed the greater
of 2 or 20% of directors in office
BOARD OF DIRECTORS COMPOSITION
•
•
•
•
Broad range of skills and experiences
7/9 directors are independent
Our Chairperson and Chief Technology Officer are
the only non-independent directors
3/9 directors are women
• 2/9 directors are from underrepresented
communities
2026 PROXY STATEMENT
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Board Composition
Set forth below is biographical information for the nominees and for each of the continuing members of our board of
directors. This includes information regarding each director’s experience, qualifications, attributes or skills that led our
board of directors to recommend them for board service.
NOMINEES FOR DIRECTOR
Lewis Chew
Independent Director
Age: 63
Director Since: 2021
Committee(s):
Audit (Chair)
Other Current Public
Company Boards:
Š
Cadence Design Systems, Inc.
Š
Intuitive Surgical, Inc.
Experience
Mr. Chew has served as a member of our board of directors since July 2021. From June 2012 to October 2021,
Mr. Chew served as executive vice president and chief financial officer of Dolby Laboratories, Inc., an audio, voice and
imaging technology company. From April 2001 to September 2011, Mr. Chew served as senior vice president and chief
financial officer of National Semiconductor Corporation, a designer and manufacturer of semiconductor components. Prior
to joining National Semiconductor Corporation, Mr. Chew was a partner at KPMG LLP, an accounting firm. Since March
2020, Mr. Chew has served on the board of directors of Cadence Design Systems, Inc., a multinational computational
software company, where he is chair of the audit committee, and since April 2024, Mr. Chew has served as a member of
the board of directors and chair of the audit committee of Intuitive Surgical, Inc., a leading surgical robotics company. From
September 2009 to April 2019, Mr. Chew served as a director of PG&E Corporation, an energy-based holding company,
where he served as chair of both the public policy committee and the audit committee. Mr. Chew holds a B.S. in
Accounting from the Leavey School of Business at Santa Clara University.
Qualifications
We believe Mr. Chew possesses specific attributes that qualify him to serve as a member of our board of directors.
Mr. Chew brings extensive experience in financial reporting, audit and operations as a partner at KPMG LLP and
senior executive officer at technology companies like Dolby Laboratories, Inc. In addition, Mr. Chew has valuable
financial and audit oversight experience as a board and audit committee member of companies in the technology
industry like Cadence Design Systems, Inc. and Intuitive Surgical, Inc.
Key Skills Added to the Board:
Industry
Expertise
Senior
Leadership
Financial
Knowledge and
Expertise
Backgrounds/
Experiences
Cybersecurity/
Information
Security
Sales, Marketing
and Brand
Management
Global/
International
Experience and
Knowledge
Governance,
Risk Oversight
and Compliance
Emerging
Technologies
and Business
Models
Human Capital
Management
Public Company
Board Experience
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Greg Lavender
Independent Director
Age: 65
Director Since: 2025
Committee(s):
Audit
Other Current Public
Company Boards:
Š
Nutanix, Inc.
Experience
Dr. Lavender has served as a member of our board of directors since March 2025. Dr. Lavender is the co-founder
and has served as Chief Technology Officer of Confidential Core AI, Inc., a company that addresses data security
and agentic safety challenges with AI technology, since August 2025. Dr. Lavender served as the Chief Technology
Officer for Intel Corporation, a semiconductor manufacturing company from November 2023 to June 2025. Prior to
becoming the Chief Technology Officer at Intel Corporation, Dr. Lavender was the Corporate Chief Technology
Officer and Senior Vice President / General Manager of the Software and Advanced Technology Group of Intel
Corporation from June 2021 to November 2023. From January 2018 to June 2021, Dr. Lavender, held senior
positions, including Senior Vice President and Chief Technology Officer, at VMware, a software development
company. Prior to VMware, Dr. Lavender held leadership positions at Citigroup, Cisco Systems and Sun
Microsystems. Since September 2025, Dr. Lavender has served on the board of directors of Nutanix, Inc., a hybrid
multi-cloud virtual software company. Dr. Lavender also serves as Visiting Industry Fellow in Computer Science at
Cambridge University. Before Dr. Lavender’s career in tech began, he was on the faculty of the University of Texas at
Austin for 14 years, including three years as Associate Chairman for Academics. Dr. Lavender holds a B.S. in
computer science (applied mathematics) from the University of Georgia, and an M.S. in computer science (software
engineering) and a Ph.D. in computer science (networking and distributed systems) from Virginia Tech.
Qualifications
We believe Dr. Lavender possesses specific attributes that qualify him to serve as a member of our board of
directors. Dr. Lavender brings extensive technological and leadership experience as the former Chief Technology
Officer of Intel Corporation and from prior senior leadership roles in technology and finance.
Key Skills Added to the Board:
Industry
Expertise
Senior
Leadership
Financial
Knowledge
and Expertise
Backgrounds/
Experiences
Cybersecurity/
Information
Security
Sales, Marketing
and Brand
Management
Global/
International
Experience and
Knowledge
Governance,
Risk Oversight
and Compliance
Emerging
Technologies
and Business
Models
Human Capital
Management
Public Company
Board Experience
CR
Experience
2026 PROXY STATEMENT
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Mark B. Templeton
Independent Director
Age: 73
Director Since: 2017
Committee(s):
Compensation
Other Current Public
Company Boards:
Š
Nutanix, Inc.
Experience
Mr. Templeton has served as a member of our board of directors since June 2017. Mr. Templeton served as the
chief executive officer and a member of the board of directors of DigitalOcean, Inc., a cloud computing company
from June 2018 to August 2019. Previously, he served as the president and chief executive officer and a member of
the board of directors of Citrix Systems, Inc., a global provider of virtualization, mobility management, networking and
software as service solutions, from January 1998 until his retirement in October 2015. Since July 2023,
Mr. Templeton has served on the board of directors of Nutanix, Inc., a hybrid multi-cloud virtual software company.
Mr. Templeton served on the board of directors of Health Catalyst, Inc., a provider of data and analytics technology
and services to healthcare organizations, from July 2020 to March 2024. Mr. Templeton served on the board of
directors of Equifax, Inc., a consumer credit reporting agency, from February 2008 to November 2018 and Keysight
Technologies, Inc., an electronics test and measurement equipment company, from November 2015 to July 2018.
Mr. Templeton holds a B.A. in product design from North Carolina State University and an M.B.A. from the Darden
School of Business at the University of Virginia.
Qualifications
We believe Mr. Templeton possesses specific attributes that qualify him to serve as a member of our board of directors.
Mr. Templeton brings extensive leadership, operations and industry experience from his roles as chief executive officer of
DigitalOcean, Inc. and Citrix Systems, Inc., among other leadership positions. In addition, Mr. Templeton has valuable
oversight experience at a variety of public companies in the technology industry.
Key Skills Added to the Board:
Industry
Expertise
Senior
Leadership
Financial
Knowledge
and Expertise
Sales, Marketing
and Brand
Management
Global/
International
Experience and
Knowledge
Governance,
Risk Oversight
and Compliance
Emerging
Technologies
and Business
Models
Human Capital
Management
Public Company
Board Experience
CR
Experience
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CONTINUING DIRECTORS
Age: 59
Director Since: 2020
Committee(s):
Audit
Other Current Public
Company Boards:
Š
ThredUp Inc.
Kelly Battles
Independent Director
Experience
Ms. Battles has served as a member of our board of directors since July 2020.
Ms. Battles has over 30 years of finance, strategy and operational leadership
experience. From July 2020 to January 2022, Ms. Battles served as chief financial
officer of Alpha Medical Group, a telemedicine provider, where she has also served as a
member of the board of directors since January 2022. From November 2016 to March
2020, Ms. Battles served as chief financial officer of Quora, Inc., a knowledge platform.
Ms. Battles also previously served as chief financial officer of Bracket Computing, a
cloud computing company, and Host Analytics, Inc., a cloud-based enterprise
performance management solutions company. She served as vice president of finance
of IronPort Systems, an email and web security company (since acquired by Cisco
Systems, Inc.), director of strategy and corporate development group of Hewlett-
Packard Company, an information technology company, and as an associate at both
McKinsey and Company and JPMorgan Chase and Company earlier in her career.
Since December 2025, Ms. Battles has served as a member of the board of directors
and chair of the audit committee of ThredUp Inc., an online consignment and thrift store.
Ms. Battles also currently serves as an independent board member and audit
committee chair of Genesys Cloud Services, Inc., a software company, and Qumulo,
Inc., an enterprise-grade unstructured data platform company. Ms. Battles holds a
B.S.E. in Operations Research / Systems Management from Princeton University and
an M.B.A. from Harvard University.
Qualifications
We believe Ms. Battles possesses specific attributes that qualify her to serve as a
member of our board of directors. Ms. Battles brings extensive experience leading
financial reporting, audit and operations from her roles as a chief financial officer and
finance leader for a number of companies, including Alpha Medical Group, Quora and
Bracket Computing. She also has valuable experience as a board member of
companies in the technology industry like ThredUp Inc. and Genesys Cloud Services,
Inc.
Age: 54
Director Since: 2023
Committee(s):
N/A
Kenneth Duda
Director
Experience
Mr. Duda is one of our founders and has served in various roles with us from 2004 to
present. Mr. Duda has served as a member of our board of directors since December
2023. Since September 2025, Mr. Duda has served as our President. Since September
2011, Mr. Duda has served as our Chief Technology Officer and Senior Vice President
of Software Engineering. From April 1999 to October 2004, Mr. Duda served as chief
technology officer of There, Inc., a virtual worlds company. From September 1996 to
April 1999, Mr. Duda was leading the software development of the switch kernel for the
Gigabit System Business Unit with Cisco Systems, Inc. Mr. Duda holds a B.S. and an
M.S. in Computer Science and Electrical Engineering from the Massachusetts Institute
of Technology and a Ph.D. in Computer Science from Stanford University.
Qualifications
We believe Mr. Duda possesses specific attributes that qualify him to serve as a
member of our board of directors. Mr. Duda brings unparalleled insights as one of
our founders, our President and Chief Technology Officer, and as a technological
leader and innovator. He has extensive experience in the networking industry and
unique operational insight and expertise that he has accumulated as one of our
founders and as our President and Chief Technology Officer.
2026 PROXY STATEMENT
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Proxy
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Corporate Governance
Age: 68
Director Since: 2013
Committee(s):
Compensation (Chair)
Other Current Public
Company Boards:
Š
Pure Storage, Inc.
Š
Zscaler, Inc.
Charles Giancarlo
Independent Director
Experience
Mr. Giancarlo has served as a member of our board of directors since April 2013.
Mr. Giancarlo has been chief executive officer and a member of the board of directors
of Pure Storage, Inc., a data storage solutions company, since August 2017, and
Chairman of the board of directors of Pure Storage, Inc. since September 2018. From
January 2008 to October 2015, Mr. Giancarlo served as a managing director of Silver
Lake Partners, a private investment firm and served as a senior advisor to the firm until
2015. From May 1993 to December 2007, Mr. Giancarlo served in various positions
with Cisco Systems, Inc., most recently as executive vice president and chief
development officer. Mr. Giancarlo has also served on the board of directors of Zscaler,
Inc., a cloud-based information security company, since November 2016. He previously
served as a director of Accenture plc, from November 2008 to February 2019.
Mr. Giancarlo holds a B.S. in Electrical Engineering from Brown University, an M.S. in
Electrical Engineering from the University of California at Berkeley and an M.B.A. from
Harvard University.
Qualifications
We believe Mr. Giancarlo possesses specific attributes that qualify him to serve as
a member of our board of directors. He has extensive experience as a venture
capital investor from his time with Silver Lake Partners. He also has unparalleled
industry insight due to his role at Pure Storage, Inc. Beyond those qualifications,
Mr. Giancarlo brings business leadership, management, operations and oversight
experience from his executive and board roles at companies in the technology
industry.
Age: 63
Director Since: 2011
Committee(s):
Compensation
Nominating and
Corporate Governance
(Chair)
Lead independent
director
Other Current Public
Company Boards:
Š
Zoom Video
Communications,
Inc.
Š
SentinelOne, Inc.
Daniel Scheinman
Independent Director
Experience
Mr. Scheinman has served as a member of our board of directors since October 2011.
Since April 2011, Mr. Scheinman has been an angel investor. From January 1997 to
April 2011, Mr. Scheinman served in various capacities with Cisco Systems, Inc., most
recently as senior vice president, Cisco Media Solutions Group. Mr. Scheinman has
served as a member of the board of directors of Zoom Video Communications, Inc., a
cloud-based video communications company, since October 2011, where he is lead
director, chair of the audit committee and a member of the compensation committee
and SentinelOne, Inc., an autonomous AI endpoint security platform since September
2015, where he is lead independent director, chair of the nominating and corporate
governance committee and a member of the compensation committee. He also
currently serves on the board of directors of several private companies. Mr. Scheinman
holds a B.A. in Politics from Brandeis University and a J.D. from the Duke University
School of Law.
Qualifications
We believe Mr. Scheinman possesses specific attributes that qualify him to serve as
a member of our board of directors. He has extensive experience in investments
and in the legal and technology industries from his time practicing law and with
Cisco Systems, Inc. He also brings valuable board leadership experience from his
public company board roles at Zoom Video Communications, Inc. and SentinelOne,
Inc.
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Corporate Governance
Age: 65
Director Since: 2008
Committee(s):
N/A
Other Current Public
Company Boards:
Š
Snowflake Inc.
Jayshree Ullal Director
Experience
Ms. Ullal has served as our Chief Executive Officer and a member of our board of
directors since October 2008 and as our Chairperson of the Board since December
2023. Ms. Ullal served as our President from October 2008 to September 2025. From
September 1993 to May 2008, Ms. Ullal served in various positions at Cisco Systems,
Inc., with her last position as senior vice president of data center, switching and services
group. Prior to that, Ms. Ullal was a vice president of marketing at Crescendo
Communications, Inc., Cisco’s first acquisition in 1993. She has also held various
product and engineering positions at Ungermann-Bass, a computer networking
company, Advanced Micro Devices, Inc., a semiconductor company, and Fairchild
Semiconductor, a semiconductor company. Ms. Ullal has served as a member of the
board of directors of Snowflake Inc., a cloud-based data warehousing company since
June 2020, where she currently serves as Chair of the Compensation Committee.
Ms. Ullal holds a B.S. in Engineering (Electrical) from San Francisco State University and
an M.S. in Engineering Management from Santa Clara University. She is a 2013
recipient of the Santa Clara University School of Engineering Distinguished Engineering
Alumni Award.
Qualifications
We believe that Ms. Ullal possesses specific attributes that qualify her to serve as a
member of our board of directors. Ms. Ullal has unparalleled operational insight and
expertise that she has accumulated as our Chief Executive Officer. In addition, she
has an extensive background in leadership and technology roles at several
semiconductor and network technology companies before joining Arista, as well as
board oversight experience as a member of Snowflake Inc.’s board of directors.
Age: 57
Director Since: 2022
Committee(s):
Audit
Nominating and
Corporate Governance
Other Current Public
Company Boards:
Š
JFrog, Inc.
Š
Rubrik, Inc.
Š
Braze, Inc.
Yvonne Wassenaar Independent Director
Experience
Ms. Wassenaar has served as a member of our board of directors since July 2022.
From January 2019 to May 2022, Ms. Wassenaar served as chief executive officer and
member of the board of directors for Puppet, Inc., an information technology company.
From June 2017 to May 2025, Ms. Wassenaar served as a member of the board of
directors of Forrester Research, Inc., a research company, where she was a member of
the audit committee from June 2017 to May 2024 and a member of the compensation
committee from May 2024 to May 2025. From November 2019 to June 2022,
Ms. Wassenaar served as a member of the board of directors and audit committee of
Anaplan, Inc., a cloud-based business planning software company. From June 2017 to
September 2018, Ms. Wassenaar served as chief executive officer and member of the
board of directors of Airware, Inc., an enterprise drone analytics company. From August
2014 to May 2017, Ms. Wassenaar served as chief information officer for New Relic
Inc., an information technology company. Ms. Wassenaar has served as a member of
the board of directors and audit committee of Braze, Inc., a marketing automation
platform, since June 2024. Ms. Wassenaar has served as a member of the board of
directors of JFrog, Inc., a software development company, since September 2022,
where she is a member of the compensation committee and chair of the nomination
and corporate governance committee. Ms. Wassenaar has served as a member of the
board of directors and audit committee of Rubrik, Inc., a cloud data management
company, since October 2021. She also currently serves on the board of directors of
several private companies. Ms. Wassenaar holds a B.A. in Economics with a
specialization in Computing from the University of California, Los Angeles, and an
M.B.A. from UCLA Anderson School of Business.
Qualifications
We believe Ms. Wassenaar possesses specific attributes that qualify her to serve as
a member of our board of directors. She has extensive executive experience leading
software and technology companies at companies like Airware, Inc. and Puppet,
Inc. In addition to her business leadership, management and operations experience,
Ms. Wassenaar brings valuable oversight experience from her board roles at public
and private companies in the technology industry.
2026 PROXY STATEMENT
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Security
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Proxy
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Board and
Corporate Governance
Key Elements of Board Independence at Arista
Our board of directors’ independence enables it to be objective and critical in carrying out its oversight
responsibilities. Our Corporate Governance Guidelines provide that a substantial majority of our directors will be
independent.
Our board of directors has undertaken a review of the independence of each director. Based on information provided
by each director concerning his or her background, employment and affiliations, our board of directors has made the
following determinations:
• 7/9 of the directors are independent: We are
committed to maintaining a substantial majority of
directors who are independent of the Company and
management. Except for our employee directors, all
directors are independent.
• Committee independence: Only independent directors
are members of board committees.
• Executive sessions: Our independent directors meet in
executive session at each board and Audit
Committee meeting.
• Lead independent director: Our lead independent
director provides leadership to the board of directors
and particularly to the independent directors.
• Independent compensation consultant: The
compensation consultant retained by the
Compensation Committee is independent of the
Company and management.
In making the determination that Mr. Giancarlo is independent, the board of directors considered the fact that
Mr. Giancarlo is chief executive officer and a member of the board of directors of Pure Storage, Inc., and we sell
products to and purchase products from Pure Storage, Inc. in the ordinary course of business. The board of
directors determined that Mr. Giancarlo did not have a direct or indirect material interest in these transactions.
Furthermore, payments made to us by Pure Storage, Inc. pursuant to such transactions did not exceed the greater
of $1 million or 2% of Pure Storage, Inc.’s consolidated gross revenues in any of the last three fiscal years. As a
result, the board of directors concluded that these transactions would not affect Mr. Giancarlo’s independence.
In making the determination that Dr. Lavender is independent, the board of directors considered the Company’s
investment in Confidential Core AI, Inc. and the fact that Dr. Lavender is the co-founder of and currently serves as the
Chief Technology Officer of Confidential Core AI, Inc. The board of directors determined that Dr. Lavender did not
have a direct or indirect material interest in this transaction. Furthermore, payments made by us to Confidential Core
AI, Inc. pursuant to such transaction did not exceed the greater of $1 million or 2% of Confidential Core AI, Inc.’s
consolidated gross revenues in any of the last three fiscal years. As a result, the board of directors concluded that
these transactions would not affect Dr. Lavender’s independence.
Director Commitments
Our board of directors recognizes that all members of our board of directors should dedicate sufficient time and
attention to fulfill the responsibilities required of directors. In assessing whether directors and nominees for director
have sufficient time and attention to devote to board duties, our board of directors considers, among other things,
whether directors may be “overboarded,” which refers to the situation where a director serves on an excessive
number of boards. In addition, prior to recommending a candidate as a nominee for director, the Nominating and
Corporate Governance Committee reviews the number of boards that the candidate serves on and considers
whether those outside commitments may limit the ability of the candidate to devote sufficient time and attention to
board duties.
Our board of directors believes that each of our directors, including each of our director nominees, has demonstrated
the ability to devote sufficient time and attention to board duties and to otherwise fulfill the responsibilities required of
directors.
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Board Leadership Structure
We believe that the structure of our board of directors and its committees provides strong overall management of our
Company and supports the risk oversight function of the board of directors. Our current Chairperson, Jayshree Ullal,
is not independent under the listing standards of the New York Stock Exchange (“NYSE”) as a result of her role as
our CEO. Our board of directors reviews this structure annually and believes that Ms. Ullal’s service as our
Chairperson is appropriate and is in the best interests of our board of directors, our Company and our stockholders.
Our CEO is responsible for setting the strategic direction of our Company, the general management and operation of
the business and the guidance and oversight of senior management. The Chairperson of our board of directors
monitors the content, quality and timeliness of information sent to our board of directors and is available for
consultation with our board of directors regarding the oversight of our business affairs. Our business is highly
complex, with rapidly evolving technology, significant research and development investment, and sophisticated and
demanding customers. Ms. Ullal brings essential knowledge and perspective as our CEO since 2008. Therefore, our
board of directors believes that Ms. Ullal’s dual roles facilitate the flow of information and communications between
the board of directors and management as well as promoting alignment of our strategic direction with the operation
of our business.
As discussed in more detail below, our board of directors believes that the responsibilities of our lead independent
director appropriately and effectively complement our combined chairperson and chief executive officer structure.
Lead Independent Director
Recognizing the importance of strong independent oversight, our board of directors has appointed Mr. Scheinman to
serve as our lead independent director.
While the Chairperson directs the operations of the board of directors and is responsible for the overall management
and effective functioning of the board of directors, the lead independent director provides leadership to the board of
directors and particularly to the independent directors.
The lead independent director communicates with the CEO, disseminates information to the rest of the board of
directors in a timely manner, and raises issues with management on behalf of the outside directors when appropriate.
In addition, the lead independent director’s responsibilities include the following:
• calling meetings of independent directors when
necessary and appropriate;
• being available, when appropriate, for consultation
and direct communication with the Company’s
stockholders;
• building a productive relationship between the board
of directors and the CEO;
• ensuring that the board of directors fulfills its
oversight responsibilities in Company strategy, risk
oversight and succession planning; and
• performing such other duties as the board of
directors may from time to time designate.
Board Structure
Our board of directors is divided into three staggered classes of directors. Any increase or decrease in the number of
directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third
of our directors. Each class of directors is elected for a three-year term.
2026 PROXY STATEMENT
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Our board of directors has reviewed this structure, in consultation with the Nominating and Corporate Governance
Committee, and believes that it is in the best interests of our company and our stockholders. The structure of our
board of directors encourages directors to focus on longer-term objectives, fosters long-term planning, supports the
development of important institutional knowledge, strengthens working relationships and protects stockholder value.
We operate in a rapidly scaling industry that is intertwined with evolving frontier technologies, which requires the
longer-term perspective, institutional knowledge, and strong working relationships that our board structure facilitates.
In addition, our board structure helps us recruit highly qualified directors who are willing to commit to our strategic
vision.
Board of Directors Evaluation Process
Our board of directors seeks to operate with the highest degree of effectiveness, supporting a dynamic boardroom
culture of independent thought and intelligent debate on critical matters. The Nominating and Corporate Governance
Committee oversees this process, which is led by the chair of the committee. Our board of directors and committee
evaluation process allows for annual assessment of our board of directors practices and the opportunity to identify
areas for improvement.
The annual assessment includes an evaluation of:
• Board structure and composition;
• Board culture and relationship with management;
• Information received by the board;
• Quality of board meetings, board responsibilities and performance;
• Current topics; and
• Each committee of the Board.
The following is an overview of the board of directors evaluation process.
BOARD EVALUATION PROCESS
HOW RESULTS ARE USED:
1
Evaluation process discussed at Nominating
and Corporate Governance Committee meeting
By the board of directors, to identify skills or
expertise that may be used as criteria when the
board of directors considers new board
candidates
By the board of directors, to identify strengths
and areas of opportunity of each board
member and to provide insight into how each
board member can be most valuable to Arista
By the board of directors, to improve their
agenda topics so that the information they
receive enables them to effectively address the
issues they consider most critical
By the Nominating and Corporate Governance
Committee, as part of its annual review of each
director’s performance when considering
whether to nominate the director for re-election
to the board of directors
2
Each board member assesses performance
and effectiveness of the board of directors,
and as applicable, the committees
3
Board members meet one-on-one with outside
counsel to discuss their assessments and to
provide feedback
4
Outside counsel shares feedback received with
the General Counsel, Nominating and
Corporate Governance Committee and the full
board
5
The full board reviews and develops plans to
take actions based on the results, as
appropriate
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Board of Directors Meetings and Committees
During our fiscal year ended December 31, 2025, each director attended at least 75% of the aggregate of (i) the total
number of meetings of our board of directors held during the period for which he or she has been a director and
(ii) the total number of meetings held by all committees of our board of directors on which he or she served during the
periods that he or she served.
As set out in our Corporate Governance Guidelines, we encourage but do not require our directors to attend the
annual meeting of stockholders. All of our board members attended our 2025 annual meeting.
NUMBER OF BOARD AND COMMITTEE MEETINGS HELD IN 2025
Audit Committee
Nominating and Corporate
Governance Committee
Compensation Committee
Board of Directors
6
4
4
4
18
meetings
Our board of directors has three standing committees. Charters describing the responsibilities of each of the Audit
Committee, Compensation Committee and Nominating and Corporate Governance Committee are available in the
Governance section of our website at http://investors.arista.com. The composition and responsibilities of each of the
committees of our board of directors is described below. Members will serve on these committees until their
resignation or until as otherwise determined by our board of directors.
AUDIT COMMITTEE
NUMBER OF MEETINGS: 4
Lewis Chew (Chair)
Kelly Battles
Greg Lavender(1)
Yvonne Wassenaar
(1) Dr. Lavender began serving on the Audit Committee upon his appointment as a director on March 14, 2025.
2026 PROXY STATEMENT
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KEY RESPONSIBILITIES
• Providing oversight of our accounting and financial reporting processes and the audit of our financial
statements
• Assisting our board of directors in oversight of (i) the audit and integrity of our financial statements, (ii) our
compliance with legal and regulatory requirements, (iii) the independent auditor’s qualifications,
independence, and performance, (iv) our accounting and financial reporting process and internal controls,
and (v) the organization and performance of our internal audit function
• Providing to our board of directors such information and materials as it may deem necessary to make our
board of directors aware of significant financial matters that require the attention of our board of directors
• Preparing the report required by the SEC rules to be included in our proxy statement for the annual meeting
of stockholders
• Reviewing and discussing with management, including our internal audit function, if applicable, and our
independent auditor guidelines and policies to identify, monitor, and address enterprises risks, including our
investment policies
• Reviewing and discussing with management the adequacy and monitoring of our compliance programs with
respect to legal, ethical, and regulatory requirements, including our Code of Ethics and Business Conduct,
compliance with anti-bribery and anti-corruption laws, and compliance with export laws
• Reviewing periodic reports from management on our internal compliance policies and procedures
• Reviewing and discussing with management our policies and practices relating to environmental and social
responsibility matters
• Reviewing and discussing with management risks to significant cybersecurity matters and concerns involving
the Company, including information security, data privacy, backup of information systems and related
regulatory matters and compliance
• Reviewing the results of the independent audit and quarterly reviews, and the independent auditor’s opinion
on the audited financial statements
INDEPENDENCE/QUALIFICATIONS:
• All committee members are independent under the NYSE listing standards and the heightened
independence requirements applicable to Audit Committee members under SEC rules
• All current committee members are financially literate in accordance with NYSE listing standards. Mr. Chew,
Ms. Battles and Ms. Wassenaar qualify as an “Audit Committee financial expert” under SEC rules and have
accounting or related financial management expertise in accordance with NYSE listing standards
COMPENSATION COMMITTEE
NUMBER OF MEETINGS: 4
Charles Giancarlo (Chair)
Daniel Scheinman
Mark B. Templeton
KEY RESPONSIBILITIES:
• Providing oversight of our compensation policies, plans, benefits programs, and overall compensation
philosophy
• Assisting our board of directors in discharging its responsibilities relating to (i) oversight of the compensation
of our CEO, and other executive officers, and (ii) approving and evaluating our executive officer compensation
plans, policies, and programs
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• Administering our equity compensation plans for our employees
• Reviewing and approving corporate goals and objectives relevant to the compensation of our CEO, and
other executive officers, evaluating performance in light thereof, and considering factors related to our
performance, including accomplishment of our long-term business and financial goals
• Evaluating, at least annually, our compensation policies and practices with management to review the
relationship between risk management policies and compensation and evaluating compensation policies and
practices that could mitigate any such risk
• Monitoring compliance with our stock ownership guidelines and recommending to our board of directors any
changes to such guidelines
• Monitoring compliance with our clawback policy and approving any changes to such policy
INDEPENDENCE/QUALIFICATIONS:
• All committee members are independent under the NYSE listing standards and the independence
requirements applicable to Compensation Committee members under NYSE rules and the heightened
independence requirements under SEC rules
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE
NUMBER OF MEETINGS: 4
Daniel Scheinman (Chair)
Yvonne Wassenaar
KEY RESPONSIBILITIES
• Reviewing and making recommendations regarding corporate governance
• Reviewing and making recommendations to our board of directors regarding the composition and size of our
board of directors and determining the relevant criteria (including any minimum qualifications) for board
membership, including issues of character, professional ethics and integrity, judgment, business acumen,
diversity of experience, independence, area of expertise, corporate experience, length of service, potential
conflicts of interest, an understanding of our business, an understanding of the responsibilities that are
required of a member of our board of directors, other time commitments, diversity with respect to
professional background, education, race, ethnicity, gender, age and geography, as well as other individual
qualities and attributes that contribute to the total mix of viewpoints and experience represented on our
board of directors
• Identifying, considering and recommending candidates to fill new positions or vacancies on our board of
directors
• Reviewing actual and potential conflicts of interest of our board of directors and corporate officers
• Making recommendations for continuing education of our board of directors
• Leading the annual performance review of our board of directors, its committees and management
• Reviewing succession planning for our executive officers
INDEPENDENCE/QUALIFICATIONS:
• All committee members are independent under the NYSE listing standards and SEC rules
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Compensation Committee Interlocks and Insider Participation
None of the members of our Compensation Committee is or has been an officer or employee of our Company. None
of our executive officers currently serves, or in the past year has served, as a member of the board of directors or
Compensation Committee (or other board committee performing equivalent functions or, in the absence of any such
committee, the entire board) of any entity that has one or more of its executive officers serving on our board of
directors or Compensation Committee.
Considerations in Evaluating Director Nominees
Our Nominating and Corporate Governance Committee uses a variety of methods for identifying and evaluating
potential director nominees and considers a broad range of backgrounds and experiences in making determinations
regarding nominations of directors and in overseeing the annual board of directors and committee evaluations. In
accordance with the Company’s Corporate Governance Guidelines, in its evaluation of director candidates, including
the members of the board of directors eligible for re-election, the Nominating and Corporate Governance Committee will
consider: (a) the current size and composition of the board of directors; (b) the needs of the board of directors and the
respective committees of the board of directors; (c) such factors as character, professional ethics and integrity,
judgment, business acumen, diversity of experience, independence, area of expertise, corporate experience, length of
service, potential conflicts of interest, an understanding of the Company’s business, an understanding of the
responsibilities that are required of a member of the board of directors, other time commitments, diversity with respect
to professional background, education, race, ethnicity, gender, age and geography, as well as other individual qualities
and attributes that contribute to the total mix of viewpoints and experience represented on the board of directors; and
(d) other factors that the Nominating and Corporate Governance Committee may consider appropriate. The Nominating
and Corporate Governance Committee shall also consider composition requirements imposed by applicable law. The
Nominating and Corporate Governance Committee evaluates these factors, among others, and does not assign any
particular weighting or priority to any of these factors.
The Nominating and Corporate Governance Committee requires the following minimum qualifications to be satisfied
by any nominee for a position on the board of directors: (a) the highest personal and professional ethics and integrity;
(b) proven achievement and competence in the nominee’s field and the ability to exercise sound business judgment;
(c) skills that are complementary to those of the existing board of directors; (d) the ability to assist and support
management and make significant contributions to the Company’s success; and (e) an understanding of the fiduciary
responsibilities that are required of a member of the board of directors and the commitment of time and energy
necessary to diligently carry out those responsibilities.
Below is a graphic summarizing the process for our board of directors to identify and review director candidates to
join our board of directors:
Input From
directors,
management
and
stockholders
1
Candidate
Pool
with diverse
qualifications
and skills
drawn from a
broad array of
organizations
2
In-Depth Review
by board of directors
and Nominating
and Corporate
Governance
Committee including:
skills, expertise,
experience, and
independence
3
The Nominating
and Corporate
Governance
Committee
Recommends
Selected
Candidates for
Appointment
to our board of
directors and our
board of directors
approves
4
4 New
Director
Nominees in
the last five
years
5
Dr. Lavender, who was appointed to the board of directors by our other directors in March 2025, was initially
suggested to the Nominating and Corporate Governance Committee for consideration as a potential director by our
CEO. There is no arrangement or understanding between Dr. Lavender and any other persons pursuant to which he
was selected as a director of Arista. In addition, Dr. Lavender does not have an interest in any transactions that
would be reportable under Item 404(a) of Regulation S-K.
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Stockholder Recommendations for Nominations to the Board of
Directors
The Nominating and Corporate Governance Committee will evaluate any recommendation for nominations to our
board of directors in accordance with its charter, our amended and restated bylaws, our policies and procedures for
director candidates, as well as the regular director nominee criteria described above. Under our Corporate
Governance Guidelines, the Nominating and Corporate Governance Committee will consider candidates for our
board of directors recommended by stockholders holding at least the minimum amount in market value of the
Company’s securities entitled to vote on the election of directors as set forth in applicable SEC rules and regulations
prior to the date of the submission of the recommendation so long as such recommendations and nominations
comply with the certificate of incorporation and bylaws of the Company and applicable laws, including SEC rules
and regulations. In addition, we have adopted a “proxy access” procedure. Our proxy access bylaw allows a
stockholder or a group of no more than 20 stockholders to include director nominees in our proxy materials for an
annual meeting of stockholders. More specifically, stockholders or groups of stockholders who have for at least three
years maintained continuous ownership of at least 3% of our common stock may collectively include a number of
director nominees not exceeding the greater of (A) two or (B) 20% of the number of directors in office. Such
recommendations must include information about the candidate, including but not limited to, a statement of support
by the recommending stockholder, evidence of the recommending stockholder’s ownership of our common stock
and certain written representations and undertakings as outlined in our amended and restated bylaws. Our
Nominating and Corporate Governance Committee has discretion to decide which individuals to recommend for
nomination as directors.
Any nomination should be sent in writing to our General Counsel or our Legal Department at Arista Networks, Inc.,
5453 Great America Parkway, Santa Clara, California 95054. To be timely for our 2027 annual meeting of
stockholders, our General Counsel or Legal Department must receive the nomination no earlier than January 31,
2027 and no later than March 2, 2027.
Stockholder Outreach
We believe that effective corporate governance should include regular, constructive conversations with our
stockholders and we believe that we have had an effective stockholder engagement program. The results of our
2025 advisory vote on say-on-pay impelled us to complement our commitment to robust stockholder engagement
with additional stockholder outreach that focused on better understanding our stockholders’ reasons for their 2025
say-on-pay votes. In 2025 and into 2026, members of our board of directors, senior management and investor
relations participated in significant engagement with stockholders. We proactively contacted institutional stockholders
representing over 40% of our outstanding shares. We met with stockholders who responded to our outreach and
otherwise engaged in discussions with institutional stockholders representing approximately 45% of our outstanding
shares. We sought and encouraged feedback from stockholders about our corporate governance practices,
executive compensation and corporate responsibility programs, among other topics, with a particularly diligent focus
on gathering and understanding stockholder feedback with respect to our executive compensation programs and
related disclosures with the goal of taking specific actions to address the issues that contributed to the level of
support for our 2025 advisory vote on say-on-pay, as discussed in more detail below in the section entitled
“Response to 2025 Say-On-Pay.” Our board of directors and its committees receive updates about our stockholder
outreach and take the feedback of our stockholders under serious consideration and in some cases take specific
actions to address that feedback. We believe that this open, ongoing and two-way dialogue with our stockholders
strengthens our governance practices, enhances the accountability of our board of directors and supports effective,
long-term oriented decision making.
How We Engage
• One-on-one and group meetings in-person and virtually
• Written and electronic communications
• Conferences and other forums
Who Participates
• Lead independent director
• Other independent directors
• Senior management
• Investor relations
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YEAR-ROUND STOCKHOLDER OUTREACH AND ENGAGEMENT
• Our board of directors and its committees assess and monitor investor
sentiment, stockholder voting results, trends in governance, executive
compensation matters and other topics of importance to our stockholders
• Our board of directors discusses stockholder proposals (if any)
• Our board of directors and management review recent regulatory
developments and our governance policies and procedures
• Our board of directors identifies and prioritizes potential topics for
stockholder engagement
• Every year we publish our Annual Report, Proxy Statement and
Corporate Responsibility Report
• Every quarter we publish an earnings release and host an earnings call
where senior management is available to answer stockholder questions
• Management engages with stockholders individually, as well as at
conferences and other forums, to actively solicit input on a range of
issues and better understand their votes
• Management speaks with proxy advisory firms to discuss our programs
and get updates about key focus areas for their clients
• Management reports stockholder views to our board of directors
• When appropriate, certain members of the board of directors engage in
dialogue with stockholders
• Stockholder input informs our ongoing process of continuous improvement
to governance, compensation and other practices
• Our board of directors and management review voting results and
stockholder input to identify topics and themes
• Our management researches and evaluates any identified issues and
concerns as needed
EVALUATE
FEEDBACK
AND INPUT
• Our board of directors and management respond to stockholder input, as
appropriate, with:
- continued engagement;
- changes to our policies, practices, and disclosure
• For more information about our responses to specific stockholder feedback
since our last annual meeting, please see the section entitled "Response
to 2025 Say-On-Pay" below
RESPOND AND
IMPLEMENT
DELIBERATE,
ASSESS AND
OUTREACH AND
ENGAGEMENT
PREPARE
- rationales for our existing policies and practices; and
RESPONSE TO 2025 SAY-ON-PAY
Initial Stockholder Outreach
Following the filing of our proxy statement on April 16, 2025, and in advance of our 2025 annual meeting of
stockholders, our board of directors and Compensation Committee conducted outreach to investors to discuss
executive compensation and other matters of interest. We solicited feedback from 18 stockholders, collectively
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representing over 33% of our shares outstanding, including 13 of our top 25 institutional stockholders. Ultimately,
prior to our 2025 annual meeting of stockholders we engaged with 13 stockholders, collectively representing over
25% of our shares outstanding. This engagement was conducted in one-on-one and group meetings held in-person
and virtually, or by written correspondence. Meetings were led by members of our Compensation Committee,
Nominating and Corporate Governance Committee and Audit Committee, including Messrs. Giancarlo, Scheinman
and Templeton, and attended by representatives from senior management and our investor relations team. In
addition, we supplemented our 2025 proxy statement with further information to address the recommendation of
Glass, Lewis & Co. (“Glass Lewis”) and Institutional Shareholder Services (“ISS”) to vote against our 2025 advisory
say-on-pay proposal.
In our pre-meeting stockholder engagement, and as explained in our proxy supplement filed on May 19, 2025, we
reaffirmed that we remained committed to the principles of aligning pay with performance. As part of the 2025 pre-
meeting engagement, we were diligent in discussing the rationale for the grant made to Mr. Duda in 2024 in light of
the negative advisory recommendations of Glass Lewis and ISS, which were focused on this grant. We explained
that we viewed the size of the grant to Mr. Duda in 2024 as appropriately tailored to the extraordinary importance of
retaining and incentivizing him. The value of his experience and insight cannot be overstated. He is a pioneer in high-
performance networking software, lead architect of Arista’s EOS Network Data Lake and drives Network-as-a-
Service initiatives across our products. He has been essential to our past success and is crucial to our ability to
execute our Arista 2.0 business strategy, achieve our future operational goals and create long-term stockholder value
over the vesting period of the award. Moreover, Mr. Duda’s depth of experience, technological insight and proven
leadership make him a valuable candidate for other opportunities. In furtherance of our Arista 2.0 strategy,
Mr. Duda’s award was specifically designed to incentivize his long-term contributions and retention following its grant
date in February 2024 to drive our performance well into the future as follows:
7 Year Overall Service Period
2024
2025
2026
2027
2028
2029
2030
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
0%
0% 0% 0% 0% 0% 0% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 0%
Percent of Award Vesting per Quarter
As illustrated above, no portion of the award would vest prior to Mr. Duda’s sustained contributions over the eight fiscal
quarters of 2024 and 2025, with the first vesting occurring in the fourth quarter of 2025. Additionally, once the award
began vesting, the rate of vesting was a low 5% quarterly vesting pace, with 55% of the shares subject to the award
vesting in 2028, 2029 and 2030 for retention purposes. These features were designed to ensure Mr. Duda’s continued
contributions into 2030, and delivered approximately $5 million annually over a 5-year period. We noted that, in granting
the award, our Compensation Committee determined that this value was appropriate for a key contributor such as
Mr. Duda in light of his overall compensation package and structure, his important role in executing our Arista 2.0 strategy,
and the market for other opportunities available to him as an industry leader.
At our 2025 annual meeting of stockholders, our investors supported the compensation of our NEOs with approximately
62% of the votes approving the 2025 advisory say-on-pay proposal.
We believed that this low support was unjustified, as our compensation programs are deliberately designed to include
significant performance-based components (including with respect to stock price appreciation which drives the majority of
our compensation value) and have consistently resulted in us providing overall compensation to our executive officers
between the 25th percentile and 75th percentile as compared to our peers.
Nonetheless, in response to the results of stockholders’ votes on the 2025 advisory say-on-pay proposal, our board of
directors and Compensation Committee conducted supplemental stockholder engagement for a fresh review of our
executive compensation program and address the vote outcome.
Further Stockholder Outreach
After our 2025 annual meeting of stockholders, members of our board of directors, together with senior management
and our investor relations team, conducted additional stockholder engagement to gather more stockholder feedback.
Given the results of stockholders’ votes on say-on-pay, this stockholder engagement program had a particularly diligent
focus on obtaining and responding to stockholder feedback with respect to our executive compensation programs and
related disclosures. The goal of the additional outreach was to deepen our understanding of our stockholders’ views of
our executive compensation programs and gather additional feedback on our policies for consideration by the board of
directors in the design of our compensation programs. We reached out to a broad group of stockholders within our top
25 institutional stockholders, with the goal of incorporating a broad range of stockholder perspectives that we could
then incorporate into our decision-making process.
2026 PROXY STATEMENT
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Over the course of this stockholder outreach:
-
We invited 22 institutional stockholders, collectively representing over 35% of our shares outstanding, to
meet with us to discuss their feedback, including with respect to our executive compensation program;
-
This outreach included selected top stockholders and other stockholders within our top 25 institutional
investors;
-
The stockholders we invited to meet with us after our 2025 annual meeting of stockholders included a
number that were unable to discuss our executive compensation program with us prior to our 2025
annual meeting of stockholders;
-
We met with 9 stockholders and received written feedback from several additional stockholders,
collectively representing over 15% of our shares outstanding; and
-
These meetings were led by representatives of our Compensation Committee, Nominating and
Corporate Governance Committee, and Audit Committee, in particular Mr. Giancarlo or
Mr. Scheinman, and attended by our senior leadership and investor relations team.
Key Themes from Stockholder Engagement & Action Taken
Overall, during our stockholder outreach focused on soliciting feedback related to our advisory vote on say-on-pay in
2025, we obtained feedback from 18 stockholders, collectively representing over 30% of our shares outstanding,
including 10 of our top 25 institutional stockholders.
The foregoing outreach supplemented and enhanced our robust and ongoing stockholder engagement program,
through which we maintain two-way dialogues with our stockholders on a range of topics related to our business.
Our stockholder engagement program runs primarily through the commitment and activity of our dedicated investor
relations team and includes active participation from our senior leadership and board of directors. Overall, in 2025
and continuing in 2026, we proactively contacted institutional stockholders representing over 40% of our outstanding
shares which, when combined with our engagement with stockholders who reached out to us, led us to engage with
institutional stockholders representing approximately 45% of our outstanding shares. Over the course of these
interactions we held over 100 engagement meetings with our institutional stockholders.
The feedback and perspectives we received leading up to and after the 2025 annual meeting of stockholders
provided us with valuable and direct insight on our executive compensation program.
Throughout the engagement outreach, we heard a range of diverse stockholder perspectives. Our executive
compensation programs were one of a number of topics we discussed, with many stockholders indicating that they
were supportive of the 2024 grant to Mr. Duda and our executive compensation programs more broadly. Those
stockholders expressed more interest in discussing our business plans given the accelerating pace of change in our
industry. Nonetheless, some stockholders expressed concerns consistent with those highlighted in the outcome of
the 2025 say-on-pay vote and in proxy advisor analyses. We took these concerns seriously and focused our review
on the areas they identified.
As in previous years, in 2025 we discussed performance equity, time-based equity, incentive metrics and grant
practices with our stockholders. In the context of executive compensation, a few key themes stood out in
discussions with our stockholders, including stockholders both who did and did not support our 2025 advisory
say-on-pay proposal, which were consistent with the stockholder sentiment conveyed to us by stockholders prior to
the 2025 annual meeting of stockholders and in the recommendations of proxy advisors Glass Lewis and ISS,
including: (1) the decision to grant a large, off-cycle award to Mr. Duda; (2) the robustness of disclosure about our
short-term cash performance incentive program; and (3) lack of multi-year performance metrics equity awards.
Large One-Time and Off-Cycle Grants
Our response
• We are committed to critically assessing any proposed special, one-time or off-cycle awards to our executives.
Our Compensation Committee conducts a detailed evaluation of potential approaches to compensation for our
executive officers, which supplements their experiential perspective and acumen with input from our CEO,
independent compensation consultant, outside counsel and board of directors. Informed through this process,
our leadership believes that talent acquisition, retention, and the need to build and support our leadership team so
that they are well positioned for the next step in our growth, namely the execution of our Arista 2.0 strategy,
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cannot be restrained to an annual compensation review cycle. In the hypercompetitive market in which we
operate, compensation review and, potentially, adjustment, must be as dynamic as our product cycle and
customer base requires.
• At the time of the 2024 grant, our Compensation Committee believed that retaining Mr. Duda was a key talent
objective given his extensive experience across a wide breadth of the technology sector that will continue to be
fundamental to our ability to execute on our business strategy and achieve our operational goals over the vesting
period of his grant, and that delivering this grant would help ensure his continued contributions.
• Indeed, consistent with our needs to actively review and refresh our executive structure to support our strategic
and operational goals as well as retain key leaders, in September 2025 Mr. Duda was named President and Chief
Technology Officer. The realignment of Mr. Duda’s role within our executive structure complemented the addition
of Mr. Nightingale to our executive team as President and Chief Operating Officer, both of which were intended to
ready us for the next phase of our growth and enhanced the capacity of our leaders and organizational structure
to execute our Arista 2.0 strategy. Each oversees significant portions of our total organization, with extensive
duties and responsibilities. Similarly, Ms. Breithaupt took on significant additional responsibility beyond her then-
existing role as our CFO in May 2025 in connection with the resignation of our then-General Counsel, including
oversight of Arista’s legal operations, cybersecurity, and information technology.
• With respect to the recruitment of Mr. Nightingale as our President and Chief Operating Officer, we had a number
of key considerations when designing his equity compensation, including:
– our conviction that his leadership would be a key driver of our future growth because of his ability to lead
our efforts in enterprise data centers, campus networks and manufacturing;
– the need to replace the equity compensation he was eligible for as Chief Executive Officer of Fastly, Inc.; and
– general market conditions related to the acquisition of talent who have thrived in the role of a chief executive
officer of a publicly traded company.
These and other considerations were reflected in the design of Mr. Nightingale’s new-hire equity grants in July 2025,
which focused on incentivizing Mr. Nightingale to ramp up his contributions to both operational and integration goals
immediately. The performance-based equity awards were split into three 6-month vesting tranches in a structure
designed to provide our Compensation Committee and CEO the ability to implement performance goals that yielded
targeted and immediate contributions and, with respect to the first tranche, rigorous and ambitious performance
goals were implemented that clearly linked pay and performance. In particular, no portion of the first tranche was
eligible to vest unless key bookings and product milestones were satisfied and Mr. Nightingale remained employed
through February 20, 2026. His companion time-based grant was designed so that it does not begin to vest until
August 20, 2026, with vesting continuing over the three following years, providing retention incentives for over four
total years.
As a result of this design, 100% of Mr. Nightingale’s equity compensation that was eligible to vest within his first
year of employment with us was performance-based. Any time-based vesting would only be eligible to be earned
after he demonstrated sustained performance and the leadership qualities we demanded for more than a year,
and such time-based equity would be spread out over four total years. Moreover, the time-based equity he was
eligible to earn with respect to his first year of employment with us was a competitive $7.5 million, which we
believe is in line with our peer group for a similar role. In agreeing to his initial equity package, we considered the
compensation that he could secure, both in his role as Chief Executive Officer of Fastly, Inc., and more generally
in the market, including by comparing the values and structure offered to those of his new-hire grant at Fastly,
Inc., in 2022, which provided more generous immediate quarterly vesting with $6 million in intended value his first
year of service, and by considering the significant reductions to his base salary and bonus opportunities that he
accepted by joining us, as discussed further below.
• While we believe that the equity granted to Mr. Nightingale to recruit him in 2025 was necessary and appropriate – it
was negotiated at arms-length – it is important to note that his recruitment grant was made prior to our stockholder
outreach after our 2025 annual meeting of stockholders, which has further informed our views regarding the size and
terms of equity awards granted in special circumstances. Nonetheless, we believed and continue to believe that he
is an exceptionally high-impact talent acquisition for a key customer-facing role providing critical skills and experience
from the outside that will broaden our bench of executives both now and in the future, and that therefore his total
compensation package, and the equity component in particular, will incentivize continued strong stockholder growth
in the future.
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• Returning to the grant to Mr. Duda, this grant was designed to ensure his long-term commitment to our business
strategy and operational goals, with a delayed vesting period extending into 2030, further promoting long-term
alignment with stockholders. As illustrated above on page 33, the award would ultimately vest as follows:
7 Year Overall Service Period
Percent of Award Vesting per Fiscal Year
FY 2024
0%
FY 2025
5%
20%
FY 2026
20%
FY 2027
20%
FY 2028
20%
FY 2029
15%
FY 2030
• This extended vesting period is a key design feature of our equity compensation program, which implements a
philosophy by which grants are made with long vesting and service cycles that extend the retention value of the
grants. This grant structure is generally designed to deliver high retention value in a manner that limits stockholder
dilution by leveraging long-term appreciation opportunities for executives who fulfill the service period
requirements and/or performance targets. When our Compensation Committee approved Mr. Duda’s grant, it
reviewed the projected annual vesting of Mr. Duda’s aggregate awards with its compensation consultant, and the
grant was designed in accordance with the grant philosophy described above, to deliver high retention value while
limiting stockholder dilution by leveraging long-term appreciation opportunities. As noted above, the majority of
the vesting for Mr. Duda’s grant will occur from 2028 through 2030, in years 5 to 7 of the grant cycle, which was
designed specifically for retention.
• Also, in line with this philosophy, in 2025 we awarded performance-vesting equity in two tranches, first in February
2025 and later in October 2025. Both sets of grants were made following a rigorous analysis with respect to each
recipient’s aggregate vesting schedule, with the October 2025 grants only becoming eligible to vest based on
performance in fiscal years 2029-2031 for Ms. Breithaupt and Mr. Duda, and in fiscal years 2030-2032 for
Mr. Nightingale. The following illustrates the vesting of our performance-vesting equity award structure:
Performance Fiscal Year*
2025
2026
2027
2028
2029
2030
2031
2032
PRSUs granted in FY2023:
PRSUs granted in FY 2024:
**
†
PRSUs granted in February FY 2025:
**†
PRSUs granted in May FY 2025:
**
PRSUs granted in July FY 2025:
‡
PRSUs granted in October FY 2025:
**†
‡
*
Except for Mr. Nightingale’s July 2025 PRSUs, if earned, vesting does not occur until February 20 of the fiscal year following
the performance fiscal year, subject to continued employment through the vesting date. If earned, the vesting for the tranches
of Mr. Nightingale’s July 2025 PRSUs occurs in February 20, 2026, August 20, 2026 and February 20, 2027, subject to
continued employment through the vesting date.
**
PRSU grant vesting for Ms. Breithaupt.
†
PRSU grant vesting for Mr. Duda.
‡
PRSU grant vesting for Mr. Nightingale.
• The stacking of vesting periods illustrated above reflects the intention to maximize retention value in a manner that
limits stockholder dilution by leveraging long-term appreciation opportunities while requiring the completion of
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longer service periods and/or the satisfaction of performance targets that will happen in later years. The
Compensation Committee believes this is a strong message to our executives that compensation is earned over
time based on the ongoing execution in their roles, which is aligned with future value creation.
• Additionally, our unique approach to equity compensation is a part of a broader approach to compensation that
has allowed us to maintain cash compensation at conservative levels as compared to those of our peer group
while maintaining a consistent track record of delivering exceptional stockholder value and growth. This approach
is perhaps best demonstrated by the compensation package of Ms. Ullal, our CEO, whose cash compensation
package is well below industry norms, and who has not accepted a service-vesting equity award since 2020 or a
performance-vesting award since 2024, with the intent of ensuring that the executive team receives equity awards
that provide maximum retentive value.
• Taking account of this unique approach to performance-equity strategy is essential when analyzing the mix of
time- and performance-based equity awarded to Mr. Nightingale in his first year of employment. We envision Mr.
Nightingale playing a key role in our long-term Arista 2.0 strategy and, as a result of our unique approach, the
value of his performance-based equity awards will soon weigh significantly more in his overall equity mix as the
performance periods of his performance-based equity awards begin to stack up, as evidenced by the addition of
his October performance-based equity grant.
Our board of directors and Compensation Committee understand the importance of responding to stockholder
feedback regarding Mr. Duda’s grant. As specific action, we continue to focus on pay for performance, to manage
stockholder dilution through the use of thoughtful, long-term performance-vesting equity awards, and to make awards that
require extended service periods to realize gains. As part of this plan, we amended our Stock Ownership Guidelines so that
they mandate that certain key executives achieve and maintain a meaningful equity stake in our company.
Disclosures Regarding our Short-Term Cash Performance Incentive Program
Our response
• As described in our prior annual proxy materials, payouts under our short-term cash incentive program are
primarily dependent on the achievement of rigorous financial performance metrics for revenue and non-GAAP
operating income for the year, and no payout is made unless we achieve at least 85% of the revenue metric
target.
Our board of directors and Compensation Committee understand the importance of responding to stockholder
feedback regarding disclosure of our short-term cash performance incentive program. As specific action, we have
substantially enhanced our compensation disclosure this year, including by disclosing the annual target goals and
weightings for our 2025 Bonus Plan and adding further discussion regarding the metrics applicable to our 2025 Bonus Plan
under the section entitled “Executive Compensation — Executive Compensation Program Components — Annual Cash
Incentive Compensation; 2025 Bonus Plan”.
Equity Vesting Program Design
Our response
•
All regular annual equity awards granted in 2025 have either a performance vesting component or a time-based
vesting period of three-years or longer. For example, as discussed further under the heading “Executive
Compensation,” we granted equity to Mr. Nightingale in connection with his appointment as our President and
Chief Operating Officer that vest based on performance-based targets in 2025 and 2026.
•
We are committed to critically assessing the proposed performance and vesting periods for equity awards to our
NEOs and we believe that the performance and vesting periods are designed to align the incentives of our NEOs
with the best interests of Arista and our stockholders.
Our board of directors and Compensation Committee understand the importance of responding to stockholder
feedback regarding the performance component of our equity compensation programs. As a specific action, we
committed to continuing to reevaluate the effectiveness of our pay for performance equity compensation program design.
2026 PROXY STATEMENT
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Other Themes from Stockholder Engagement
In addition to the compensation themes discussed above, our stockholder engagement efforts yielded additional
commentary about the following considerations:
-
Certain stockholders prefer the incorporation of sustainability-related performance metrics into performance-based
equity awards – We are committed to advancing our corporate responsibility programs in alignment with our broader
business strategy and goals and, as discussed in more detail under section entitled “Our Commitment to Corporate
Responsibility,” we are proud of our achievements in 2025, such as setting our SBTi goals. Our board of directors,
committees and management continue to monitor and assess the effectiveness of our incentive structures to advance
our corporate responsibility programs and consider whether inclusion of such metrics in the measurement of
achievement of the targets for our performance-based equity awards is in the best interests of our stockholders.
-
Certain stockholders asked how we planned to compete in the current climate for talent, particularly AI talent –
We are committed to offering attractive packages to both recruit and retain the best talent across all aspects of
our business. Our Compensation Committee continuously reviews our compensation programs to ensure the
attractiveness and positioning of our programs in the market. In line with our executive compensation philosophy,
we believe that top tier talent is attracted to and motivated by the potential to earn equity compensation that
aligns their work with enhancing stockholder value, which also helps us maintain conservative cash-based
compensation arrangements. We leverage the equity available for issuance under our 2014 Plan to attract,
motivate and retain our talent.
Summary of Stockholder Engagement
Our board of directors and Compensation Committee carefully considered the results of our 2025 say-on-pay
advisory vote, together with the feedback we received from our stockholders during our engagement efforts, as part
of their review of our overall executive compensation program and policies. We take our stockholders input seriously
and the perspectives that we heard directly during our engagement with them in developing our compensation
program that is discussed elsewhere in this proxy statement under the section entitled “Executive Compensation.”
Nonetheless, we believe, based on the feedback that we received from our stockholders, that they generally
understand that in order to continue to deliver growth, our compensation programs and review cycle must mirror the
fast-paced development of our technology and industry. This means that at times we cannot be restricted to just a
habitual once-a-year compensation review cycle and that it is appropriate and beneficial for us to implement long-
duration value creating equity compensation frameworks as our business evolves. Importantly, as demonstrated by
our strong executive team, conservative cash compensation and equity burn, and our exceptional revenue growth
and stock price performance, we believe that our approach to executive compensation has been successful.
Communications with the Board of Directors
Stockholders and other interested parties wishing to communicate directly with our independent or non-management
directors may do so by writing and mailing the correspondence to our General Counsel and Corporate Secretary at
Arista Networks, Inc., 5453 Great America Parkway, Santa Clara, California 95054. Each communication should set
forth (i) the name and address of the stockholder, as it appears on our books, and if the shares of our common stock
are held by a nominee, the name and address of the beneficial owner of such shares, and (ii) the number of shares of
our common stock that are owned of record by the record holder and beneficially by the beneficial owner.
Our General Counsel, in consultation with appropriate members of our board of directors as necessary, will review all
incoming communications and, if appropriate, such communications will be forwarded to the appropriate member or
members of our board of directors, or if none is specified, to the Chairperson of our board of directors or the Lead
Independent Director if the Chairperson is not independent.
Role of Board of Directors in Risk Oversight
Risk is inherent with every business and we face a number of risks, including strategic, financial, business and
operational, legal and compliance, and reputational risks. We have designed and implemented processes to manage
risk in our operations. Management is responsible for the day-to-day management of risks the Company faces while
our board of directors has responsibility for the oversight of risk management. Our board committees assist our
board of directors in fulfilling its oversight responsibilities in certain areas of risk.
Our Audit Committee reviews the Company’s risk management processes and procedures, including our internal
controls and procedures on financial reporting, our investment policies, and our compliance programs with respect to
legal, ethical and regulatory requirements. The management and internal audit teams provide periodic updates on
cybersecurity risks and other risks to the Audit Committee. Further, the Audit Committee receives reports and
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presentations from management on the Company’s risk assessment and mitigation programs, compliance matters,
and cybersecurity activities, and the results of various internal audit projects. Our Audit Committee receives quarterly
reports from our Chief Information Security Officer, in conjunction with other senior managers, on cybersecurity risks.
In addition, these managers update the Audit Committee, as necessary, regarding any material cybersecurity
incidents, as well as incidents with lesser impact potential.
•
•
Evaluates the relationship between our risk management policies and
practices, and compensation
Evaluates our compensation policies and practices to determine whether
they could encourage excessive risk-taking or could mitigate any such risk
•
• Oversees regulatory compliance with respect to compensation matters
that affect us
Board of
Directors
• Meets with CEO,
CFO and other
members of the senior
management team at
quarterly meetings of
our board of directors
where they discuss
strategy and risks
facing the Company
• Oversees the
risk management
processes designed
and implemented by
management to ensure
that they are appropriate
and functioning as
designed
AUDIT COMMITTEE
• Oversees internal control over
financial reporting and related
disclosure controls and
procedures, legal and regulatory
compliance
• Discusses with management
and the independent auditor
guidelines and policies with
respect to enterprise risk
assessment and management
• Reviews our major financial
risk exposures and the steps
management has taken to
monitor and control these
exposures
• Monitors certain key risks on a
regular basis throughout the
fiscal year, such as cybersecurity
risk and risk associated with
internal control over financial
reporting and enterprise risk
• Reviews the adequacy and
monitoring of our compliance
policies and programs for legal,
ethical and regulatory requirements
• Reviews our risk management
policies, including our
investment policies
• Reviews management reports on
internal compliance policies and
procedures
• Reviews and discusses with
management our policies
and practices relating to
environmental and social
responsibility matters
• Reviews and discusses with
management our information
security policies and practices and
internal controls regarding
information security
• Oversees management’s
implementation of our
cybersecurity risk management
program
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE
•
•
Manages risks associated with board organization, membership and
structure, corporate governance and succession planning
Reviews any conflicts of interest
COMPENSATION COMMITTEE
• Reviews strategic and
operational risk,
including by receiving
reports from the
management team
• Evaluates the risks
inherent in significant
transactions
• Provides guidance to
management
• Receives reports on all
significant committee
activities at each regular
meeting
2026 PROXY STATEMENT
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Role of Board of Directors in Oversight of Corporate
Responsibility
Arista was founded on the principle of doing things the “Arista Way,” which is to drive for customer success in every
aspect of what we do. We build and deliver innovative, high-quality products and services through commitment,
innovation and uncompromising focus on customer needs. This includes a commitment to designing, manufacturing
and delivering leading software-driven cloud networking solutions in an environmentally and socially responsible
manner, which requires robust oversight of our corporate responsibility (“CR”) initiatives.
Our CR governance structure begins at the very top as CR-related topics are raised to the board of directors on a
periodic basis, as needed, in accordance with our regular governance processes. Furthermore, as noted in the chart
above, each committee of the board of directors has particular responsibilities related to CR priorities. In particular,
the Audit Committee oversees risk management, including environmental and social responsibility matters,
compliance with the Code of Ethics and Business Conduct, and the implementation of our climate transition plan.
We also have a management Sustainability Committee responsible for overseeing climate-related strategies and
initiatives, which includes members of the HR, Legal, and Sustainability teams with respective subject matter
expertise across aspects of governance, regulatory matters, corporate social responsibility, and environmental
sustainability. The Sustainability Committee’s key responsibilities include the assessment of environmental
dependencies, risks, and opportunities. The Sustainability Committee also sets and monitors corporate
environmental policies and targets, including science-based emissions reduction targets, develops and implements
Arista’s climate transition plan and manages environmental reporting, audit, and verification processes. The
Sustainability Committee plays a central role in coordinating sustainability efforts across business functions, ensuring
alignment with corporate strategy and regulatory expectations. The Sustainability Committee provides an annual
briefing to the Audit Committee and biannually to our CEO and the board of directors.
We are committed to transparency in our CR reporting and regularly evaluate the quality and effectiveness of our
reporting based on feedback from our stakeholders, measurement against external reporting frameworks, and
evolving regulatory frameworks. For more information about our CR priorities and impact, see our most recent Annual
Report on Form 10-K accompanying this proxy statement as well as the content on the Corporate Responsibility
page of our website.
Talent Management and Succession Planning
Our board of directors places a high priority on senior management development and succession planning. Our
board of directors recognizes that thoughtful succession planning is critical to creating long-term stockholder value
and requires a robust and comprehensive approach to talent and human capital management.
Pursuant to our Corporate Governance Guidelines, the Nominating and Corporate Governance Committee, in
consultation with the full board of directors, is primarily responsible for succession planning for the role of chief
executive officer. The Nominating and Corporate Governance Committee also monitors management’s succession
plans for other key executives and confers with our CEO to encourage management’s employee development
programs. In addition, our Group Vice President, Worldwide Human Resources & Operations reports to the Audit and
Compensation Committees and our board of directors periodically throughout the year on our talent management
and employee development programs to support the board’s oversight responsibilities.
The Nominating and Corporate Governance Committee also evaluates our key executives, discusses their
development and develops succession plans with the goal of ensuring that a strong pipeline of talent is being
developed for planned or unplanned events. In addition, our lead independent director facilitates discussions among
independent directors about succession planning and provides updates to the full board of directors on such
discussions.
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HUMAN CAPITAL MANAGEMENT
Talent
Attraction
We engage in expansive global recruiting efforts to connect with and hire talented
professionals from a wide range of backgrounds and geographies. For example,
we hosted or participated in numerous new grad recruiting events with many
major colleges as well as in-person and virtual job fairs. We also have partnered
with organizations and universities, such as Arizona State University, to develop
training and upskilling programs to create new pathways for students to enter
the IT industry.
Engagement
and Culture
We believe that our employees’ feedback is the most accurate indicator of our
success in creating an engaged, highly motivated and high performance
workforce. In 2023, 2024 and 2025 Global Employee surveys, Arista received very
high mid-90th percentile scores from all employee demographic groups as an
overall rating as well as for fairness, highlighting our on-going dedication to
maintaining an equitable workplace. In 2025, we were also humbled and honored
to receive a record number of external recognitions, among other awards, as a Best
Place to Work (Large Company) for Happiness as well as for Culture by Comparably.
Health and
Well-Being
• Biweekly virtual webinars by medical professionals and mental health
wellness and fitness experts as well as numerous in-person wellness
activities at our major office locations;
• A global webinar dedicated to understanding neurodiversity;
• In-house fitness challenges with high global participation.
• Webinars dedicated to career/development/upskilling and financial
education; and
We prioritize our employees’ health and well-being by offering a wide range of
physical, mental, financial wellness, career development and upskilling programs,
such as:
Management
Development
and Training
Arista has made AI skills development an enterprise-wide priority as we strive to
embed AI in our everyday business processes. In 2025, employees participated in
many live, webinar, and self-paced training programs to improve their overall and
job-specific AI skills and capabilities. In addition, we provide extensive training and
accreditation opportunities to employees in Sales, Customer Engineering and
Software Research and Development roles including our Arista Certified Engineer
(“ACE”) certification program as well as mentorship programs. Additional career
development content including management and leadership development training
is available through our E-Learning portal and Arista Academy to facilitate a
culture of lifelong learning and allow employees to personalize their development.
Compensation
Arista's compensation philosophy is to pay our employees based on their
performance, contribution and impact to improving customer and stockholder
success. In the United States, we offer our employees competitive and
comprehensive benefit packages that include an employee stock purchase plan,
healthcare and retirement benefits, paid time off and family leave, flexible time away,
family planning benefits, backup resources for childcare and elder care, and other
employee assistance programs. In addition to base salary and benefits, Arista’s
employees participate in stock and bonus incentive plans that support our
organizational philosophy of allowing employees to share in our performance and
success. We are committed to paying our employees fairly, equitably, and we work
with a third party annually to identify and resolve any gaps.
2026 PROXY STATEMENT
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Director Compensation
The following table provides information regarding the total compensation of each of our non-employee directors in
2025. Directors who are also our employees do not receive additional compensation for their service as directors. In
particular, Jayshree Ullal, our CEO and Chairperson of the board of directors, and Kenneth Duda, our President and
Chief Technology Officer, did not receive additional compensation for their service as directors.
Director
Fees Earned
or Paid in
Cash ($)(1)
Stock
Awards ($)(2)
Option
Awards ($) Total ($)
Kelly Battles
90,000
336,510
—
426,510
Lewis Chew
110,000
336,510
—
446,510
Charles Giancarlo
100,000
336,510
—
436,510
Greg Lavender(3)
74,896
337,380
—
412,276
Daniel Scheinman
145,000
336,510
—
481,510
Mark B. Templeton
85,000
336,510
—
421,510
Yvonne Wassenaar
100,000
336,510
—
436,510
(1) The amounts reported represent the fees earned for service on our board of directors and committees of our board of
directors for 2025.
(2) In accordance with SEC rules, the amounts shown reflect the aggregate grant date fair value of restricted stock units granted
to non-employee directors during 2025, computed in accordance with Financial Accounting Standards Board Accounting
Standards Codification Topic 718 (“FASB ASC 718”). The grant date fair value for restricted stock units is measured based on
the closing price of Arista’s common stock on the date of grant. Each of Mses. Battles and Wassenaar and Messrs. Chew,
Giancarlo, Lavender, Scheinman and Templeton received an award of 3,380 restricted stock units on May 30, 2025.
Dr. Lavender received an award of 810 restricted stock units on March 14, 2025 and an award of 3,230 restricted stock units
on March 14, 2025, the effective date of his appointment to the board.
(3) Dr. Lavender was appointed to our board of directors and the Audit Committee on March 14, 2025. The amounts reported
represent the pro-rated cash retainer and equity grant earned for a partial year of service on our board of directors and the
Audit Committee. The fees earned in cash include an overpayment of $3,645.83 due to an administrative error. The cash fee
paid to Dr. Lavender in 2026 has been reduced by the amount of the overpayment in 2025.
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The following table lists all outstanding equity awards held by our non-employee directors as of December 31, 2025.
Director
Stock
Awards (#)(1)
Option
Awards (#)
Kelly Battles
1,942
—
Lewis Chew
1,942
—
Charles Giancarlo
1,942
—
Greg Lavender
1,615
—
Daniel Scheinman
1,942
—
Mark B. Templeton
1,942
—
Yvonne Wassenaar
1,942
—
(1) Represents the number of restricted stock units unvested as of December 31, 2025.
With respect to 2025 board service, our board of directors approved compensation to each of our non-employee
directors as follows:
• a $75,000 cash retainer for general board service,
except that our lead independent director received a
$120,000 cash retainer;
• a $30,000 cash retainer for chairing the Audit
Committee;
• a $25,000 cash retainer for chairing the
Compensation Committee;
• a $12,000 cash retainer for chairing the Nominating
and Corporate Governance Committee;
• a $10,000 cash retainer for non-chair service on each
Compensation Committee and Nominating and
Corporate Governance Committee
• a $12,500 cash retainer for non-chair service on the
Audit Committee
In February 2025, our Compensation Committee recommended, and our board of directors approved, a revised
policy for annual equity grants to outside board members of restricted stock units with a total value of $250,000
(based on the lowest closing stock price for the 90 trading day period ending on the grant date) that vest quarterly
(on each Company standard quarterly vesting date following the grant date) over one year and are subject to
continued service on the board (the “Revised Director Equity Policy”). The board of directors adopted this new policy
following an independent review of the pay practices and policies conducted by Aon, plc (“Aon”), the independent
consultant for the Compensation Committee. The decision to make policy changes was considered by the
Compensation Committee and presented to the non-employee directors for approval. Grants under the Revised
Director Equity Policy were automatic immediately following the first annual meeting after its adoption. The grants
received by the directors in 2025 reflected the updates made to the Revised Director Equity Policy.
STOCK OWNERSHIP GUIDELINES
In April 2019, our board of directors adopted, and in April 2026 amended, stock ownership guidelines. As amended
in April 2026, our stock ownership guidelines are designed to encourage our non-employee directors to achieve and
maintain a meaningful equity stake in our Company and more closely align their interests with those of our
stockholders. The guidelines provide that, within five years of the date that a non-employee director is appointed to
our board of directors, the non-employee director shall own a number of shares of our common stock with a value
equal to at least three times the value of his or her annual retainer for service on our board of directors (not including
any additional fees received for committee service, lead independent director service, or meeting attendance). The
following types of holdings are included for our stock ownership guidelines: shares of our common stock, shares of
our common stock underlying unvested RSUs subject to time-based vesting alone, and any other shares of our
common stock in which the non-employee director holds a beneficial interest. Our non-employee directors already
met or are on track to meet these guidelines based on their current rate of stock accumulation in the time frames set
out in the guidelines.
2026 PROXY STATEMENT
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PROPOSAL NO. 1
ELECTION OF DIRECTORS
Our board of directors is currently composed of nine members. In accordance with our amended and restated
certificate of incorporation, our board of directors is divided into three staggered classes of directors. At the Annual
Meeting, three Class III directors will be elected for a three-year term to succeed the same class whose term is then
expiring.
Each director’s term continues until the election and qualification of his or her successor, or such director’s earlier
death, resignation, or removal. Any increase or decrease in the number of directors will be distributed among the
three classes so that, as nearly as possible, each class will consist of one-third of our directors. This classification of
our board of directors may have the effect of delaying or preventing changes in control of our Company.
Nominees
Our Nominating and Corporate Governance Committee has recommended, and our board of directors has
approved, Lewis Chew, Greg Lavender and Mark B. Templeton, as nominees for election as Class III directors at the
Annual Meeting. If elected, each of Lewis Chew, Greg Lavender and Mark B. Templeton will serve as Class III
directors until the 2029 annual meeting of stockholders and until their successors are duly elected and qualified. Each
of the nominees is currently a director of our Company.
For information concerning the nominees, please see the section entitled “Board of Directors and Corporate
Governance.”
If you are a stockholder of record and you sign your proxy card or vote by telephone or over the Internet but do not
give instructions with respect to the voting of directors, your shares will be voted “FOR” the election of:
• Lewis Chew
• Greg Lavender
• Mark B. Templeton
Lewis Chew, Greg Lavender and Mark B. Templeton have each consented to
being a nominee and to serving as a director, if elected; however, in the event
that a director nominee is unable to serve as a director at the time of the
Annual Meeting, the proxies will be voted for any nominee who shall be
designated by our board of directors to fill such vacancy. If you are a street
name stockholder and you do not give voting instructions to your broker or
nominee, your broker will leave your shares unvoted on this matter.
Vote Required
The election of directors is by a plurality of the voting power of the shares of our common stock present in person or
represented by proxy at the Annual Meeting and entitled to vote on the election of directors. Abstentions and broker
non-votes will have no effect on the outcome of the vote. “Plurality” means that the nominees who receive the largest
number of votes cast “for” are elected as directors. As a result, any shares not voted “for” a particular nominee (whether
as a result of a withheld vote or a broker non-vote) will not be counted in such nominee’s favor and will have no effect
on the outcome of the election. You may vote “for” or “withhold” on each of the nominees for election as a director.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
“FOR” EACH OF THE NOMINEES NAMED ABOVE.
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PROPOSAL NO. 2
ADVISORY VOTE ON EXECUTIVE
COMPENSATION
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or the Dodd-Frank Act, enables
stockholders to approve, on an advisory or non-binding basis, the compensation of our named executive officers as
disclosed pursuant to Section 14A of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). This
proposal, commonly known as a “say-on-pay” proposal, gives our stockholders the opportunity to express their
views on our named executive officers’ compensation as a whole. This vote is not intended to address any specific
item of compensation or any specific named executive officer, but rather the overall compensation of all of our named
executive officers and the philosophy, policies and practices described in this proxy statement.
The say-on-pay vote is advisory, and therefore not binding on us, the Compensation Committee or our board of
directors. The say-on-pay vote will, however, provide information to us regarding investor sentiment about our
executive compensation philosophy, policies and practices, which the Compensation Committee will be able to
consider when determining executive compensation for the remainder of the current fiscal year and beyond. Our
board of directors and our Compensation Committee value the opinions of our stockholders and to the extent there
is any significant vote against the named executive officer compensation as disclosed in this proxy statement, we will
communicate directly with stockholders to better understand the concerns that influenced the vote, consider our
stockholders’ concerns and the Compensation Committee will evaluate whether any actions are necessary to
address those concerns.
We believe that the information provided in the “Executive Compensation” section of this proxy statement, and in
particular the information discussed in “Executive Compensation—Compensation Discussion and
Analysis—Executive Compensation Philosophy and Objectives” beginning on page 54 below, demonstrates that our
executive compensation program was designed appropriately and is working to ensure management’s interests are
aligned with our stockholders’ interests to support long-term value creation. Accordingly, we ask our stockholders to
vote “FOR” the following resolution at the Annual Meeting:
“RESOLVED, that the stockholders approve, on an advisory basis, the compensation paid to the named executive
officers, as disclosed in the proxy statement for the Annual Meeting pursuant to the compensation disclosure rules of
the SEC, including the compensation tables and narrative discussion, and other related disclosure.”
Vote Required
The advisory vote on executive compensation requires the affirmative vote of a majority of the voting power of the
shares of our common stock present in person or represented by proxy at the Annual Meeting and entitled to vote on
the subject matter. Abstentions will have the effect of a vote AGAINST the proposal and broker non-votes will have
no effect.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE APPROVAL OF
THE ADVISORY RESOLUTION ON EXECUTIVE COMPENSATION.
2026 PROXY STATEMENT
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PROPOSAL NO. 3
RATIFICATION OF INDEPENDENT
REGISTERED PUBLIC
ACCOUNTING FIRM
Our Audit Committee has appointed Ernst & Young LLP (“EY”), an independent registered public accounting firm, to
audit our consolidated financial statements for our fiscal year ending December 31, 2026. During our fiscal years
ended December 31, 2025, and December 31, 2024, EY served as our independent registered public accounting
firm.
Notwithstanding the appointment of EY and even if our stockholders ratify the appointment, our Audit Committee, in
its discretion, may appoint another independent registered public accounting firm at any time during our fiscal year if
our Audit Committee believes that such a change would be in the best interests of our Company and stockholders.
At the Annual Meeting, our stockholders are being asked to ratify the appointment of EY as our independent
registered public accounting firm for our fiscal year ending December 31, 2026. Our Audit Committee is submitting
the appointment of EY to our stockholders because we value our stockholders’ views on our independent registered
public accounting firm and as a matter of good corporate governance. Representatives of EY are expected to attend
the Annual Meeting virtually, and they will have an opportunity to make a statement and will be available to respond
to appropriate questions from our stockholders.
If our stockholders do not ratify the appointment of EY, our Audit Committee may reconsider the appointment of EY.
Fees Paid to the Independent Registered Public Accounting Firm
The following table presents fees for professional audit services and other services rendered to our Company by EY
for our fiscal years ended December 31, 2024 and 2025.
2024
2025
(in thousands)
Audit Fees(1)
$3,483
$4,025
Audit-Related Fees(2)
—
—
Tax Compliance Fees(3)
$1,149
$1,213
Tax Advice and Planning Fees(4)
$
219
$
248
All Other Fees(5)
—
—
Total Fees
$4,851
$5,486
(1) Audit Fees consist of professional services rendered in connection with the audit of our annual consolidated financial statements, including
audited financial statements presented in our Annual Report on Form 10-K and services that are normally provided by the independent
registered public accountants in connection with statutory and regulatory filings or engagements for those fiscal years.
(2) Audit-Related Fees consist of fees for professional services for assurance and related services that are reasonably related to the performance
of the audit or review of our consolidated financial statements and are not reported under “Audit Fees.” These services include accounting
consultations concerning financial accounting and reporting standards.
(3) Tax Compliance Fees consist of fees for tax compliance and the preparation of original and amended tax returns and refund claims.
(4) Tax Advice and Planning Fees consist of fees for tax advice and tax planning assistance, including non-recurring tax assistance in connection
with acquisitions and intellectual property alignment.
(5) All Other Fees consist of fees billed for products and services provided by the independent registered public accountants other than those
that meet the criteria above.
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Auditor Independence
In our fiscal year ended December 31, 2025, there were no other professional services provided by EY, other than
those listed above, that would have required our Audit Committee to consider their compatibility with maintaining the
independence of EY.
Audit Committee Policy on Pre-Approval of Audit and
Permissible Non-Audit Services of Independent Registered
Public Accounting Firm
Our Audit Committee has established a policy governing our use of the services of our independent registered public
accounting firm. Under the policy, our Audit Committee is required to pre-approve all audit and non-audit services
performed by our independent registered public accounting firm in order to ensure that the provision of such services
does not impair the public accountants’ independence. All services and fees paid to EY for our fiscal years ended
December 31, 2024 and 2025 were pre-approved by our Audit Committee.
Vote Required
The ratification of the appointment of EY requires the affirmative vote of a majority of the voting power of the shares
of our common stock present in person or represented by proxy at the Annual Meeting and entitled to vote on the
subject matter. Abstentions will have the effect of a vote AGAINST the proposal and broker non-votes will have no
effect.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
“FOR” THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP.
2026 PROXY STATEMENT
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AUDIT COMMITTEE REPORT
The Audit Committee is a committee of the board of directors comprised solely of independent directors as required
by the NYSE listing standards and rules and regulations of the SEC. The Audit Committee operates under a written
charter approved by the board of directors, which is available in the Governance section of our website at http://
investors.arista.com. The composition of the Audit Committee, the attributes of its members and the responsibilities
of the Audit Committee, as reflected in its charter, are intended to be in accordance with applicable requirements for
corporate audit committees. The Audit Committee reviews and assesses the adequacy of its charter and the Audit
Committee’s performance on an annual basis.
With respect to the Company’s financial reporting process, the management of the Company is responsible for
(1) establishing and maintaining internal controls and (2) preparing the Company’s consolidated financial statements.
Our independent registered public accounting firm, Ernst & Young LLP (“EY”), is responsible for auditing these
financial statements. It is the responsibility of the Audit Committee to oversee these activities. It is not the
responsibility of the Audit Committee to prepare our financial statements. These are the fundamental responsibilities
of management. In the performance of its oversight function, the Audit Committee has:
•
reviewed and discussed the audited financial
statements with management and EY;
•
discussed with EY the matters required to be
discussed by the applicable requirements of the
Public Company Accounting Oversight Board and
the SEC; and
•
received the written disclosures and the letter from
EY required by applicable requirements of the
Public Company Accounting Oversight Board
regarding the independent accountant’s
communications with the Audit Committee
concerning independence, and has discussed with
EY its independence.
Based on the Audit Committee’s review and discussions with management and EY, the Audit Committee
recommended to the board of directors that the audited financial statements be included in the Annual Report on
Form 10-K for the fiscal year ended December 31, 2025 for filing with the SEC.
Respectfully submitted by the members of the Audit Committee of the board of directors:
Lewis Chew (Chair)
Kelly Battles
Greg Lavender
Yvonne Wassenaar
This Audit Committee report is required by the SEC and, in accordance with the SEC’s rules, will not be deemed to
be part of or incorporated by reference by any general statement incorporating by reference this proxy statement into
any filing under the Securities Act of 1933, as amended (“Securities Act”), or under the Exchange Act, except to the
extent that we specifically incorporate this information by reference, and will not otherwise be deemed “soliciting
material” or “filed” under either the Securities Act or the Exchange Act.
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EXECUTIVE OFFICERS
The following table identifies certain information about our executive officers as of April 16, 2026. Officers are
appointed by our board of directors to hold office until their successors are appointed. There are no family
relationships among any of our directors or executive officers.
Name
Age
Position
Jayshree Ullal
65
Chief Executive Officer and Chairperson
Chantelle Breithaupt
54
Senior Vice President, Chief Financial Officer
Kenneth Duda
54
Founder, President, Chief Technology Officer and Director
Todd Nightingale
46
President and Chief Operating Officer
For biographical information about Ms. Ullal and Mr. Duda, please see the section entitled “Board of Directors and
Corporate Governance — Continuing Directors.”
Chantelle
Breithaupt
Ms. Breithaupt joined Arista Networks, Inc. in January 2024 and
was appointed as the Company’s Senior Vice President, Chief
Financial Officer effective as of February 12, 2024. Ms. Breithaupt
served as Senior Vice President and Chief Financial Officer of
Aspen Technology, an industrial software company, from March
2021 to December 2023. Prior to Aspen Technology,
Ms. Breithaupt spent seven years with Cisco Systems Inc., a
networking technology company. She held multiple leadership
positions at Cisco, most recently as Senior Vice President,
Finance from January 2021 to March 2021, Vice President of
Finance – Customer Experience/Services from August 2018 to
January 2021, Vice President – Finance, Americas from October
2017 to August 2018 and Senior Director – Operational Finance
from April 2014 to August 2015. Before Cisco, Ms. Breithaupt
worked with General Electric Company, an industrial
conglomerate, for 15 years, where she held progressive,
executive global finance roles. Ms. Breithaupt has served as a
member of the board of directors of Ambarella, Inc., a
semiconductor design company, since February 2025.
Ms. Breithaupt holds an Honors Business Administration degree
from Wilfrid Laurier University (Canada).
Senior Vice President, Chief Financial
Officer
Todd
Nightingale
Mr. Nightingale has served as our President and Chief Operating
Officer since June 2025. Mr. Nightingale has served as the Chief
Executive Officer and member of the Board of Directors of Fastly,
Inc., a cloud computing company, from September 2022 to June
2025. Prior to Fastly, Inc., Mr. Nightingale previously served as the
Executive Vice President and General Manager of Enterprise
Networking and Cloud at Cisco Systems, Inc. from March 2020 to
September 2022. Mr. Nightingale served as the Senior Vice
President and General Manager of Cisco Meraki, an IT solutions
company owned by Cisco, from June 2016 to March 2020. Prior
to that he held various roles as a Vice President at Cisco Meraki.
Mr. Nightingale holds a Bachelor of Science in electrical
engineering and computer science from Massachusetts Institute
of Technology as well as a Masters in Engineering from
Massachusetts Institute of Technology.
President and Chief Operating Officer
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COMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed and discussed the section entitled “Compensation Discussion and
Analysis” with management. Based on such review and discussion, the Compensation Committee has
recommended to the board of directors that the section entitled “Compensation Discussion and Analysis” be
included in this proxy statement.
Respectfully submitted by the members of the Compensation Committee of the board of directors:
Charles Giancarlo (Chair)
Daniel Scheinman
Mark B. Templeton
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
The compensation provided to those individuals who are our named executive officers for our fiscal year ended
December 31, 2025 (our “Named Executive Officers”) is set forth in detail in the Fiscal 2025 Summary Compensation Table
and the other tables that follow this Compensation Discussion and Analysis. The following discussion provides an overview
of our executive compensation philosophy, the overall objectives of our executive compensation program, and each
component of compensation that we provide to our Named Executive Officers. In addition, we explain how and why the
Compensation Committee of our board of directors arrived at the specific compensation policies and decisions for our
Named Executive Officers. The following are the individuals who served as our Named Executive Officers for fiscal 2025:
• Jayshree Ullal, our Chief Executive Officer;
• Chantelle Breithaupt, our Senior Vice President and
Chief Financial Officer;
• Kenneth Duda, our President and Chief Technology
Officer;
• Todd Nightingale, our President and Chief Operating
Officer; and
• Marc Taxay, our former Senior Vice President,
General Counsel
Mr. Taxay served as our Senior Vice President, General Counsel for a portion of 2025. Given his services in his
executive officer role, Mr. Taxay is included as an NEO for the purposes of this Proxy Statement in compliance with
applicable disclosure requirements; however, any references to “Named Executive Officers” or “NEOs” that relate to
events, actions, decisions, or other matters that occurred after his services as Senior Vice President, General Counsel
ceased with the Company should be read to exclude him unless specifically noted.
The assignment and structure of responsibilities among our Named Executive Officers changed significantly in 2025 to
enhance the alignment of our leadership structure with our Arista 2.0 strategy. Mr. Nightingale joined us in a newly
created role of President and Chief Operating Officer. This is a key leadership role that oversees the part of our
organization that is focused on enterprise data centers, campus networks and manufacturing. Mr. Duda’s role was
expanded, as represented by his shift from Chief Technology Officer and Senior Vice President of Software
Engineering to our President and Chief Technology Officer. Mr. Duda is primarily responsible for overseeing the part of
our organization that is focused on research, development, and technology innovation. We believe that splitting these
responsibilities between Mr. Nightingale and Mr. Duda to leverage their depth of experience will be a key to success in
our next stage of growth. Additionally, Ms. Breithaupt took on significant new responsibilities following the departure of
Mr. Taxay, our former Senior Vice President and General Counsel, and the restructuring of our legal operations,
cybersecurity, and information technology functions. We carefully tailored our recent compensation decisions in 2025
and 2024 to reflect the size and scope necessary to implement these structural changes.
Our board of directors has delegated to the Compensation Committee authority and responsibility for establishing
and overseeing salaries, incentive compensation programs, and other forms of compensation for our executive
officers, general remuneration policies for the balance of our employee population, and for overseeing and
administering our equity incentive and benefits plans.
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The following compensation governance standards in our executive compensation policies and practices are
currently in effect:
What We Do
What We Do Not Do
Annual Review. We perform annual reviews of
our executive compensation program.
Performance-Based Equity. In 2025, we
continued to use performance-based equity as a
significant part of our compensation program for
our Named Executive Officers.
Independence. Our Compensation Committee is
made up solely of independent directors and
makes all executive compensation decisions.
Compensation Consultant. Our Compensation
Committee engages its own independent
compensation consultant to assist with its
compensation reviews.
Stock Ownership Guidelines. To align the long-
term interests of our CEO, CFO, and Presidents
with those of our stockholders, these executives
are required to own specified minimum levels of
Company stock.
Clawback Policy. We may seek the recovery of
cash incentive compensation and performance-
based equity compensation paid to our executive
officers.
Robust Stockholder Engagement. We engaged in an
active, year-round stockholder engagement
process where we meet with our stockholders and
other key stakeholders to discuss, among other
topics, our executive compensation programs.
Annual Advisory Say-On-Pay. We solicit an advisory
vote on executive compensation on an annual
basis.
No Executive-Only Retirement Programs.
We do not offer pension arrangements,
retirement plans, or nonqualified deferred
compensation plans or arrangements to our
executive officers, other than the plans generally
available to all employees.
No Excise Tax Gross-Ups. We do not offer
golden parachute tax gross-ups to any of our
Named Executive Officers or other executive
officers.
No “Single-Trigger” Benefits and Limited
“Double-Trigger” Benefits. Potential change in
control payments and benefits are limited in
nature and are received only in connection with
the termination of employment without cause or
for good reason in connection with or following a
change in control.
No Equity Award Repricing or Exchange.
Awards under our 2014 Plan may not be
repriced or exchanged without stockholder
approval.
No Dividends or Distributions. No dividends
or distributions are paid with respect to the
unvested portion of awards under our 2014 Plan.
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Overview
FISCAL 2025 BUSINESS HIGHLIGHTS
Our executive compensation program is designed to align the compensation of our executives with our operating and
financial performance and create value for our stockholders. Accordingly, you should consider our executive
compensation decisions in the context of our financial and operational performance during fiscal 2025, including:
Revenue
$9B
FY2025 REVENUE
Revenue for our fiscal 2025 was $9 billion, representing an increase of 28.6%
compared to fiscal 2024. Product revenue increased by $1.7 billion, or 28.8%,
for the year ended December 31, 2025 compared to 2024. This increase
reflects healthy customer demand and higher shipments of our switching and
routing platforms, with strong contributions across our customer base. In
addition, service revenue increased by $309.7 million, or 27.7%, in the year
ended December 31, 2025 compared to 2024, as a result of continued
growth in initial and renewal support contracts as our customer installed base
has continued to expand. Non-Americas revenues as a percentage of our total
revenues increased from 18.2% in 2024 to 20.9% in 2025, which was
primarily driven by changes in the geographic mix of sales to our large global
customers.
Operating Income
$3.9B
FY2025 GAAP
OPERATING INCOME
48.2%
OF REVENUE
$4.3B
FY2025 NON-GAAP
OPERATING INCOME
Our GAAP operating income for fiscal 2025 was $3.9 billion or 42.8% of
revenue, representing a 30.95% increase compared to fiscal 2024.
Our non-GAAP operating income for fiscal 2025 was $4.3 billion or 48.2% of
revenue, representing a 30.37% increase compared to fiscal 2024 and 13%
above our internal targets set at the beginning of the year. This
outperformance reflected the benefit of increased revenue growth and careful
expense management throughout the year. The ratio of non-GAAP operating
income to revenue is a key metric for our stockholders as it provides a
consistent measure of the profitability of our business and as a result we used
non-GAAP operating income as a metric in our 2025 Bonus Plan (as defined
below).
See Appendix A for reconciliation of GAAP to non-GAAP financial measures.
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FISCAL 2025 EXECUTIVE COMPENSATION HIGHLIGHTS
As reflected in our general compensation philosophy and objectives, our executive compensation program is
intended to reward performance, attract and retain key personnel and increase stockholder value. In light of our
financial performance as described in the “Fiscal 2025 Business Highlights” section above, our fiscal 2025 executive
compensation program was intended to reward performance against our financial and key business objectives and
incentivize successful performance in these areas. Accordingly, our key executive compensation actions in fiscal
2025 advanced these objectives:
•
Limited Base Salary Increases-We provided a limited
increase of less than 5% to the base salary of Ms.
Breithaupt, but we did not provide any base salary
increases to any of our other Named Executive
Officers in fiscal 2025. Our CEO’s base salary has
been the same for over a decade and the base
salary of our Chief Technology Officer has been the
same since May 2018.
•
Annual Bonuses Reflecting Pay for Performance-We
did not provide any target bonus increases to our
Named Executive Officers in fiscal 2025. As noted
above, in fiscal 2025, we achieved revenue of
approximately $9 billion representing an increase
of 28.6% compared to fiscal 2024, combined with
non-GAAP Operating Income of $4.3 billion, an
increase of 30.37% from 2024 and 13% above our
internal targets. In addition to this financial
performance, we made significant progress on our
business diversification goals with strong growth in
our enterprise and provider businesses. We
demonstrated continued excellence in product
quality, innovation and support as demonstrated
by healthy new product qualification and order
activity with our cloud titan customers.
Performance across all of these metrics resulted in
payments to our Named Executive Officers under
the 2025 Bonus Plan.
•
No Equity Awards for Our CEO-We did not make any
grant of PRSUs or RSUs to our CEO in 2025, who
elected to forego a grant in order balance dilution
management with the need to retain and recruit
top-tier executives to broaden our profile and
support the Arista 2.0 strategy.
•
Equity Awards Promoting Our Stockholders’ Interests-
Long-term equity incentives constitute a significant
majority of compensation paid to Named Executive
Officers in 2025. Long-term equity incentives align
the interests of executives with those of our
stockholders. For fiscal 2025, we continued to
provide long-term equity compensation to our
Named Executive Officers other than our CEO.
•
Equity Awards Subject to Achievement-Performance-
based equity was continued as an important
portion of our executive compensation program for
our Named Executive Officers, with performance-
based equity representing 100% of our CEO’s
equity compensation.
Effect of Most Recent Stockholder Advisory Vote on Executive
Compensation
Our board of directors and Compensation Committee considers the results of the annual stockholder advisory vote
on the compensation of our Named Executive Officers and stockholder feedback on our executive compensation
program as part of its annual executive compensation review. At our 2025 annual meeting of stockholders,
approximately 62% of the votes cast approved the compensation program for our Named Executive Officers as
described in our 2025 proxy statement. Based on this level of stockholder support, we reached out to and had
robust discussions with our stockholders to better understand their perspectives. You can find more details about
our stockholder outreach and the steps that we have taken to address stockholder concerns about our executive
compensation program and policies in the section of this proxy statement entitled, “Board of Directors & Corporate
Governance — Stockholder Outreach.” Our Compensation Committee continues to evaluate the executive
compensation program and policies to determine the most appropriate ways of effecting our executive compensation
philosophy and objectives. Our Compensation Committee currently intends to continue to consider the results of the
annual advisory vote on executive compensation and stockholder feedback as data points in making executive
compensation decisions.
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Executive Compensation Philosophy and Objectives
We operate in a highly competitive business environment, which is characterized by frequent technological advances.
To successfully grow our business in this dynamic environment, we must continually develop and refine our products
and services to stay ahead of our competitors. To achieve these objectives, we need a highly talented and seasoned
team of technical, sales, marketing, operations, and other business professionals. We compete with other companies in
our industry and other technology companies in the Silicon Valley to attract and retain a skilled management team. To
attract and retain qualified executive candidates, our Compensation Committee recognizes that it needs to develop
competitive compensation packages. At the same time, our Compensation Committee is sensitive to the need to
integrate new Named Executive Officers into our executive compensation structure that we were seeking to develop,
balancing both competitive and internal equity considerations. To meet this challenge, we have embraced a
compensation philosophy of offering our Named Executive Officers a competitive total compensation program, which
we view as the sum of base salary, cash performance-based incentives, equity compensation and employee benefits,
each of which recognizes and rewards individual performance and contributions to our success, allowing us to attract,
retain, and motivate talented executives with the skills and abilities needed to drive our desired business results.
The specific objectives of our executive compensation program are to:
•
reward the successful achievement of our financial
growth objectives;
•
drive the development of a successful and
profitable business;
•
attract, motivate, reward, and retain highly qualified
executives who are important to our success;
•
recognize strong performers by offering cash
performance-based incentive compensation and
equity awards that have the potential to reward
individual achievement as well as contributions to
our overall success;
•
reward long-term performance objectives and
manage dilution by implementing a unique
structure that grants equity awards that do not
begin vesting until many years in the future and
provide upside potential to our executives; and
•
create value for our stockholders.
COMPENSATION PROGRAM DESIGN
Our executive compensation program for fiscal 2025 reflected our stage of development as a growing publicly traded
company. Accordingly, the compensation of our Named Executive Officers consisted of base salary, a short-term
cash incentive compensation opportunity, long-term equity compensation in the form of performance-based
restricted stock units (“PRSUs”) for our CEO and both PRSUs and time-based restricted stock units (“RSUs”) for our
other Named Executive Officers, and certain employee health and welfare benefits.
We offer cash compensation in the form of base salaries and cash incentive compensation opportunities with an
annual payment component. Typically, we have structured our annual cash incentive compensation opportunities to
focus on the achievement of specific short-term financial and operational objectives that will further our longer-term
growth objectives with the plan subject to a minimum level of performance and a cap to ensure the plan is affordable
based on company performance.
Additionally, equity awards for shares of our common stock serve as a key component of our executive
compensation program. For 2025, we granted (i) PRSUs (which become eligible to vest only if the threshold
performance is achieved) to all of our Named Executive Officers (other than our CEO, who did not receive a new
PRSU grant in 2025) and (ii) RSUs (which provide value certainty to recipients and limit dilution to our stockholders) to
our Named Executive Officers other than our CEO. In the future, we may introduce other forms of equity awards, as
we deem appropriate, into our executive compensation program to offer our Named Executive Officers additional
types of long-term incentive compensation that further the objective of aligning the recipient’s interests with those of
our stockholders.
Finally, we offer executives standard health and welfare benefits that are generally available to our other employees,
including medical, dental, vision, flexible spending accounts, life insurance and 401(k) plans.
We have not adopted any formal policies or guidelines for allocating compensation between current and long-term
compensation or between cash and non-cash compensation, although we use competitive market data to
understand the competitive market framework for pay mix. Within this overall framework, our Compensation
Committee reviews each component of executive compensation separately and also takes into consideration the
value of each Named Executive Officer’s compensation package as a whole and its relative value in comparison to
our other Named Executive Officers.
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Our Compensation Committee evaluates our compensation philosophy and executive compensation program as
circumstances require, and reviews executive compensation annually. As part of this review, we expect that our
Compensation Committee will apply our philosophy and the objectives outlined above, together with consideration
for the levels of compensation that we would be willing to pay to ensure that our executive compensation remains
competitive and that we meet our retention objectives, as well as the cost to us if we were required to find a
replacement for a key executive officer.
COMPENSATION-SETTING PROCESS
Role of our Compensation Committee
Compensation decisions for our executives are made by our Compensation Committee. Currently, our
Compensation Committee is responsible for reviewing, evaluating and approving the compensation arrangements,
plans, policies, and practices for our Named Executive Officers and overseeing and administering our cash-based
and equity-based compensation plans.
Each fiscal year, our Compensation Committee, after consulting with our management team and its compensation
consultant, establishes our corporate performance objectives and makes decisions with respect to any base salary
adjustment, and approves the corporate performance objectives and target annual cash incentive compensation
opportunities and equity awards for our executive officers, including our Named Executive Officers, for the upcoming
fiscal year. With respect to (i) our cash incentive compensation plan and (ii) the performance-based equity grant to
our Named Executive Officers in 2025, our Compensation Committee determines the applicable goals for each
corporate performance objective used for the applicable year.
Our Compensation Committee reviews our executive compensation program from time to time, including any incentive
compensation plans, to determine whether they are appropriate, properly coordinated, and achieve their intended
purposes, and to make any modifications to existing plans and arrangements or to adopt new plans or arrangements.
Role of Management
In carrying out its responsibilities, our Compensation Committee works with members of our management team,
including our CEO and our Group Vice President, Worldwide Human Resources & Operations. Typically, our
management team (together with our compensation consultant) assists our Compensation Committee in the
execution of its responsibilities by providing information on corporate and individual performance, market data, and
management’s perspective and recommendations on compensation matters.
Typically, except with respect to her own compensation, our CEO will make recommendations to our Compensation
Committee regarding compensation matters, including the compensation of our executive officers. Our CEO also
participates in meetings of our Compensation Committee, except with respect to discussions involving her own
compensation in which case she leaves the meeting.
While our Compensation Committee solicits the recommendations and proposals of our CEO with respect to
compensation-related matters, these recommendations and proposals are only one factor in our Compensation
Committee’s decision-making process.
Role of Compensation Consultant
Our Compensation Committee is authorized to retain the services of one or more executive compensation advisors
from time to time, as it sees fit, in connection with carrying out its duties.
In fiscal 2025, our Compensation Committee continued to engage Aon, a national compensation consulting firm, to
assist us in executing our executive compensation strategy and guiding principles, assessing current executive total
compensation levels against competitive market practices, developing a compensation peer group and advising on
potential executive compensation decisions for fiscal 2025. Our Compensation Committee provided Aon with
instructions regarding the goals of our executive compensation program and the parameters of the competitive
review of executive officer compensation packages that it was to conduct. In particular, the Compensation
Committee instructed Aon to analyze whether the compensation packages of our executive officers were consistent
with our compensation philosophy and competitive relative to market-based peer practices and general market
trends. The Compensation Committee further instructed Aon to evaluate the following components to assist the
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Compensation Committee in establishing fiscal 2025 compensation: base salary; target and actual annual incentive
compensation; target and actual total cash compensation (base salary and annual incentive compensation); long-
term incentive compensation (equity awards); target and actual total direct compensation (base salary, annual
incentive compensation and long-term incentive compensation); and the retention value of the outstanding awards to
examine talent risk.
Aon does not provide any services to us other than the services provided to our Compensation Committee. Our
Compensation Committee has assessed the independence of Aon taking into account, among other things, the
factors set forth in Exchange Act Rule 10C-1 and the NYSE listing standards, and has concluded that no conflict of
interest exists with respect to the work that Aon performs for our Compensation Committee.
Use of Competitive Data
To assess the competitiveness of our executive compensation program and to assist in setting compensation levels,
Aon provided market data for the compensation peer group approved by our Compensation Committee. Aon also
provides information on general market trends, governance best practices, share plan dilution trends and other
matters that support the Compensation Committee in fulfilling its fiduciary responsibilities. The Compensation
Committee considered compensation holistically and does not refer to a set formula or percentile when it designs
compensation packages. Competitive market data is just one input that the Compensation Committee considered to
supplement their extensive business experience and inform their business judgment in the design of compensation
policies that achieve the goal of attracting, motivating and retaining a top tier workforce.
Competitive Positioning
In fiscal 2025, our Compensation Committee continued to compare and analyze our executive compensation
program with that of a formal compensation peer group of companies.
In fiscal 2025, our Compensation Committee reviewed our executive compensation peer group, highlighting potential
outliers in the existing group and adjusting for changes in our market capitalization. In considering an updated peer
group, our Compensation Committee considered the following criteria: (i) companies in the computer networking,
communication products/services and software sectors with a focus on growing technology companies;
(ii) companies with revenues between $3 billion to $15 billion (approximately 0.5x to 2.5x of our then-current trailing
12-month revenue); (iii) companies with market capitalization generally between $30 billion and $200 billion
(approximately 0.3x to 2x of our then-current market capitalization); and (iv) companies with positive revenue growth,
with a preference for companies at or above 10% revenue growth. As a result, the following group was our executive
compensation peer group for fiscal 2025 compensatory decisions for fiscal year 2025:
Executive Compensation Peer Group for Fiscal 2025
Akamai Technologies
CrowdStrike
Intuitive Surgical
Synopsys
Autodesk
Digital Realty
NetApp
Workday
Cadence Design Systems
Equinix
Palo Alto Networks
Zscaler
Ciena
Fortinet
ServiceNow
With respect to fiscal 2026 executive compensation decisions our Compensation Committee reconsidered the peer
group, highlighting potential outliers in the existing group and adjusting for changes in our market capitalization. In
considering an updated peer group, our Compensation Committee considered the following criteria: (i) companies in
the computer networking, communication products/ services and software sectors with a focus on growing
technology companies; (ii) companies with revenues between $3.5 billion to $18.5 billion (approximately 0.5x to 2.5x
of our then-current trailing 12-month revenue); (iii) companies with market capitalization generally between $35 and
$235 billion (approximately 0.3x to 2x of our then-current market capitalization); and (iv) companies with positive
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revenue growth, with a preference for companies at or above 10% revenue growth. As a result, the following group
was our executive compensation peer group for fiscal 2026 compensatory decisions for fiscal 2026:
Executive Compensation Peer Group for Fiscal 2026
Akamai Technologies
Ciena
Fortinet
ServiceNow
Advanced Micro Devices*
CrowdStrike
Intuitive Surgical
Synopsys
Autodesk
Digital Realty
NetApp
Workday
Cadence Design Systems
Equinix
Palo Alto Networks
Zscaler
*
Company added to peer group for fiscal 2026 based on market cap at the time of approval.
As a result of changes in our compensation peer group, we are positioned at the 63rd percentile in terms of revenue
and the 74th percentile in terms of market capitalization (on a 30-day average basis) at the time the peer group was
approved.
Aon provides our Compensation Committee with market data from our compensation peer group regarding each
element of our executive compensation program. However, our Compensation Committee does not rely on a specific
benchmark or percentile in our compensation peer group for any particular element of compensation preferring to
understand the range of pay between the 25th and 75th percentiles as a basis for looking at total compensation. The
Compensation Committee continues to place more emphasize on long-term incentives over cash compensation to
focus on the long-term success of the company and to align our executives with stockholders interest, which we
believe also supports the stated goal of retention over time.
Executive Compensation Program Components
For fiscal 2025, the portion of our Named Executive Officers’ (excluding Mr. Taxay, who departed in fiscal 2025)
actual total direct compensation (which consists of the base salaries, bonus and annual cash incentive plan
compensation paid to our Named Executive Officers with respect to fiscal 2025 and the grant-date fair values of the
equity awards granted to our Named Executive Officers in fiscal 2025, with each such value calculated in the same
manner as set forth in our Fiscal 2025 Summary Compensation Table below) represented by each material
component of our executive compensation program was as follows:
Base Salary
(1.6%)
Base Salary
Annual Cash
Incentive
Compensation
(1.3%)
Annual Cash Incentive Compensation
Equity Compensation
Equity
Compensation
(97.1%)
The following describes each component of our executive compensation program, the rationale for each, and how
the compensation amounts and awards were determined for fiscal 2025.
Base Salary. Base salary is the primary fixed component of our executive compensation program. We use base salary
to compensate our Named Executive Officers for services rendered during the fiscal year and to ensure that we
remain competitive in attracting and retaining executive talent.
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Our Compensation Committee reviews the base salaries of each Named Executive Officer annually and makes
adjustments as it determines to be reasonable and necessary to reflect the scope of a Named Executive Officer’s
performance, contributions, responsibilities, experience, prior salary level, position (in the case of a promotion), and
market conditions. We typically establish the initial base salary of a Named Executive Officer through arm’s-length
negotiation at the time, after taking into consideration his or her position, qualifications, experience, salary
expectations, and the base salaries of our other executives.
For fiscal 2025, our Compensation Committee determined to implement a minor increase of less than 5% to the base
salary of Ms. Breithaupt, but determined not to make any changes to the base salaries of our other Named Executive
Officers (which were generally around or below the 25th percentile in our compensation peer group) as it thought the
base salary levels continued to be appropriate and to continue to focus on long-term incentives in the total
compensation policy.
Our Named Executive Officers’ base salaries for fiscal 2025 were as follows:
Named Executive Officer
Base Salary
through 2025
Jayshree Ullal
$300,000
Chantelle Breithaupt
$330,000
Kenneth Duda
$300,000
Todd Nightingale
$350,000
Marc Taxay(1)
$315,000
(1) Mr. Taxay resigned from his position as Senior Vice President, General Counsel effective May 7, 2025.
Annual Cash Incentive Compensation; 2025 Bonus Plan
We use cash incentive compensation under our omnibus Employee Incentive Plan to motivate our executive officers,
including our Named Executive Officers, to achieve our annual financial and key operational objectives, while making
progress towards our longer-term strategic goals. Each fiscal year, our Compensation Committee sets the terms and
conditions of the Employee Incentive Plan for that fiscal year, which identifies the plan participants and establishes
the target cash incentive opportunity for each participant, the performance measures to be used to determine
whether to make payouts related to the fiscal year and the associated target levels for each measure, and the
potential payouts based on actual performance for the fiscal year. Typically, cash incentive payouts have been
determined after the end of the applicable performance period based on our performance against one or more
financial and operational performance objectives for the performance period as set forth in our annual operating plan.
The goals are typically reviewed and established in the first quarter each year, with performance evaluated after the
close of the fiscal year as part of the standard Compensation Committee process.
In February 2025, our Compensation Committee set the terms and conditions of the Employee Incentive Plan for
fiscal 2025 (the “2025 Bonus Plan”). The 2025 Bonus Plan included financial performance metrics for revenue and
non-GAAP operating income for the year.
Metrics
Weight
Target
Revenue
50%
$
8.25 billion
Non-GAAP Operating Income
50%
$3.8385 billion
These two financial metrics determined the funding percentage of the overall bonus program. No payout would be
made under the plan if achievement of the revenue metric was below 85% of the revenue metric target of $8.25
billion. Overachievement of revenue and/or non-GAAP operating income for the year as compared to the targets
would result in funding above 100% of the bonus pool available for distribution, subject to the implementation of
negative discretion in the event that gross margin does not exceed our internal target, quality was not acceptable, we
did not grow our non-cloud business or did not achieve new customer growth in line with our internal goals.
Once the funding percentage of the 2025 Bonus Plan was determined as outlined above, our Compensation
Committee would evaluate performance for each of our Named Executive Officers. In determining the payout for each
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Named Executive Officer, our Compensation Committee considers multiple factors including: (A) contribution of the
individual to the achievement of the quantitative financial measures set forth above regarding the funding of the overall
bonus pool; (B) achievement against additional objectives related to the future growth of our business, including ability
to diversify and deliver in new markets; (C) consistent execution on product quality, innovation and support; and
(D) overall individual performance. The 2025 Bonus Plan provided for a single annual payout to each participant
following the end of fiscal 2025 after our Compensation Committee evaluated corporate and individual performance as
outlined above.
For purposes of our 2025 Bonus Plan, we define revenue in accordance with GAAP, and non-GAAP operating income
as GAAP operating income, less stock-based compensation expenses and the amortization of intangible assets. A
reconciliation of the non-GAAP financial metrics to the related GAAP financial measure is set forth in Appendix A.
Our Compensation Committee approved the following preliminary targets for the 2025 annual cash incentive
compensation of our Named Executive Officers (which provided each of our Named Executive Officers with target total
cash compensation around or below the 25th percentile in our compensation peer group). Consistent with fiscal 2024,
for our CEO, this target was 100% of base salary, while the target for our other Named Executive Officers was 60% of
base salary. These targets are not strict targets and merely inform the aggregate of bonuses that will be accrued for
financial accounting purposes. Once a total incentive pool is accrued for all participants in the 2025 Bonus Plan, our
Compensation Committee looks at the performance for the year across the key metrics discussed above and factors in
individual performance and market comparable compensation in our peer group in determining an actual cash incentive
paid to each Named Executive Officer for their contribution in the performance year.
For fiscal 2025, we achieved revenue of approximately $9 billion (an increase of 28.6% from 2024, and above our plan
target by approximately 9%). In addition, we achieved non-GAAP operating income of approximately $4.3 billion (an
increase of 48.2% from 2024, and above our plan target by approximately 13%). Our Compensation Committee
considered our overall achievement against these key metrics and determined it was appropriate to establish the 2025
Bonus Plan funding percentage at a level of 100%, the accrual of which is included in the above financial results.
Following the funding of the 2025 Bonus Plan based on the financial metrics outlined above, our Compensation
Committee looked at performance with respect to the other key metrics including gross margin, operating margin,
growth in non-cloud revenue, diversification and delivery into new markets, product quality, innovation and support,
and individual performance for the purposes of potential downward adjustments. Our Compensation Committee
considered that we made significant progress against our business diversification goals during the year with strong
growth in our enterprise and provider businesses. We also demonstrated continued excellence in product quality,
innovation and support as demonstrated by healthy new product qualification and order activity with our cloud titan
customers in the second half of 2025.
Given our overall financial performance for the year and the significant progress made against our non-financial
objectives for the year combined with our Compensation Committee’s determination of individual performance for
each of our Named Executive Officers and including consideration of our total cash compensation being around or
below the 25th percentile of compensation of our peer group, the total payouts to our Named Executive Officers
under the 2025 Bonus Plan were made as set forth below.
Named Executive Officer
Actual Incentive
Compensation
Jayshree Ullal
$300,000
Chantelle Breithaupt
$250,000
Kenneth Duda
$300,000
Todd Nightingale
$ 75,000
Marc Taxay(1)
$
—
(1) Mr. Taxay resigned from his position as Senior Vice President, General Counsel effective May 7, 2025.
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Equity Compensation
We use equity awards to incentivize and reward our executives (including our Named Executive Officers) for long-
term corporate performance based on the value of our common stock and, thereby, to align the interests of our
executives with those of our stockholders. We grant full value awards for shares of our common stock, or awards
without a purchase price, such as RSU awards.
New hire, or initial, equity awards for our executives are established through arm’s-length negotiations at the time the
individual executive is hired. To successfully recruit new talent, our Compensation Committee considers the size and
scope of equity awards forfeited by potential executives upon leaving their current employer, as well as the general
market for talent for specific roles, in order to ensure that awards are not excessive but are still attractive to induce
leaders to join Arista. In making these awards, we also consider, among other things, the prospective role and
responsibility of the individual executive, competitive factors, the expectations concerning the size of the equity
award, the cash compensation to be received by the executive, and the need to create a meaningful opportunity for
reward predicated on the creation of long-term stockholder value.
In addition, we grant equity awards to our executives when our Compensation Committee determines that such
awards are necessary or appropriate to recognize corporate and individual performance, in recognition of a
promotion, or to achieve our retention objectives. To date, we have not applied a rigid formula in determining the size
of these equity awards. Instead, our Compensation Committee has determined the size of such equity awards for an
individual executive after taking into consideration market data compiled from our compensation peer group, a
compensation analysis performed by Aon, the equity award recommendations of our CEO, the scope of an
executive’s performance, contributions, responsibilities, and experience, and the amount of equity compensation
held by the executive, including the current economic value of his or her outstanding unvested equity awards and the
ability of this equity to satisfy our retention objectives, market conditions, and internal equity considerations. In
making its award decisions, our Compensation Committee has exercised its best business judgment to set the size
of each award at a level it considered appropriate to create a meaningful opportunity for reward predicated on the
creation of long-term stockholder value. Equity awards to our named executive officers typically have multi-year
vesting periods of four or more years. Importantly, a key design feature of our equity compensation program is the
grant of equity awards with a delayed vesting start date (longer service periods requirement), which implements a
grant philosophy by which grants are made with a delayed and sometimes extended vesting period. When approving
grants, our Compensation Committee reviews the projected annual vesting of our executive’s aggregate awards with
its compensation consultant. This approach is designed to deliver the maximum retention value in a manner that
limits stockholder dilution by leveraging long-term appreciation opportunities to executives with respect to long-term
equity awards delivered in advance.
For fiscal 2025, our Compensation Committee continued to provide equity compensation to our CEO in PRSUs only,
and a mix of PRSUs and RSUs to our Named Executive Officers other than our CEO.
1. For our CEO, our Compensation Committee did not grant any new PRSU awards in 2025. Our CEO has two
outstanding PRSU awards (the “Outstanding CEO PRSUs”). One such award is subject to performance against
revenue and operating income goals that has three performance periods in each of fiscal year 2024, 2025 and
2026 (the portion eligible to be earned in 2025, the “2025 AOP PRSUs”), and the other such award is subject to
performance against 3-year compound annual growth rate goals for the period of fiscal 2024 through fiscal 2026
(“2024 CAGR PRSUs”). All of the equity delivered to our CEO is performance-contingent with the 2024 CAGR
PRSUs, which are 50% of the Outstanding CEO PRSUs, based on 3-year performance.
2. In February 2025, our Compensation Committee granted PRSU awards to our then-serving Named Executive
Officers intended to cover fiscal 2025, 2026, and 2027. One-third of the PRSUs would be eligible to be earned
each fiscal year, with the performance conditions for each fiscal year determined as soon as practicable during
the applicable fiscal year. Our Compensation Committee also granted each of our then-serving Named Executive
Officers RSUs that vest in equal quarterly installments over a period of approximately 4 years from the date of
grant, with the first vesting day occurring February 2026. The mix between PRSUs and RSUs was approximately
50% PRSUs and 50% RSUs. 100% of the PRSUs granted to our Named Executive Officers other than our CEO
that were eligible to be earned with respect to fiscal year 2025 were 2025 AOP PRSUs.
3. In addition to the PRSUs and RSUs described above, in May 2025 our Compensation Committee approved an
additional award of RSUs with a target value of $2 million and PRSUs with a target value of $2 million for
Ms. Breithaupt (together, the “Role Expansion Award”). The RSU portion of the Role Expansion Award vests in equal
quarterly installments over a period of approximately 4 years from the first vesting day, with the first vesting day
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occurring February 2028 and vesting thru February 2032. One-quarter of the PRSU portion of the Role Expansion
Award would be eligible to be earned based on attainment of certain 2028, 2029, 2030 and 2031 performance
conditions. These vesting and performance conditions represent a service period requirement of nearly 7 years.
In approving the Role Expansion Award, our Compensation Committee determined that an additional award was
appropriate with the expansion of Ms. Breithaupt’s role to take on significant new responsibility following the
restructuring of our legal operations, cybersecurity, and information technology functions. Ms. Breithaupt’s
contributions to overseeing, streamlining and managing our operations has been integral to our growth and
continued financial success. Retention was a key consideration of our Compensation Committee in approving this
grant as Ms. Breithaupt is a key leader driving our financial strength across functional domains as our business
continues to grow. It is also important to consider that we currently see the Role Expansion Award as a one-time
event aligned with the timing of her broader role at the company, and do not have any current plans to make
additional grants to Ms. Breithaupt outside of our executive equity grant practices in connection with
Ms. Breithaupt’s role as CFO.
4. Mr. Nightingale was hired into a new role as President and Chief Operating Officer, a role that is intended to
complement Mr. Duda’s role as President and Chief Technology Officer. We consider this split of responsibilities
foundational for the next step in our growth. Following an arm’s-length negotiation at the time he was hired, in
July 2025, our Compensation Committee granted him RSUs with a target value of $30 million (the “Nightingale
RSUs”) and PRSU awards to Mr. Nightingale intended to cover fiscal 2025 and 2026 with a target value of
$2 million (the “Nightingale July PRSUs,” together with the Nightingale RSUs, the “Nightingale Awards”) to ensure
that Mr. Nightingale’s performance period was aligned with the broader leadership team. One-third of the
Nightingale July PRSUs would be eligible to be earned based on performance in each of three 6-month
performance periods, representing a near term incentive measured against several key business priorities that
supported our market leading customer adoption and Arista 2.0 strategy.
In determining the size and structure of the Nightingale RSUs and Nightingale July PRSUs, our Compensation
Committee considered Mr. Nightingale’s strong background in the networking industry, the Company’s executive
leadership structure and depth of executive talent, and the compensation required to attract Mr. Nightingale from
his prior role, with the need to buy-out the unvested equity due to shares being forfeited at his prior employer.
Mr. Nightingale’s hiring is key to our forward looking growth, our ability to continue to scale our operations and
drive to lead in our market. The Compensation Committee determined that the approved awards were necessary
to incentivize and motivate Mr. Nightingale in alignment with Arista’s priorities given his prior track record as a
public company executive and having had experience as a CEO.
The Compensation Committee carefully evaluated the size and structure of the Nightingale Awards to maintain
strong pay-for-performance alignment. In structuring the Nightingale Awards, the Compensation Committee
considered the comparable base salary, incentive cash, time-based equity and performance equity that
Mr. Nightingale was eligible to receive at his prior employer and what he would be eligible to receive for a
comparable leadership role with another employer, in light of the fact that Arista’s base salary typically accounts
for a smaller portion of our executive officers’ compensation than at our peer or other technology companies. In
addition, as an employee of the Company, Mr. Nightingale is eligible to participate in our short-term,
performance-based annual bonus program. Moreover, our Compensation Committee determined that the
Nightingale PRSUs establish robust performance goals for Mr. Nightingale, which will serve as a basis for the
Compensation Committee to assess his contribution to our results in its regular annual review cycle.
5. Following a rigorous analysis of our equity compensation program, in October 2025 our Compensation
Committee granted additional awards of PRSUs to Ms. Breithaupt and Mr. Duda intended to cover fiscal 2029,
2030, and 2031, and to Mr. Nightingale intended to cover fiscal 2030, 2031, and 2032. One-third of the PRSUs
would be eligible to be earned each fiscal year, with the performance conditions for each fiscal year determined
as soon as practicable during the applicable fiscal year. The decision to make these grants with delayed vesting,
in this case delayed over four to five years depending on the Named Executive Officer, aligns with our grant
philosophy discussed above designed to deliver the maximum retention value in a manner that limits stockholder
dilution by leveraging long-term appreciation opportunities to executives with respect to long-term equity awards
delivered in advance. We believe that this approach balances long-term value creation and stockholder alignment
with the need to grant awards for retention purposes.
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Our Compensation Committee determined that the mix of performance goals of existing equity awards for our CEO
and the proportion of performance- and service-based awards of new awards for our other Named Executive Officer
provided appropriate incentives to retain and motivate our Named Executive Officers and help to achieve success in
our business, and that this mix would best incentivize our Named Executive Officers to drive stockholder value
creation, while also satisfying the need to deliver value certainty to our Named Executive Officers other than our CEO.
Our historical commitment to aligning pay for performance is demonstrated by our recent say-on-pay votes, in which
approximately 94% of the votes cast in 2023 and 93% of the votes cast in 2024 approved our compensation
program in the respective year. In 2025, 62% of the votes cast for say-on-pay approved our compensation program,
and our Compensation Committee considered the results of last year’s annual say-on-pay stockholder advisory vote
and stockholder feedback on our executive compensation program as part of its annual executive compensation
review, including its decision to grant the Role Expansion Award and the Nightingale Awards. We remain committed
to the principles of aligning pay for performance, and believe that the Role Expansion Award and the Nightingale
Awards will strengthen that alignment and help us achieve our goals. We manage our equity plan responsibly, as
indicated by our current one-year burn rate and three-year average burn rate being less than one percent. Our three-
year average burn rate is well below both ISS’s 2.15% benchmark and the 2% threshold commonly used by
institutional investors to assess equity plan management for our sector.
In determining the size of awards to our Named Executive Officers, our Compensation Committee considered market
compensation data from our peer group, the unvested equity held by each of these Named Executive Officers and the
Named Executive Officer’s expected future contributions to the Company and towards growing stockholder value.
2025 Performance-Based Awards Grant and Achievement
In February and October 2025 (and with respect to Mr. Nightingale, in July and October 2025), we granted
performance-based awards of PRSUs to our Named Executive Officers to incentivize our Named Executive Officers
and drive stockholder value creation. Both sets of grants were made following a rigorous analysis with respect to
each recipient’s vesting schedule, with the October 2025 grants only becoming eligible to vest based on
performance in fiscal years 2029-2031 for Ms. Breithaupt and Mr. Duda, and in fiscal years 2030-2032 for
Mr. Nightingale. The October grants do not become eligible to vest until 2029, or 2030 for Mr. Nightingale, and were
designed in accordance with our delayed vesting philosophy to deliver the maximum retention value in a manner that
limits stockholder dilution by leveraging long-term appreciation opportunities to executives with respect to long-term
equity awards delivered in advance. As a result of our philosophy, a higher percentage of our long-term equity
incentives do not vest until after a significant period of service, which can be illustrated as follows:
Performance Fiscal Year*
2025
2026
2027
2028
2029
2030
2031
2032
PRSUs granted in FY 2023:
PRSUs granted in FY 2024:
**
†
PRSUs granted in February FY 2025:
**†
PRSUs granted in May FY 2025:
**
PRSUs granted in July FY 2025:
‡
PRSUs granted in October FY 2025:
**†
‡
*
Except for Mr. Nightingale’s July 2025 PRSUs, if earned, vesting does not occur until February 20 of the fiscal year following
the performance fiscal year, subject to continued employment through the vesting date. If earned, the vesting for the tranches
of Mr. Nightingale’s July 2025 PRSUs occurs in February 20, 2026, August 20, 2026 and February 20, 2027, subject to
continued employment through the vesting date.
**
PRSU grant vesting for Ms. Breithaupt.
†
PRSU grant vesting for Mr. Duda.
‡
PRSU grant vesting for Mr. Nightingale.
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The table below describes the PRSUs granted to our Named Executive Officers. The intended value was converted
into a target number of PRSUs by reference to our trading price during the 90-day period preceding the date of grant
in accordance with our standard practices.
Named Executive Officer
Target Number
of PRSUs
(February 2025)
Target Number
of PRSUs
(May 2025)
Target Number
of PRSUs
(July 2025)
Target Number
of PRSUs
(October 2025)
Aggregate
Intended
Value
Jayshree Ullal
—
—
—
—
—
Chantelle Breithaupt
21,600(1)
31,080(3)
—
46,380(5)
$8,000,000
Kenneth Duda
21,600(1)
—
—
81,160(5)
$9,000,000
Todd Nightingale
—
—
31,080(4)
70,730(6)
$8,100,000
Marc Taxay
14,580(2)
—
—
—
$1,350,000
1. 1/3 of the shares are earned based on attainment of certain 2025, 2026, and 2027 performance conditions. The number of
shares in the table reflects the shares available at target (100%). Maximum payout is 200%. Shares earned will vest on
February 20th of the year following the associated performance year. The performance conditions for each of fiscal 2026 and
2027 will be determined as soon as practicable during the applicable fiscal year.
2. Mr. Taxay resigned from his position as Senior Vice President, General Counsel effective May 7, 2025. These PRSUs were
forfeited prior to the establishment of vesting criteria.
3. 1/4 of the shares are earned based on attainment of certain 2028, 2029, 2030 and 2031 performance conditions. The number
of shares in the table reflects the shares available at target (100%). Maximum payout is 200%. Shares earned will vest on
February 20th of the year following the associated performance year. The performance conditions for each fiscal year will be
determined as soon as practicable during the applicable fiscal year.
4. 1/3 the shares are earned based on attainment of certain performance conditions over three 6-month periods during 2025 and
2026. The number of shares in the table reflects the shares available at target (100%). Shares earned over the first 6-month period
and the last 6-month period will vest on February 20th of the year following the associated performance. Shares earned for the
performance conditions for the first half of 2026 will vest on August 20, 2026. The performance conditions for the second half of
fiscal 2026 will be determined as soon as practicable during the applicable fiscal year.
5. 1/3 of the shares are earned based on attainment of certain 2029, 2030, and 2031 performance conditions. The number of
shares in the table reflects the shares available at target (100%). Maximum payout is 200%. Shares earned will vest on
February 20th of the year following the associated performance year. The performance conditions for each fiscal 2029-2031
will be determined as soon as practicable during the applicable fiscal year.
6. 1/3 of the shares are earned based on attainment of certain 2030, 2031, and 2032 performance conditions. The number of
shares in the table reflects the shares available at target (100%). Maximum payout is 200%. Shares earned will vest on
February 20th of the year following the associated performance year. The performance conditions for each fiscal 2030-2032
will be determined as soon as practicable during the applicable fiscal year.
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2025 AOP PRSUs
The metrics, targets, and actual performance and resulting payout for our Named Executive Officers’ (all Named
Executive Officers other than Mr. Nightingale) 2025 AOP PRSUs (including, if applicable, 2025 AOP PRSUs granted
in 2023 and 2024 to our Named Executive Officers) are shown in the following table:
Performance Period: January 1, 2025 – December 31, 2025
Metrics
Weight
Performance Range
Payout
Results
Revenue
50%
Minimum:
$ <8.2 billion
0%
Target:
$
8.2 billion
100%
$9.0 billion
Maximum:
$
8.5 billion
200%
Non-GAAP Operating Income
50%
Minimum:
$<3.8 million
0%
Target:
$
3.8 billion
100%
$4.3 billion
Maximum:
$ 3.95 billion
200%
The number of 2025 AOP PRSUs determined based on actual achievement as described above became eligible to
vest upon determination of achievement. The number of 2025 AOP PRSUs that were earned for performance
between performance range levels would be determined by linear interpolation, rounded up to the nearest whole
share. 100% of the 2025 AOP PRSUs that became eligible to vest vested on the first quarterly vesting date after the
date the level of achievement of the performance goals was determined.
For fiscal 2025, our revenue was $9 billion, above the maximum goal. Our non-GAAP operating income was
$4.3 billion, above the maximum goal. As a result of this achievement, 2025 AOP PRSUs became eligible to vest as
set forth in the table below. As noted above, certain of our other Named Executive Officers remain eligible to earn
portions of the PRSUs granted in 2024 and 2025 (based on performance in subsequent fiscal years).
Number of PRSUs Eligible to Vest(1)
Named Executive Officer
Revenue PRSUs
Non-GAAP
Operating
Income
PRSUs
Jayshree Ullal
20,614
20,614
Chantelle Breithaupt
15,130
15,130
Kenneth Duda
39,108
39,108
Marc Taxay(2)
—
—
(1) Includes PRSU Awards granted in 2023, 2024 and 2025 and earned and eligible to vest pursuant to performance in fiscal
2025 (as applicable).
(2) Mr. Taxay resigned from his position as Senior Vice President, General Counsel effective May 7, 2025, and was not eligible to
vest any PRSUs tied to 2025 performance targets.
Nightingale July PRSUs
As noted elsewhere, Mr. Nightingale was awarded the Nightingale July PRSUs, one-third of which were eligible to be
earned based on performance in the second half of fiscal 2025. Mr. Nightingale’s performance targets were
determined in order to prioritize key business metrics that supported our market leading customer adoption and
Arista 2.0 strategy. The vesting design of the Nightingale July PRSUs demand Mr. Nightingale’s immediate
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contributions in ways that demonstrate a clear linkage between pay and performance. In particular, no portion of the
first tranche would have vested unless key bookings and product milestones were satisfied. Furthermore, no portion
of the first tranche would vest unless Mr. Nightingale continued his employment with us through February 20, 2026.
Based on our actual achievement in the second half of fiscal 2025, the Nightingale July PRSUs became eligible to
vest as set forth in the table below. As noted above, Mr. Nightingale remains eligible to earn portions of the
Nightingale July PRSUs granted in July 2025 (based on performance in 2026).
Named Executive Officer
Number of PRSUs Eligible to Vest
Todd Nightingale
10,360
2025 Time-Based Award Grants
In February 2025, we granted RSUs to our Named Executive Officers other than our CEO and Mr. Nightingale. In
May 2025, we also granted the Role Expansion Award to Ms. Breithaupt and, in July 2025, the Nightingale RSUs. To
promote retention, the awards vest in equal quarterly installments over a period of approximately 4 years from the
date of grant, with the first vesting day occurring February 2026, except as described below.
The numbers of shares of our common stock covered by each RSU award granted to our Named Executive Officers
in 2025 were as set forth in the chart below. The intended value was converted into RSUs by reference to our trading
price during the 90-day period preceding the date of grant in accordance with our standard practices.
Named Executive Officer
RSU Grants
Aggregate Intended
Value
Chantelle Breithaupt
52,680(1)
$ 4,000,000
Kenneth Duda
21,600
$ 2,000,000
Todd Nightingale
466,060(2)
$30,000,000
Marc Taxay(3)
14,580
$ 1,350,000
(1) 31,080 of the RSUs were granted in May 2025 as Ms. Breithaupt’s Role Expansion Award. The Role Expansion Award vests
in equal quarterly installments over a period of approximately 4 years from the first vesting day, with the first vesting day
occurring February 2028, thus requiring almost 7 years of service before it fully vests.
(2) Granted in July 2025 in connection with Mr. Nightingale’s appointment as our President and Chief Operating Officer. The
award vests in equal quarterly installments over a period of approximately 4 years from the date of grant, with the first vesting
day occurring August 2026.
(3) Mr. Taxay resigned from his position as Senior Vice President, General Counsel effective May 7, 2025. These RSUs were
forfeited.
Nightingale RSUs
Overall, the Nightingale RSUs were designed to deliver total earnings that were relatively consistent with those
available to him in the market, which he forewent by joining us, and which we believe was necessary to recruit
Mr. Nightingale. We believe that the size and structure of his grant should be considered with the following context in
mind:
• Delayed Vesting. Consistent with our general approach to equity compensation, Mr. Nightingale’s time-based
vesting would only be eligible to be earned after he demonstrated sustained performance and the leadership
qualities we demanded for a full year, and such time-based equity would be spread out over four total years. We
believe that this compares favorably to his on-hire grant at Fastly, Inc., which began vesting quarterly immediately.
• Replacement of External Compensation Opportunities:
–
Reductions in Cash Compensation. By joining us, Mr. Nightingale accepted significant salary and cash bonus
decreases. For example, his salary as reported in the 2025 proxy statement of Fastly, Inc., was $600,000, while
his starting salary with us was reduced to $350,000.
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–
Size of Time-Based Award. The Nightingale RSUs were designed to deliver approximately $7.5 million in equity
compensation annually. In light of the reductions to his cash compensation, his importance to our Arista 2.0
strategy, and unique experience and leadership qualities, we believe this amount compares favorably to the $6
million in annual equity compensation in his on-hire grant at Fastly, Inc.
–
Mix of Time- and Performance-Based Equity. While Mr. Nightingale’s initial grants were weighted to time-based
equity, it is not possible to analyze the mix of time- and performance-based equity that he will be eligible to earn
without considering Arista’s unique approach to stacking performance-based equity. The time- and
performance-based equity mix began shifting more toward performance as soon as October 2025 and we
expect that trend will continue, consistent with our overall unique approach to equity compensation.
–
100% Performance-Based Equity for First Year. 100% of Mr. Nightingale’s equity compensation that is eligible to
vest within his first year of employment with us is performance-based equity.
–
Limited Acceleration. Pursuant to Mr. Nightingale’s severance agreement, the Nightingale RSUs will only
accelerate as to twelve (12) months of vesting in the event that his employment is involuntarily terminated by us,
other than in connection with our change in control.
• Comparison to Pay of Peer Group. As discussed elsewhere, we envision Mr. Nightingale playing a key role in our
Arista 2.0 strategy. Mr. Nightingale was hired into a new role as President and Chief Operating Officer, which is
intended to complement Mr. Duda’s role as President and Chief Technology Officer. We consider this split of
responsibilities foundational for the next step in our growth. We believe that the intended annual vesting value of
Mr. Nightingale’s equity awards demonstrates a judicious use of equity compensation that is both comparable to
our peers and aligned with our compensation philosophy of emphasizing equity compensation versus cash
compensation in a manner that incentivizes the creation of significant value for our stockholders. Furthermore, we
believe that Mr. Nightingale’s total annual compensation, particularly considering his experience as a public
company chief executive officer and his ability to fill external chief executive officer opportunities, is in line with our
peer group for a similar role.
WELFARE AND OTHER EMPLOYEE BENEFITS
We have established a tax-qualified Section 401(k) retirement plan for all employees who satisfy certain eligibility
requirements, including requirements relating to age and length of service. In 2025, we made matching contributions
for the contributions made to the 401(k) plan by our employees, including certain of our Named Executive Officers.
We intend for the plan to qualify under Section 401(a) of the Internal Revenue Code (the “Code”), so that
contributions by employees to the plan, and income earned on plan contributions, are not taxable to employees until
withdrawn from the plan.
In addition, we provide other benefits to our Named Executive Officers on the same basis as all of our full-time
employees. These benefits include standard health, vacation and other benefits offered to our employees.
PERQUISITES AND OTHER PERSONAL BENEFITS
We generally do not provide perquisites to our Named Executive Officers or other personal benefits beyond what is
provided to employees on a broad basis.
Named Executive Officer Employment Arrangements
JAYSHREE ULLAL OFFER LETTER
We have entered into an offer letter with Jayshree Ullal, our Chief Executive Officer, pursuant to which Ms. Ullal is an at-will
employee. Ms. Ullal’s current annual base salary is $300,000 per year, and her target annual bonus is targeted at $300,000.
Ms. Ullal is also eligible to participate in all of our standard health, vacation and other benefits offered to our employees.
CHANTELLE BREITHAUPT OFFER LETTER & SEVERANCE AGREEMENT
We have entered into an offer letter with Chantelle Breithaupt, our Senior Vice President, Chief Financial Officer,
pursuant to which Ms. Breithaupt is an at-will employee. Ms. Breithaupt’s current annual base salary is $330,000,
and her target annual bonus is targeted at $198,000. Ms. Breithaupt is also eligible to participate in all of our
standard health, vacation and other benefits offered to our employees.
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In addition, we entered into a severance agreement with Ms. Breithaupt. The severance agreement provides that if
Ms. Breithaupt’s employment is involuntarily terminated other than for “cause” (as generally defined below) or if
Ms. Breithaupt resigns for “good reason” (as generally defined below) then, subject to her execution of a release of
claims, Ms. Breithaupt will receive continuing payments of her base salary for 12 months and accelerated vesting of
time-based equity awards that would have vested had Ms. Breithaupt remained employment with us for 12 months
following her termination of employment date. If the qualified termination of employment occurred during the period
beginning on, and for 12 months following a change in control, then the equity acceleration benefit would be 50% of
the then-unvested equity awards, if greater than the acceleration benefit described in the previous sentence.
For purposes of the severance agreement with Ms. Breithaupt, “cause” means generally:
•
an act of dishonesty made by her in connection
with her responsibilities as an employee;
•
her conviction of, or plea of nolo contendere to, a
felony or any crime involving fraud, embezzlement
or any other act of moral turpitude;
•
her gross misconduct;
•
her unauthorized use or disclosure of any
proprietary information or trade secrets of ours or
any other party to whom she owes a duty of
non-disclosure as a result of her relationship
with us;
•
her willful breach of any obligations under any
written agreement or covenant with us; or
•
her continued failure to perform her duties after a
demand from us setting the basis of our belief and
failure to cure within 10 business days after
receiving such notice.
For purposes of the severance agreement with Ms. Breithaupt, “good reason” means generally a resignation within
30 days following the expiration of any cure period following the occurrence of one or more of the following, without
her consent:
•
a material diminution of her authority, duties or
responsibilities (which includes a reduction in
authority, duties or responsibilities in connection
with our being acquired and made part of a larger
entity);
•
a material reduction of her base salary (which
excludes a reduction in her base salary of 15% or
less in any one year) other than a reduction applied
to management generally; or
•
a material change in the geographic location of her
primary work facility or location (which excludes a
relocation of less than 50 miles from her then-
present location)
In order to receive the benefits described above, Ms. Breithaupt is required to provide written notice within 90 days of
the initial existence of good reason and provide a cure period of 30 days following the date of such notice.
KENNETH DUDA OFFER LETTER
We have entered into an offer letter with Kenneth Duda, our President and Chief Technology Officer, pursuant to
which Mr. Duda is an at-will employee. Mr. Duda’s current annual base salary is $300,000 per year, and his annual
bonus is targeted at $180,000. Mr. Duda is also eligible to participate in all of our standard health, vacation and other
benefits offered to our employees.
TODD NIGHTINGALE OFFER LETTER & SEVERANCE AGREEMENT
We have entered into an offer letter with Todd Nightingale, our President and Chief Operating Officer, pursuant to which
Mr. Nightingale is an at-will employee. Mr. Nightingale’s current annual base salary is $350,000 per year. Mr. Nightingale is
also eligible to participate in all of our standard health, vacation and other benefits offered to our employees.
In addition, we entered into a severance agreement with Mr. Nightingale. The severance agreement provides that if
Mr. Nightingale’s employment is involuntarily terminated other than for “cause” or if Mr. Nightingale resigns for “good
reason” (as generally defined below) then, subject to his execution of a release of claims, Mr. Nightingale will receive
continuing payments of his base salary for 12 months and accelerated vesting of time-based equity awards that
would have vested had Mr. Nightingale remained employed with us for 12 months following his termination of
employment date. If the qualified termination of employment occurred during the period beginning on, and for
12 months following a change in control, then the equity acceleration benefit would be 50% of the then-unvested
equity awards, if greater than the acceleration benefit described in the previous sentence.
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For purposes of the severance agreement with Mr. Nightingale, “cause” and “good reason” have the same general
meanings as set forth in Ms. Breithaupt’s severance agreement.
MARC TAXAY OFFER LETTER, SEVERANCE AGREEMENT AND CONSULTING AGREEMENT
Marc Taxay resigned from his position as our Senior Vice President, General Counsel effective May 7, 2025. We had
entered into an offer letter with Mr. Taxay, pursuant to which Mr. Taxay was an at-will employee. Mr. Taxay’s annual
base salary was $315,000 per year and he was eligible for an annual bonus targeted at $189,000. Mr. Taxay was
also eligible to participate in all of our standard health, vacation and other benefits offered to our employees.
In addition, we had entered into a severance agreement with Mr. Taxay. The severance agreement provided that if
Mr. Taxay’s employment was involuntarily terminated other than for “cause” or if Mr. Taxay resigned for “good
reason” (as generally defined below) then, subject to his execution of a release of claims, Mr. Taxay would receive
continuing payments of his base salary for 12 months and accelerated vesting of time-based equity awards that
would have vested had Mr. Taxay remained employed with us for 12 months following his termination of employment
date. If the qualified termination of employment occurred during the period beginning on, and for 12 months following
a change in control, then the equity acceleration benefit would be 50% of the then-unvested equity awards, if greater
than the acceleration benefit described in the previous sentence.
For purposes of the severance agreement with Mr. Taxay, “cause” and “good reason” have the same general
meanings as set forth in Ms. Breithaupt’s severance agreement.
Upon Mr. Taxay’s resignation, we entered into a Consulting Agreement with Mr. Taxay, pursuant to which Mr. Taxay
is an independent contractor. The Consulting Agreement provides that Mr. Taxay’s previously awarded and then-
outstanding equity awards continued vesting through May 20, 2025.
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Fiscal 2025 Summary Compensation Table
The following table provides information regarding the total compensation for services rendered in all capacities that
was earned by our Named Executive Officers.
Name and
Principal Position
Year
Salary
($)
Bonus
($)
Stock
Awards
($)(1)
Non-Equity
Incentive Plan
Compensation
($)
All Other
Compensation
($)
Total
($)
Jayshree Ullal
Chief Executive Officer
2025 300,000
—
2,262,785
300,000
9,360(2)
2,872,145
2024 300,000
—
6,856,502
250,000
1,542,901
8,949,403
2023 300,000
— 15,051,588
200,000
10,399
15,561,987
Chantelle Breithaupt
Chief Financial Officer
2025 325,322
—
6,658,625
250,000
10,123(2)
7,244,070
2024 302,885
50,000 11,665,423
240,000
9,433
12,267,741
Kenneth Duda
President,
Chief Technology
Officer
2025 300,000
1,000
6,601,668
300,000
9,360(2)
7,212,028
2024 300,000
— 34,433,411
240,000
274,780
35,248,191
2023 300,000
—
3,900,407
205,000
10,399
4,415,806
Todd Nightingale
President, Chief
Operating Officer
2025 183,160
— 52,026,188
75,000
4,975(2)
52,289,323
Marc Taxay
Former
Senior Vice President,
General Counsel
2025 116,401
—
1,558,165
—
158(2)
1,674,724(3)
2024 315,000
—
4,780,026
220,000
378
5,315,404
2023 315,000
—
2,926,896
200,000
378
3,442,274
(1) The amounts reported include the aggregate grant-date fair value of restricted stock units or stock options awarded to the
Named Executive Officer, calculated in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards
Codification Topic 718 (“ASC Topic 718”). The assumptions used in calculating the grant-date fair value of these awards are set
forth in the notes to our audited consolidated financial statements included in our Annual Report on Form 10-K, as filed with the
SEC on February 17, 2026. For performance-based restricted stock units, the amount reported represents the grant-date fair
value based upon the probable outcome of the performance conditions for such awards, consistent with the estimate of
aggregate compensation cost to be recognized over the service period determined as of the grant date under FASB ASC
Topic 718, excluding the effect of estimated forfeitures. The amount disclosed for fiscal 2025 includes a portion of performance-
based restricted stock units granted in an earlier fiscal year to the extent the Named Executive Officer received an award in that
fiscal year and respect to which the performance conditions were set in 2025. Performance conditions have not been established
with respect to portions of such awards, and as a result those portions of the performance-based restricted stock units do not
have a grant-date fair value and are not included above. If maximum performance were deemed achieved for the performance-
based restricted stock unit awards for which the performance conditions were established during 2025, the grant-date fair value
of such awards would be $4,525,571 for Ms. Ullal, $3,322,382 for Ms. Breithaupt, and $8,586,552 for Mr. Duda. There is no
maximum performance achievement for Mr. Nightingale’s performance-based restricted stock units. Based on actual
achievement for fiscal 2025, for Named Executive Officers other than Mr. Nightingale, 200% of the performance-based restricted
stock units awards granted in 2023 that were eligible to be earned in fiscal 2025 became eligible to vest, 200% of the
performance-based restricted stock units awards granted in 2024 that were eligible to be earned in fiscal 2025 became eligible to
vest, and 200% of the performance-based restricted stock units awards granted in 2025 that were eligible to be earned in fiscal
2025 became eligible to vest. Based on actual achievement for fiscal 2025, 100% of the performance-based restricted stock unit
awards granted in 2025 to Mr. Nightingale that were eligible to be earned in fiscal 2025 became eligible to vest.
(2) The amounts reported for fiscal 2025 include, in the case of all Named Executive Officers other than Mr. Taxay, matching
contributions from the Company for the contributions made to the 401(k) plan by the Named Executive Officer and, in the case of
all Named Executive Officers, a life insurance premium paid on the Named Executive Officer’s behalf.
(3) The amounts reported include salary earned by Mr. Taxay for his services as our Senior Vice President, General Counsel.
Mr. Taxay resigned from his position as Senior Vice President, General Counsel effective May 7, 2025.
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Outstanding Equity Awards at 2025 Fiscal Year-End
The following table sets forth information regarding outstanding stock options and stock awards held by our Named
Executive Officers as of December 31, 2025.
Option Awards
Stock Awards
Name
Date of
Board or
Committee
Action to
Grant the
Award
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
Option
Exercise
Price
($)
Option
Expiration
Date
Number of
Shares or
Units of Stock
That Have
Not Vested
(#)(1)
Market
Value
of Shares or
Units of
Stock
That Have
Not Vested
($)(2)
Jayshree
Ullal
4/13/2018(3)
5,328
—
15.2625 4/12/2028
—
—
2/8/2019(4)
6,672
—
14.1463
2/7/2029
—
—
2/11/2022(5)
—
—
—
—
20,592
2,698,170
2/11/2022(6)
—
—
—
—
77,640
10,173,169
2/10/2023(7)
—
—
—
—
138,320
18,124,070
2/10/2023(8)
—
—
—
—
57,240
7,500,157
2/9/2024(9)
—
—
—
—
41,228
5,402,105
2/9/2024(10)
—
—
—
—
61,840
8,102,895
Chantelle
Breithaupt
1/12/2024(11)
—
—
—
—
98,260
12,875,008
2/9/2024(12)
—
—
—
—
23,792
3,117,466
2/14/2025(13)
—
—
—
—
21,600
2,830,248
2/14/2025(14)
—
—
—
—
21,600
2,830,248
5/9/2025(15)
—
—
—
—
31,080
4,072,412
5/9/2025(16)
—
—
—
—
31,080
4,072,412
10/10/2025(17)
—
—
—
—
46,380
6,077,171
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Option Awards
Stock Awards
Name
Date of
Board or
Committee
Action to
Grant the
Award
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
Option
Exercise
Price
($)
Option
Expiration
Date
Number of
Shares or
Units of Stock
That Have
Not Vested
(#)(1)
Market
Value
of Shares or
Units of
Stock
That Have
Not Vested
($)(2)
Kenneth Duda
2/12/2016(18)
30,000
—
3.5150 2/11/2026
—
—
4/13/2018(19)
128,000
—
15.2625 4/12/2028
—
—
11/9/2018(20)
48,000
—
15.2769 11/8/2028
—
—
2/8/2019(21)
160,000
—
14.1463
2/7/2029
—
—
2/11/2022(22)
—
—
—
—
15,528
2,034,634
2/10/2023(23)
—
—
—
—
33,180
4,347,575
2/10/2023(24)
—
—
—
—
22,120
2,898,384
2/9/2024(25)
—
—
—
—
22,020
2,885,281
2/9/2024(26)
—
—
—
—
376,504
49,333,319
2/9/2024(9)
—
—
—
—
19,576
2,565,043
2/14/2025(13)
—
—
—
—
21,600
2,830,248
2/14/2025(14)
—
—
—
—
21,600
2,830,248
10/10/2025(17)
—
—
—
—
81,160
10,634,395
Todd
Nightingale
7/11/2025(27)
—
—
—
—
466,060
61,067,842
7/11/2025(28)
—
—
—
—
31,080
4,072,412
10/10/2025(29)
—
—
—
—
70,730
9,267,752
Marc
Taxay(31)
2/12/2021(30)
—
—
—
—
10,432
1,366,905
2/11/2022(22)
—
—
—
—
17,476
2,289,880
2/10/2023(23)
—
—
—
—
31,124
4,078,178
2/10/2023(24)
—
—
—
—
16,600
2,175,098
2/9/2024(25)
—
—
—
—
18,760
2,458,123
2/9/2024(9)
—
—
—
—
14,296
1,873,205
2/14/2025(13)
—
—
—
—
14,580
1,910,417
(1) Represents awards of restricted stock units that remained unvested as of December 31, 2025. All vesting is subject to the
named executive officer’s continued role as a service provider to us through the applicable vesting date.
(2) This column represents the market value of the shares of our common stock underlying the awards of restricted stock units
as of December 31, 2025, based on the closing price of our common.
(3) 1/48th of the shares subject to the option vested on June 1, 2020 and 1/48th of the shares subject to the option shall vest
monthly thereafter.
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(4) 1/48th of the shares subject to the option vested on December 1, 2020 and 1/48th of the shares subject to the option shall
continue to vest each month thereafter.
(5) This performance stock award was granted in February 2022 and is earned based on attainment of certain performance
conditions. The number of shares in the table reflects the shares available at target (100%). Maximum payout is 200%. The
award vested 25% on February 20, 2023 and continue to vest at a rate of 6.25% quarterly thereafter. A quarterly vest date is
the first market trading day on or after February 20, May 20, August 20, and November 20 of each year.
(6) This performance stock award was granted in February 2022 and is earned based on attainment of certain 2023-2024
performance conditions. The number of shares in the table reflects the shares available at target (100%). Maximum payout is
200%. The award vested 50% on February 20, 2025 and 50% on February 20, 2026.
(7) The award vested 25% on February 20, 2024 and continued to vest at a rate of 6.25% quarterly thereafter. A quarterly vest
date is the first market trading day on or after February 20, May 20, August 20, and November 20 of each year.
(8) This performance stock award was granted in February 2023 and is earned based on attainment of certain 2023-2024
performance conditions. The number of shares in the table reflects the shares available at target (100%). Maximum payout is
200%. The award vested 50% on February 20, 2025 and 50% on February 20, 2026.
(9) This performance stock award was granted in February 2024 and 1/3 of the shares are earned based on attainment of certain
2024, 2025 and 2026 performance conditions. The number of shares in the table reflects the shares available at target
(100%). Maximum payout is 200%. Shares earned vest on February 20th of the year following the associated performance
year.
(10) This performance stock award was granted in February 2024 and is earned based on attainment of certain 2024-2026
performance conditions. The number of shares in the table reflects the shares available at target (100%). Maximum payout is
200%. The award will vest 100% on February 20, 2027.
(11) Twenty five percent (25%) of the restricted stock units awarded vested on February 20, 2025, and continue to vest at a rate
of six and one-quarter percent (6.25%) each quarter on each quarterly vest date thereafter. A quarterly vest date is the first
market trading day on or after February 20, May 20, August 20 or November 20 of each year.
(12) This performance stock award was granted in February 2024 and 1/4 of the shares are earned based on attainment of certain
2024, 2025, 2026, and 2027 performance conditions. The number of shares in the table reflects the shares available at target
(100%). Maximum payout is 200%. Shares earned vest on February 20th of the year following the associated performance
year.
(13) Six and one-quarter percent (6.25%) of the restricted stock units awarded vested on February 20, 2026 and continue to vest
at the same rate on each quarterly vest date thereafter. A quarterly vest date is the first market trading day on or after
February 20, May 20, August 20, and November 20 of each year.
(14) This performance stock award was granted in February 2025 and 1/3 of the shares are earned based on attainment of certain
2025, 2026, and 2027 performance conditions. The number of shares in the table reflects the shares available at target
(100%). Maximum payout is 200%. Shares earned vest on February 20th of the year following the associated performance
year.
(15) Six and one-quarter percent (6.25%) of the restricted stock units awarded will vest on February 20, 2028 and continue to vest
at the same rate on each quarterly vest date thereafter. A quarterly vest date is the first market trading day on or after
February 20, May 20, August 20, and November 20 of each year.
(16) This performance stock award was granted in May 2025 and 1/4 of the shares are earned based on attainment of certain
2028, 2029, 2030 and 2031 performance conditions. The number of shares in the table reflects the shares available at target
(100%). Maximum payout is 200%. Shares earned vest on February 20th of the year following the associated performance
year.
(17) This performance stock award was granted in October 2025 and 1/3 of the shares are earned based on attainment of certain
2029, 2030, and 2031 performance conditions. The number of shares in the table reflects the shares available at target
(100%). Maximum payout is 200%. Shares earned vest on February 20th of the year following the associated performance
year.
(18) 1/60th of the shares subject to the option vested and became exercisable on April 1, 2017 and 1/60th of the shares subject
to the option continue to vest each month thereafter.
(19) 1/48th of the shares subject to the option vested and became exercisable on June 1, 2020 and 1/48th of the shares subject
to the option vest each month thereafter.
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(20) 1/48th of the shares subject to the option vested and became exercisable on December 1, 2020 and 1/48th of the shares
subject to the option continue to vest each month thereafter.
(21) 1/48th of the shares subject to the option vested and became exercisable on December 1, 2020 and 1/48th of the shares
subject to the option continue to vest each month thereafter.
(22) Six and one-quarter percent (6.25%) of the restricted stock units awarded vested on February 20, 2023 and continue to vest
at the same rate on each quarterly vest date thereafter. A quarterly vest date is the first market trading day on or after
February 20, May 20, August 20, or November 20 of each year.
(23) Six and one-quarter percent (6.25%) of the restricted stock units awarded vested on February 20, 2024 and continue to vest
at the same rate on each quarterly vest date thereafter. A quarterly vest date is the first market trading day on or after
February 20, May 20, August 20, and November 20 of each year.
(24) This performance stock award was granted in February 2023 and 1/3 of the shares are earned based on attainment of certain
2023, 2024 and 2025 performance conditions. The number of shares in the table reflects the shares available at target
(100%). Maximum payout is 200%. Shares earned vest on February 20th of the year following the associated performance
year.
(25) Six and one-quarter percent (6.25%) of the restricted stock units awarded vested on February 20, 2025 and continue to vest
at the same rate on each quarterly vest date thereafter. A quarterly vest date is the first market trading day on or after
February 20, May 20, August 20, and November 20 of each year.
(26) Five percent (5%) of the restricted stock units awarded vested on November 20, 2025 and continue to vest at the same rate
on each quarterly vest date thereafter. A quarterly vest date is the first market trading day on or after February 20, May 20,
August 20, and November 20 of each year.
(27) Twenty five percent (25%) of the restricted stock units awarded will vest on August 20, 2026 and continue to vest at a rate of
six and one-quarter percent (6.25%) each quarter on each quarterly vest date thereafter. A quarterly vest date is the first
market trading day on or after February 20, May 20, August 20 or November 20 of each year.
(28) This performance stock award was granted in July 2025 and are earned based on attainment of certain 2025 and 2026
performance conditions. The number of shares in the table reflects the shares available at target (100%). Shares earned
vested on February 20, 2026 for the 2025 goals. Shares earned for first half of 2026 will vest on August 20, 2026. Shares
earned for second half of 2026 will vest on February 20, 2027.
(29) This performance stock award was granted in October 2025 and 1/3 of the shares are earned based on attainment of certain
2030, 2031, and 2032 performance conditions. The number of shares in the table reflects the shares available at target
(100%). Maximum payout is 200%. Shares earned vest on February 20th of the year following the associated performance
year.
(30) Six and one-quarter percent (6.25%) of the restricted stock units awarded vested on February 20, 2022 and continue to vest
at the same rate on each quarterly vest date thereafter. A quarterly vest date is the first market trading day on or after
February 20, May 20, August 20, and November 20 of each year.
(31) Mr. Taxay resigned from his position as Senior Vice President, General Counsel effective May 7, 2025. All outstanding equity
awards previously awarded to Mr. Taxay during his employment with us continued to vest through May 20, 2025, at which
pointed such awards no longer continued to vest.
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Fiscal 2025 Grants of Plan-Based Awards
The following table presents information regarding the amount of plan-based awards granted to our Named
Executive Officers during our fiscal year ended December 31, 2025. No option awards were granted to our Named
Executive Officers during our fiscal year ended December 31, 2025.
Named Executive
Officer
Grant
Date(1)
Date of
Board or
Committee
Action to
Grant the
Award(2)
Estimated
Payouts
Under
Non-Equity
Plan Awards
(Target)($)(3)
Estimated Future Payouts Under
Equity Incentive Plan Awards
All Other
Stock
Awards:
Number
of Shares
or Units
(#)(4)
Grant
Date Fair
Value of
Awards
($)(5)
Threshold Target Maximum
Jayshree Ullal
—
—
300,000
—
—
—
—
—
7/22/2025 2/9/2024
—
10,306
20,612
41,224
—
2,262,785
Chantelle Breithaupt
—
—
250,000
—
—
—
—
—
7/22/2025 2/9/2024
—
3,966
7,932
15,864
—
870,775
2/14/2025 2/14/2025
—
—
21,600
—
—
2,308,392
7/22/2025 2/14/2025
—
3,600
7,200
14,400
—
790,416
5/9/2025 5/9/2025
—
—
31,080
—
—
2,689,042
Kenneth Duda
—
—
300,000
—
—
—
—
—
7/22/2025 2/10/2023
—
11,060
22,120
44,240
—
2,428,334
7/22/2025 2/9/2024
—
4,894
9,788
19,576
—
1,074,527
2/14/2025 2/14/2025
—
—
21,600
—
—
2,308,392
7/22/2025 2/14/2025
—
3,600
7,200
14,400
—
790,416
Todd Nightingale
—
—
75,000
—
—
—
—
—
7/11/2025 7/11/2025
—
—
466,060
—
—
50,600,134
7/11/2025 7/11/2025
—
—
10,360
—
—
1,426,054
Marc Taxay(6)
2/14/2025 2/14/2025
—
—
14,580
—
—
1,558,165
(1) Represents the grant date determined under ASC Topic 718, for the portion of the awards that were considered, under ASC
Topic 718, to have been granted in fiscal 2025.
(2) The legal grant date for the awards with Board or Committee Action to grant the award.
(3) Our 2025 Bonus Plan does not have thresholds or maximums. However, bonuses would not be paid under our 2025 Bonus
Plan if achievement of the revenue metric was below 85% of target. The amounts set forth above represent the target annual
bonus for each Named Executive Officer. These targets are not strict targets and merely inform the aggregate of bonuses that
will be accrued for financial accounting purposes. Once a total incentive pool is accrued for all participants in the 2025 Bonus
Plan, our Compensation Committee looks at the performance for the year across the key metrics discussed above in the
“Compensation Discussion and Analysis” section and factors in individual performance and market comparable compensation
in our peer group in determining a total incentive paid to each Named Executive Officer.
(4) The RSU and PRSU awards were made under the 2014 Equity Plan.
(5) Represents the grant date fair value of each equity award granted in fiscal 2025, calculated in accordance with ASC Topic
718. Amounts reported for PRSUs are based upon the probable outcome of the performance conditions, consistent with the
estimate of aggregate compensation cost to be recognized over the service period determined as of the grant date under
FASB ASC Topic 718, excluding the effects of estimated forfeitures. In the case of Mr. Duda, the amount disclosed includes a
portion of performance-based restricted stock units granted in 2023 and a portion of performance-based restricted stock units
granted in 2024, with respect to each of which performance conditions were set in 2025. Performance conditions have not
been established with respect to portions of such awards, and as a result those portions of the performance-based restricted
stock units do not have a grant-date fair value and are not included above. If maximum performance were deemed achieved
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for the performance-based restricted stock unit awards with respect to which performance conditions were established during
2025, the grant-date fair value of such awards would be $4,525,571 for Ms. Ullal, $3,322,382 for Ms. Breithaupt, and
$8,586,552 for Mr. Duda.
(6) Mr. Taxay resigned from his position as Senior Vice President, General Counsel effective May 7, 2025.
Fiscal 2025 Option Exercises and Stock Vested
The following table presents information regarding the exercise of stock options and the vesting of stock awards by
our Named Executive Officers during our fiscal year ended December 31, 2025.
Named Executive Officer
Number of
Shares
Acquired on
Exercise
(#)
Value Realized
on Exercise
($)(1)
Number of
Shares
Acquired on
Vesting
(#)
Value
Realized
on Vesting
($)(2)
Jayshree Ullal
—
—
463,708
49,710,233
Chantelle Breithaupt
—
—
92,276
9,940,212
Kenneth Duda
610,000
62,192,738
197,988
21,361,836
Todd Nightingale
—
—
—
—
Marc Taxay(3)
—
—
113,904
11,680,307
(1) Based on the market price of our common stock on the date of exercise less the option exercise price paid for those shares,
multiplied by the number of shares for which the option was exercised.
(2) Based on the market price of our common stock on the vesting date or last trading date, multiplied by the number of shares
vested.
(3) Mr. Taxay resigned from his position as Senior Vice President, General Counsel effective May 7, 2025.
Pension Benefits
We did not sponsor any defined benefit pension or other actuarial plan for our Named Executive Officers during fiscal
2025.
Nonqualified Deferred Compensation
We did not maintain any nonqualified defined contribution or other deferred compensation plans or arrangements for
our Named Executive Officers during fiscal 2025.
2026 PROXY STATEMENT
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Potential Payments Upon Termination or Change in Control
The tables below provide an estimate of the value of the compensation and benefits due to each of our Named
Executive Officers for our fiscal year ended December 31, 2025, in the events described below, assuming that the
termination of employment and change in control was effective on December 31, 2025, under the applicable
employment agreements described above. The actual amounts to be paid can only be determined at the time of the
termination of employment and are subject to the execution of a separation agreement and release of claims by the
Named Executive Officer and such officer’s compliance with that certain confidential information and invention
assignment agreement by and between the Named Executive Officer and the Company. Mr. Taxay received no
severance in connection with his voluntary resignation from his position as Senior Vice President, General Counsel
effective as of May 7, 2025. Consequently, he has been omitted from the tables below.
TERMINATION OF EMPLOYMENT UNRELATED TO A CHANGE IN CONTROL
Value of Accelerated Equity
Awards ($)(1)
Named Executive Officer
Salary
Continuation
($)
Restricted
Stock Units
Options
Total ($)
Chantelle Breithaupt
330,000
8,412,650
—
8,742,650
Todd Nightingale
350,000
19,083,733
—
19,433,733
(1) The amounts reported in the table reflect the aggregate market value of the unvested shares of our common stock underlying
outstanding restricted stock unit awards and stock options that would become vested on a qualifying termination. For the
restricted stock unit awards, the aggregate market value is computed by multiplying (i) the number of unvested shares of our
common stock subject to outstanding restricted stock awards or outstanding restricted stock unit awards on December 31,
2025, that would become vested by (ii) $131.03 (the closing market price of our common stock on NYSE on December 31,
2025).
TERMINATION OF EMPLOYMENT IN CONNECTION WITH A CHANGE IN CONTROL
Value of Accelerated Equity
Awards ($)(1)
Named Executive Officer
Salary
Continuation
($)
Restricted
Stock Units
Options
Total ($)
Chantelle Breithaupt
330,000
8,412,650
—
8,742,650
Todd Nightingale
350,000
19,083,733
—
19,433,733
(1) The amounts reported in the table reflect the aggregate market value of the unvested shares of our common stock underlying
outstanding restricted stock unit awards and stock options that would become vested on a qualifying termination. For the
restricted stock unit awards, the aggregate market value is computed by multiplying (i) the number of unvested shares of our
common stock subject to outstanding restricted stock unit awards on December 31, 2025, that would become vested by (ii)
$131.03 (the closing market price of our common stock on NYSE on December 31, 2025).
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Risk Assessment and Compensation Practices
Our management assesses and discusses with our Compensation Committee at least annually our compensation
policies and practices for our employees as they relate to our risk management, and based upon this assessment,
we believe that, for the following reasons, any risks arising from such policies and practices are not reasonably likely
to have a material adverse effect on us in the future:
•
Our annual bonus plan considers a multiple of
performance factors and allows our Compensation
Committee to review performance on a holistic
basis minimizing risk related to our short-term
variable compensation;
•
Our equity awards include multi-year vesting
schedules requiring a long-term employee
commitment; and
•
As described below, we have stock ownership
guidelines and clawback policies that help to
mitigate risk.
Compensation Policies and Hedging/Pledging Policies
Stock Ownership Guidelines. In April 2019, our board of directors adopted, and in April 2026 amended, stock
ownership guidelines. As amended in April 2026, our stock ownership guidelines are designed to encourage our
non-employee directors, CEO, CFO, and Presidents (“covered executives”) to achieve and maintain a meaningful
equity stake in our Company and more closely align their interests with those of our stockholders. The guidelines
provide that our non-employee directors and covered executives should accumulate and hold, within five years from
the date such non-employee director or covered executive was appointed to such role, an investment level in our
common stock of three times the value of the non-employee director’s annual retainer for service on our board of
directors (not including any additional fees received for committee service, lead independent director service, or
meeting attendance), three times the covered executive’s annual base salary, or six times in the case of our CEO.
The following types of holdings are included for our stock ownership guidelines: shares of our common stock, shares
of our common stock underlying unvested RSUs subject to time-based vesting alone, and any other shares of our
common stock in which our the covered executive holds a beneficial interest. Our non-employee directors and
covered executives have met or are on track to meet these guidelines based on their current rate of stock
accumulations in the time frame set out in the guidelines.
Clawback Policy. In July 2023, we adopted a new Clawback Policy in accordance with the SEC and NYSE
requirements under the Dodd-Frank Wall Street Reform and Consumer Protection Act. This policy provides for the
non-discretionary recovery of excess incentive-based compensation from current and former executive officers in the
event of an accounting restatement, whether or not the executive officer was at fault for the restatement, in
accordance with the SEC and NYSE requirements.
Hedging or Pledging Policies. Our insider trading policy prohibits our directors, officers, employees, consultants,
contractors and advisors from engaging in short sales, as well as transactions in publicly-traded options, such as
puts and calls, and other derivative securities with respect to the Company’s securities. This prohibition extends to
any hedging or similar transaction designed to decrease the risks associated with holding Company securities. Stock
options, stock appreciation rights and other securities issued pursuant to Company benefit plans or other
compensatory arrangements with the Company are not subject to this prohibition.
These policies were established in part because transactions in derivative securities may reflect a short term and
speculative interest in the Company’s securities and may create the appearance of impropriety, even where a
transaction does not involve trading on inside information. Trading in derivatives may also focus attention on short-
term performance at the expense of the Company’s long-term objectives. In addition, the application of securities
laws to derivatives transactions can be complex, and persons engaging in derivatives transactions run an increased
risk of violating securities laws.
In addition, our insider trading policy prohibits our directors, executive officers and certain other employees from
pledging the Company’s securities as collateral for any loan, as part of any other pledging transaction, or from
holding Company common stock in margin accounts.
2026 PROXY STATEMENT
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No Timing of Equity Awards In Relation to Disclosure of Material Non-Public Information
During 2025, we granted equity awards to certain service providers who were not named executive officers. Equity
awards approved by our board of directors or our Compensation Committee typically are granted during their
regularly scheduled meetings, but our Compensation Committee has also delegated authority to our CEO to grant
equity awards to any employee who (i) has a corporate rank of Senior Vice President or below and (ii) is not a
Section 16 officer or an executive direct report of our CEO. We do not take material non-public information into
account in determining the timing and terms of equity awards, and the delegation of authority to our CEO requires
that any award she grants will become effective on the tenth business day of the month in which she approves the
award (or, if the tenth business day of that month has passed, on the tenth business day of the immediately following
month). We have not timed the disclosure of material nonpublic information to affect the value of executive
compensation. We did not grant stock options to our named executive officers in 2025, and we have never granted
stock appreciation rights to any service providers.
Insider Trading Policy
We have an insider trading policy governing the purchase, sale and other dispositions of the Company’s securities
that applies to the Company and its personnel, including officers, directors, all other co-workers of the Company and
its subsidiaries, and other covered persons (the “Insider Trading Policy”). We believe that the Insider Trading Policy is
reasonably designed to promote compliance with insider trading laws, rules and regulations, and listing standards
applicable to us. A copy of the Insider Trading Policy is filed as Exhibit 19.0 to the Company’s Annual Report on
Form 10-K for the year ended December 31, 2024.
Tax and Accounting Considerations
Deductibility of Executive Compensation. Section 162(m) of the Code generally disallows public companies a tax
deduction for federal income tax purposes of remuneration in excess of $1 million paid to the chief executive officer
and certain other highly compensated executive officers.
Our Compensation Committee may consider the deductibility of compensation when making decisions, but may
authorize the payment of compensation that is not deductible when it believes it appropriate.
Taxation of “Parachute” Payments. Sections 280G and 4999 of the Code provide that executive officers and directors
who hold significant equity interests and certain other service providers may be subject to significant additional taxes
if they receive payments or benefits in connection with a change in control that exceeds certain prescribed limits and
that we (or a successor) may forfeit a deduction on the amounts subject to this additional tax. We did not provide any
of our Named Executive Officers with a “gross-up” or other reimbursement payment for any tax liability that the
Named Executive Officer might owe as a result of the application of Sections 280G or 4999, and we have not agreed
and are not otherwise obligated to provide any Named Executive Officer with such a “gross-up” or other
reimbursement.
Accounting for Share-Based Compensation. We follow ASC Topic 718 for our share-based compensation awards. ASC
Topic 718 requires companies to measure the compensation expense for all share-based compensation awards
made to employees and directors, including stock options, based on the grant date “fair value” of these awards. This
calculation is performed for accounting purposes and reported in the compensation tables above, even though our
Named Executive Officers may never realize any value from their awards. ASC Topic 718 also requires companies to
recognize the compensation cost of their share- based compensation awards in their income statements over the
period that an executive officer is required to render service in exchange for the option or other award.
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CEO Pay Ratio
As required by Item 402(u) of Regulation S-K, we are providing the following information about the relationship of the
annual total compensation of our employees and the annual total compensation of our CEO:
For 2025, our last completed fiscal year:
1. the median of the annual total compensation of all
employees of our Company (other than our CEO),
was $190,815; and
2. the annual total compensation of our CEO, as
reported in the Fiscal 2025 Summary Compensation
Table presented elsewhere in this proxy statement,
was $2,872,145.
Based on this information, for 2025, the ratio of the annual total compensation of our CEO to the median of the
annual total compensation of all employees was approximately 15:1. This pay ratio is a reasonable estimate based
on our reasonable judgement and assumptions and calculated in a manner consistent with Item 402(u) of Regulation
S-K. SEC rules do not specify a single methodology for identification of the median employee or calculation of the
pay ratio, and other companies may use assumptions and methodologies that are different from those used by us in
calculating their pay ratio. Accordingly, the pay ratio disclosed by other companies may not be comparable to the
Company’s pay ratio as disclosed above.
Consistent with Item 402(u) of Regulation S-K, our CEO’s annual total compensation for the purposes of the pay ratio
is as presented in our Fiscal 2025 Summary Compensation Table.
To identify the median of the annual total compensation of all our employees, as well as to determine the annual total
compensation of the “median employee,” the methodology and the material assumptions, adjustments, and
estimates that we used were as follows:
1. We selected October 31, 2025 as the date upon
which we would identify the median employee.
2. To identify the “median employee” from our
employee population we used payroll and equity
plan records.
(a) The compensation measure included the
following: annual base salary for salaried
employees (or hourly rate multiplied by
estimated work schedule for hourly employees),
actual incentive compensation paid in 2025 as
of the determination date, and grant date fair
value of equity awards granted in 2025.
(b) We did not apply any de minimis exclusions to
remove certain employees in non-U.S.
jurisdictions allowed by Item 402(u).
3. Amounts paid in foreign currency were converted
into United States dollars using 2025 average
exchange rates.
4. The calculation was performed for all employees,
excluding Ms. Ullal, whether employed on a full-
time, part- time, or seasonal basis.
With respect to the annual total compensation of the “median employee,” we identified and calculated the elements
of such employee’s compensation for 2025 in accordance with the requirements of Item 402(c)(2)(x) of Regulation
S-K, resulting in annual total compensation of $190,815.
With respect to the annual total compensation for our CEO, we used the amount reported in the “Total” column of
our Fiscal 2025 Summary Compensation Table.
2026 PROXY STATEMENT
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Pay Versus Performance
As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v)
of Regulation S-K, we are providing the following information about the relationship between executive compensation
actually paid (“CAP”) and certain measures of the financial performance of the Company. For further information
concerning the Company’s variable pay-for-performance philosophy and how the Company aligns executive
compensation with corporate performance, please refer to the section of this proxy statement entitled
“Compensation Discussion and Analysis” (“CD&A”).
The following table reports the compensation of our Principal Executive Officer (“PEO”) and the average
compensation of the other Named Executive Officers (“non-PEO NEOs”) as reported in the Summary Compensation
Table for the past five fiscal years, as well as their “Compensation Actually Paid” as calculated pursuant to recently
adopted SEC rules and certain performance measures required by the rules.
Value of Initial Fixed $100
Investment Based On:
Fiscal
Year
Summary
Compensation
Table Total
PEO
Compensation
Actually Paid
to PEO
Average
Summary
Compensation
Table Total for
non-PEO NEOs
Avg.
Compensation
Actually
Paid to
non-PEO
NEOs
Total
Shareholder
Return
Peer Group
Total
Shareholder
Return
Net
Income Revenue
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
2025
$ 2,872,145
$26,188,077
$17,105,036
$ 25,236,315
$721
$163
$3,511
$9,006
2024
$ 8,949,403
$62,201,559
$10,891,249
$ 27,045,747
$608
$141
$2,852
$7,003
2023
$15,561,987
$63,914,394
$ 4,918,724
$ 20,487,088
$324
$124
$2,087
$5,860
2022
$10,735,887
$ 3,171,085
$ 3,285,597
($
785,576)
$167
$109
$1,352
$4,381
2021
$15,993,632
$65,318,255
$ 4,157,062
$ 25,133,973
$198
$121
$
841
$2,948
Column (b)
Represents the total compensation reported for our CEO, Jayshree Ullal, in the Summary Compensation Table for
each listed year. Ms. Ullal served as our CEO (PEO) for each year presented.
Column (c)
Represents the amount of CAP for a particular year, as computed in accordance with SEC rules. The dollar amounts
do not reflect the actual amounts of compensation paid to our CEO during the applicable year.
To calculate CAP, the following amounts were deducted from and added to the “Total” compensation amount for the
CEO reflected in each year’s Summary Compensation Table as follows:
2025
Summary Compensation Table Total
$ 2,872,145
Subtract Grant Date Fair Value of Option Awards and Stock Awards Granted in Fiscal Year
($ 2,262,785)
Add Fair Value at Fiscal Year-End of Outstanding and Unvested Option Awards and Stock
Awards Granted in Fiscal Year
$ 5,401,581
Add Change in Fair Value of Outstanding and Unvested Option Awards and Stock Awards
Granted in Prior Fiscal Years
$ 18,556,566
Add Fair Value at Vesting of Option Awards and Stock Awards Granted in Fiscal Year That
Vested During Fiscal Year
$
—
Add Change in Fair Value as of Vesting Date of Option Awards and Stock Awards Granted in
Prior Fiscal Years for Which Applicable Vesting Conditions Were Satisfied During Fiscal Year
$ 1,620,571
Subtract Fair Value as of Prior Fiscal Year-End of Option Awards and Stock Awards Granted in
Prior Fiscal Years That Failed to Meet Applicable Vesting Conditions During Fiscal Year
$
—
Add Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise
Reflected in Fair Value or Total Compensation
$
—
Compensation Actually Paid $ 26,188,077
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Note that we have not reported any amounts in our Summary Compensation Table with respect to “Change in
Pension and Nonqualified Deferred Compensation” and, accordingly, the adjustments with respect to such items
prescribed by the pay-versus- performance rules are not relevant to our analysis and no adjustments have been
made.
For purposes of calculating CAP, the fair value of equity awards is calculated in accordance with Financial
Accounting Standards Board Accounting Standards Codification Topic 718 (FASB ASC Topic 718) using consistent
assumption methodologies used to calculate the grant date fair value of awards, and for awards subject to
performance-based vesting conditions, based on the probable outcome of such performance-based vesting
conditions as of the last day of the fiscal year.
Column (d)
Represents the average of the total compensation reported for our non-PEO NEOs in the Summary Compensation
Table for each listed year. The non-PEO NEOs in each year were as follows:
2025: Chantelle Breithaupt; Kenneth Duda; Todd Nightingale; Marc Taxay
2024: Chantelle Breithaupt; Ita Brennan; Kenneth Duda; John McCool; Anshul Sadana; Marc Taxay
2023: Ita Brennan; Kenneth Duda; Anshul Sadana; Marc Taxay
2022: Ita Brennan; Kenneth Duda; Anshul Sadana; Marc Taxay
2021: Ita Brennan; Kenneth Duda; Anshul Sadana; Marc Taxay
Column (e)
Represents the average amount of CAP for a particular Covered Year, as computed in accordance with SEC rules, to
our non-PEO NEOs. The dollar amounts do not reflect the actual amounts of compensation paid to our non-PEO
NEOs during the applicable year.
To calculate the average CAP payable to our non-PEO NEOs, the following amounts were deducted from and added
to the “Total” compensation amount for such non-PEO NEOs reflected in each year’s Summary Compensation Table
as follows:
2025
Summary Compensation Table Total
$ 17,105,036
Subtract Grant Date Fair Value of Option Awards and Stock Awards Granted in Fiscal Year
($ 16,711,162)
Add Fair Value at Fiscal Year-End of Outstanding and Unvested Option Awards and Stock
Awards Granted in Fiscal Year
$ 22,070,693
Add Change in Fair Value of Outstanding and Unvested Option Awards and Stock Awards
Granted in Prior Fiscal Years
$
3,194,331
Add Fair Value at Vesting of Option Awards and Stock Awards Granted in Fiscal Year That
Vested During Fiscal Year
$
—
Add Change in Fair Value as of Vesting Date of Option Awards and Stock Awards Granted in
Prior Fiscal Years for Which Applicable Vesting Conditions Were Satisfied During Fiscal Year
($
422,584)
Subtract Fair Value as of Prior Fiscal Year-End of Option Awards and Stock Awards Granted
in Prior Fiscal Years That Failed to Meet Applicable Vesting Conditions During Fiscal Year
$
—
Add Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise
Reflected in Fair Value or Total Compensation
$
—
Compensation Actually Paid $
25,236,315
The assumptions used for determining the fair values shown in this table are materially consistent with those
described in the note regarding Column (c).
Column (f)
Total shareholder return (“TSR”) is calculated by assuming that a $100 investment was made on the day prior to the
first fiscal year reported below and reinvesting all dividends until the last day of each reported fiscal year.
Because listed fiscal years are presented in the table in reverse chronological order (from top to bottom), the table
should be read from bottom to top for purposes of understanding cumulative returns over time.
2026 PROXY STATEMENT
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Column (g)
The peer group utilized in the table above is the NYSE Composite Index, as used in the company’s performance
graph in our annual report. For each listed fiscal year, the peer group cumulative TSR was calculated based on a
deemed fixed investment of $100 in the index made on the day prior to the first fiscal year reported below and
reinvesting all dividends until the last day of each reported fiscal year.
Column (h)
The dollar amounts reported are the Company’s net income reflected in the Company’s audited financial statements.
Column (i)
In the Company’s assessment, revenue is the financial performance measure that is the most important financial
performance measure (other than total shareholder return and net income) used by the company in 2025 to link
compensation actually paid to performance. The dollar amounts reported are the Company’s gross revenues (in
millions) as reflected in the Company’s audited financial statements.
TABULAR LIST OF PERFORMANCE MEASURES
The following table identifies the most important financial performance measures used by our Compensation
Committee to link the “compensation actually paid” to our CEO and other NEOs in 2025, calculated in accordance
with SEC regulations, to company performance. The role of each of these performance measures on our NEOs’
compensation is discussed in the CD&A.
Most Important Performance Measures
Revenue
Non-GAAP Operating Income
Non-GAAP Gross Margin
Compound Annual Growth Rate of Revenue
DESCRIPTION OF RELATIONSHIPS BETWEEN COMPENSATION ACTUALLY PAID AND PERFORMANCE
As discussed further in our CD&A, our compensation structure recognizes and rewards individual performance and
contributions to our success, allowing us to attract, retain, and motivate talented executives with the skills and
abilities needed to drive our desired business results, while creating long-term value for our stockholders.
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The graphs below describe, in a manner compliant with the relevant SEC rules, the relationship between
Compensation Actually Paid and the specific performance measures shown.
Compensation Actually Paid Versus Cumulative TSR
$800
$400
$700
$300
$600
$200
$500
$100
$0
$0
$10
$20
$30
$40
$50
$60
$70
-$10
FY 2021
Arista Networks CAP vs TSR
FY 2022
FY 2023
FY 2025
FY 2024
Compensation Actually Paid ($M)
Value of $100 Investment from 12/31/2020
$608
$721
PEO CAP ($M)
Avg NEO CAP ($M)
ANET TSR
NYSE Composite Total Return TSR
$198
$121
$109
$124
$141
$163
$167
$324
Company TSR vs. Peer Group Cumulative TSR
$0
$100
$200
$300
$400
$500
$600
$700
$800
Value of $100 Investment from 12/31/2020
Company TSR vs. Peer Group Cumulative TSR
$167
$324
$608
$721
$124
$162
FY 2021
FY 2023
FY 2022
FY 2025
FY 2024
ANET TSR
NYSE Composite Total Return TSR
$121
$198
$109
$141
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Compensation Actually Paid Versus Net Income
PEO CAP ($M)
Avg NEO CAP ($M)
Net Income ($M)
-$10
$0
$10
$20
$30
$40
$50
$60
$70
Arista Networks CAP vs Net Income
$500
$1,000
$1,500
$2,000
$4,000
$3,500
$3,000
$2,500
Compensation Actually Paid ($M)
Net Income ($M)
FY 2021
FY 2022
FY 2023
FY 2025
FY 2024
$841
$1,352
$2,087
$2,852
$3,511
Compensation Actually Paid Versus Revenue
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
$9,000
$10,000
-$10
$0
$10
$20
$30
$40
$50
$60
$70
FY 2021
Revenue ($ in Millions)
Compensation Actually Paid ($M)
Arista Networks CAP vs Revenue ($ in Millions)
PEO CAP ($M) - Ullal, Jayshree
Avg NEO CAP ($M)
Revenue ($ in Millions)
FY 2025
FY 2024
FY 2023
FY 2022
$2,948
$4,381
$5,860
$7,003
$9,006
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Equity Compensation Plan Information
The following table summarizes our equity compensation plan information as of December 31, 2025. Information is
included for equity compensation plans approved by our stockholders and equity compensation plans not approved
by our stockholders. We will not grant equity awards in the future under any of the equity compensation plans not
approved by our stockholders included in the table below.
Plan Category
(a) Number of
Securities to be Issued
Upon Exercise of
Outstanding Options,
Warrants and Rights
(b) Weighted
Average
Exercise Price of
Outstanding Options,
Warrants and
Rights
(c) Number of
Securities Remaining
Available for Future
Issuance Under Equity
Compensation Plans
(Excluding Securities
Reflected in Column
(a))
Equity compensation plans
approved by stockholders
28,856,602(1)
$12.932(2)
149,141,940(3)
Equity compensation plans not
approved by stockholders
—
—
—
Total
28,856,602
$12.932
149,141,940
(1) Includes 789,882 shares underlying stock options and 28,066,720 shares of restricted stock units.
(2) The weighted average exercise price is calculated based solely on outstanding stock options.
(3) Includes the following plans: The 2014 Plan and Arista Networks, Inc. 2014 Employee Stock Purchase Plan (“ESPP”). Our
ESPP provides that on the first day of each fiscal year beginning in 2015 and ending in (and including) 2034, the number of
shares available for issuance thereunder is automatically increased by a number equal to the least of (i) 40,000,000 shares, (ii)
1% of the outstanding shares of our common stock on the first day of such year, or (iii) such other amount as our board of
directors may determine. No shares were added to the ESPP in 2025.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the beneficial ownership of our common stock as of
April 2, 2026 for:
•
each of our directors and nominees for director;
•
each of our Named Executive Officers;
•
all of our current directors and executive officers as
a group; and
•
each person or group, who beneficially owned
more than 5% of our common stock.
We have determined beneficial ownership in accordance with the rules of the SEC, and thus it represents sole or
shared voting or investment power with respect to our securities. Unless otherwise indicated below, to our
knowledge, the persons and entities named in the table have sole voting and sole investment power with respect to
all shares that they beneficially owned, subject to community property laws where applicable.
We have based our calculation of the percentage of beneficial ownership on 1,259,169,438 shares of our common
stock outstanding as of April 2, 2026. We have deemed shares of our common stock subject to stock options that
are currently exercisable or exercisable within 60 days of April 2, 2026 and RSUs that vest within 60 days of April 2,
2026, which are subject to vesting conditions expected to occur to be outstanding and to be beneficially owned by
the person holding the stock option for the purpose of computing the percentage ownership of that person. We did
not deem these shares outstanding, however, for the purpose of computing the percentage ownership of any other
person.
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Unless otherwise indicated, the address of each beneficial owner listed in the table below is c/o Arista Networks, Inc.,
5453 Great America Parkway, Santa Clara, California 95054. The information provided in the table is based on our
records, information filed with the SEC and information provided to us, except where otherwise noted.
Name of Beneficial Owner
Number of
Shares
Beneficially
Owned
Percentage of
Shares
Beneficially
Owned
5% Stockholders:
The Bechtolsheim Family Trust(1)
183,799,896
14.6%
BlackRock, Inc.(2)
73,684,608
5.9%
Named Executive Officers and Directors:
Jayshree Ullal(3)
29,300,817
2.3%
Chantelle Breithaupt(4)
81,890
*
Kenneth Duda(5)
3,519,006
*
Todd Nightingale(6)
6,128
*
Marc Taxay(7)
—
*
Kelly Battles(8)
10,500
*
Lewis Chew(9)
31,232
*
Charles Giancarlo(10)
217,304
*
Greg Lavender(11)
4,069
*
Daniel Scheinman(12)
158,192
*
Mark B. Templeton(13)
133,072
*
Yvonne Wassenaar(14)
12,150
*
All current executive officers and directors as a group (11 persons)(15)
33,474,360
2.7%
*
Represents beneficial ownership of less than one percent (1%) of the outstanding shares of our common stock.
(1) Includes 183,228,048 shares held by the Bechtolsheim Family Trust for which trust Mr. Bechtolsheim serves as trustee.
Mr. Bechtolsheim may be deemed to exercise sole voting and investment power over such shares held by the trust. Also
includes 413,848 shares held directly by Mr. Bechtolsheim and 158,000 shares issuable within 60 days of April 2, 2026 upon
the exercise of outstanding exercisable stock options held by Mr. Bechtolsheim.
(2) Based solely upon a Schedule 13G/A filed with the SEC on January 29, 2024 by BlackRock, Inc. (“BlackRock”) reporting
beneficial ownership as of December 31, 2023. BlackRock reported sole voting power with respect to 66,141,496 shares and
sole dispositive power with respect to 73,684,608 shares. The address for BlackRock is 50 Hudson Yards, New York,
NY 10001.
(3) Includes 18,312,010 shares held by Jayshree Ullal and Vijay Ullal as trustees of the 2000 Ullal Trust dated February 15, 2000.
Mr. and Ms. Ullal may be deemed to be the beneficial owner of the shares and to have shared voting and investment control
over such shares. Also includes 10,826,414 shares held in trusts for Ms. Ullal’s family members for which trusts Ms. Ullal
serves as trustee or co-trustee. Ms. Ullal may be deemed to exercise sole voting and investment control over shares held in
each of the trusts. Also includes 122,729 shares held directly by Ms. Ullal and 39,664 shares issuable within 60 days of
April 2, 2026 upon vesting of restricted stock units or the exercise of outstanding exercisable options held by Ms. Ullal.
(4) Includes 69,624 shares held directly by Ms. Breithaupt and 12,266 shares issuable within 60 days of April 2, 2026 upon
vesting of restricted stock units held by Ms. Breithaupt.
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(5) Includes 201,134 shares held by Kenneth Duda and Jennifer Duda as trustees of the Kenneth Duda and Jennifer Duda Family
Trust dated September 24, 2004. Also includes 702,147 shares held in grantor retained annuity trusts of which Mr. Duda is
trustee, 702,147 shares held in grantor retained annuity trusts of which Mr. Duda’s spouse is trustee, 1,095,168 shares held
in trusts for Mr. Duda’s children for which trusts Mr. Duda serves as trustee and 502,400 shares held in a 501(c) foundation
for which Mr. Duda and his spouse serve as co-trustees. Mr. and Ms. Duda may be deemed to be the beneficial owners of all
of the foregoing shares and to have shared voting and investment control over such shares. Also includes 12,976 shares held
directly by Mr. Duda and 303,034 shares issuable within 60 days of April 2, 2026 upon vesting of restricted stock units or the
exercise of outstanding exercisable options held by Mr. Duda.
(6) Includes 6,128 shares held directly by Mr. Nightingale.
(7) Mr. Taxay resigned from his position as Senior Vice President, General Counsel effective May 7, 2025. The information in this
table is based solely upon a Schedule 4 filed with the SEC on March 5, 2025, by us on Mr. Taxay’s behalf.
(8) Includes 9,529 shares held directly by Ms. Battles and 971 shares issuable within 60 days of April 2, 2026 upon vesting of
restricted stock units held by Ms. Battles.
(9) Includes 30,261 shares held directly by Mr. Chew and 971 shares issuable within 60 days of April 2, 2026 upon vesting of
restricted stock held by Mr. Chew.
(10) Includes 216,333 shares held by Mr. Giancarlo as trustee of the Giancarlo Family Trust UAD 11/02/98. Mr. Giancarlo may be
deemed to be the beneficial owner of the shares and to have voting and investment power over such shares. Also includes
971 shares issuable within 60 days of April 2, 2026 upon vesting of restricted stock units held by Mr. Giancarlo.
(11) Includes 3,262 shares held directly by Dr. Lavender and 807 shares issuable within 60 days of April 2, 2026 upon vesting of
restricted stock held by Dr. Lavender.
(12) Includes 157,221 shares held directly by Mr. Scheinman and 971 shares issuable within 60 days of April 2, 2026 upon vesting
of restricted stock held by Mr. Scheinman.
(13) Includes 75,200 shares held in a trust of which Mr. Templeton’s spouse serves as trustee, 56,901 shares held directly by
Mr. Templeton and 971 shares issuable within 60 days of April 2, 2026 upon vesting of restricted stock units held by
Mr. Templeton.
(14) Includes 11,179 shares held directly by Ms. Wassenaar and 971 shares issuable within 60 days of April 2, 2026 upon vesting
of restricted stock units held by Ms. Wassenaar.
(15) Includes 33,112,763 shares held directly, as trustee or as co-trustee, and 361,597 shares issuable within 60 days of April 2,
2026 upon vesting of options and restricted stock units or the early exercise of outstanding options.
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RELATED PERSON TRANSACTIONS
In addition to the compensation arrangements, including employment, termination of employment and change in
control arrangements discussed above in the sections entitled “Board of Directors and Corporate Governance —
Director Compensation” and “Executive Compensation,” we describe below transactions and series of similar
transactions, since the beginning of our last fiscal year, to which we were a party or will be a party, in which:
•
the amounts involved exceeded or will exceed
$120,000; and
•
any of our directors, nominees for director,
executive officers or holders of more than 5% of
our outstanding capital stock, or any immediate
family member of, or person sharing the household
with, any of these individuals or entities, had or will
have a direct or indirect material interest.
Other than as described below, there has not been, nor is there any currently proposed, transactions or series of
similar transactions to which we have been or will be a party.
We have granted equity awards to our Named Executive Officers and certain of our directors. See the section entitled
“Executive Compensation — Outstanding Equity Awards at 2025 Fiscal Year-End” for a description of these awards.
In the ordinary course of business, we enter into offer letters and employment agreements with our executive officers.
We have also entered into indemnification agreements with each of our directors and officers. The indemnification
agreements and our certificate of incorporation and amended and restated bylaws require us to indemnify our
directors and officers to the fullest extent permitted by Delaware law.
Other than as described above under this section entitled “Related Person Transactions,” since January 1, 2025, we
have not entered into any transactions, nor are there any currently proposed transactions, between us and a related
party where the amount involved exceeds, or would exceed, $120,000, and in which any related person had or will
have a direct or indirect material interest. We believe the terms of the transactions described above were comparable
to terms we could have obtained in arm’s-length dealings with unrelated third parties.
Policies and Procedures for Related Person Transactions
Our Audit Committee has the primary responsibility for reviewing and approving or ratifying related party transactions.
We have a formal written policy providing that a related party transaction is any transaction between us and an
executive officer, director, nominee for director, beneficial owner of more than 5% of any class of our capital stock, or
any immediate family member or person sharing the household of any of the foregoing persons, in which such party
has a direct or indirect material interest and the aggregate amount involved exceeds $120,000. In reviewing any
related party transaction, our Audit Committee is to consider the relevant facts and circumstances available to our
Audit Committee, including, whether the transaction is on terms no less favorable than the terms that could have
been reached with an unrelated third party, and the extent of the related party’s interest in the transaction. Our Audit
Committee has determined that certain transactions will be deemed to be pre-approved by our Audit Committee,
including certain executive officer and director compensation, transactions with another company at which a related
party’s only relationship is as a director or beneficial owner of less than 10% of that company’s shares (subject to a
one-time initial approval by the Audit Committee), transactions where a related party’s interest arises solely from the
ownership of our common stock and all holders of our common stock received the same benefit on a pro rata basis,
and transactions available to all employees generally.
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OTHER MATTERS
Householding
We have adopted a procedure called “householding,” which the SEC has approved. Under this procedure,
stockholders of record who have the same address and last name and have not previously requested electronic
delivery of proxy materials will receive a single envelope containing the Notices for all stockholders having that
address. The Notice for each stockholder will include that stockholder’s unique control number needed to vote his or
her shares. This procedure reduces our printing costs, mailing costs, and fees. Upon written or oral request, we will
deliver promptly a separate copy of the Notice and, if applicable, our proxy materials to any stockholder at a shared
address to which we delivered a single copy of any of these materials. To receive a separate copy, or, if a
stockholder is receiving multiple copies, to request that we only send a single copy of the Notice and, if applicable,
our proxy materials, such stockholder may contact us at the following phone number (408) 547-5500 or address:
Arista Networks, Inc.
Attention: Investor Relations
5453 Great America Parkway
Santa Clara, California 95054
Stockholders who beneficially own shares of our common stock held in street name may contact their brokerage
firm, bank, broker-dealer or other similar organization to request information about householding.
Stockholder Proposals
Stockholders may present proposals for inclusion in our proxy statement and for consideration at the next annual
meeting of stockholders by submitting their proposals in writing to our Secretary in a timely manner. For a
stockholder proposal to be considered for inclusion in our proxy statement for our 2027 annual meeting of
stockholders, our Secretary must receive the written proposal at our principal executive offices no later than the close
of business on December 17, 2026. In addition, stockholder proposals must comply with the requirements of Rule
14a-8 under the Exchange Act regarding the inclusion of stockholder proposals in Company-sponsored proxy
materials. Stockholder proposals should be addressed to:
Arista Networks, Inc.
Attention: Secretary
5453 Great America Parkway
Santa Clara, California 95054
Our amended and restated bylaws also establish an advance notice procedure for stockholders who wish to present
a proposal before an annual meeting of stockholders but do not intend for the proposal to be included in our proxy
statement. Our amended and restated bylaws provide that the only business that may be conducted at an annual
meeting is business that is (i) specified in our proxy materials with respect to such meeting, (ii) otherwise properly
brought before the annual meeting by or at the direction of our board of directors, or (iii) properly brought before the
annual meeting by a stockholder of record entitled to vote at the annual meeting who has delivered timely written
notice to our Secretary, which notice must contain the information specified in our amended and restated bylaws. To
be timely for our 2027 annual meeting of stockholders, our Secretary must receive the written notice at our principal
executive offices:
•
not earlier than the close of business on January 31, 2027; and
•
not later than the close of business on March 2, 2027.
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NOMINATION OF DIRECTOR CANDIDATES
Stockholders may recommend director candidates for consideration by our Nominating and Corporate Governance
Committee. Any such recommendations should include the nominee’s name and qualifications for membership on
our board of directors and should be directed to our Secretary at the address set forth above. For additional
information regarding stockholder recommendations for director candidates, see the section entitled “Board of
Directors and Corporate Governance — Stockholder Recommendations for Nominations to the Board of Directors.”
In addition, our amended and restated bylaws permit stockholders to nominate directors for election at an annual
meeting of stockholders. To nominate a director, the stockholder must provide the information required by our
amended and restated bylaws. In addition, the stockholder must give timely notice to our Secretary in accordance
with our amended and restated bylaws, which, in general, require that the notice be received by our Secretary within
the time period described above under the section entitled “Other Matters — Stockholder Proposals” for stockholder
proposals that are not intended to be included in a proxy statement.
Stockholders who intend to solicit proxies in support of director nominees other than our nominees must also provide
notice that sets forth the information required by Rule 14a-19 of the Exchange Act no later than March 30, 2027.
Please note that the notice requirement under Rule 14a-19 is in addition to the applicable notice requirements under
the advance notice provisions of our amended and restated bylaws described above.
Availability of Bylaws
A copy of our bylaws may be obtained by accessing our filings on the SEC’s website at www.sec.gov. You may also
contact our Secretary at our principal executive offices for a copy of the relevant bylaw provisions regarding the
requirements for making stockholder proposals and nominating director candidates.
Fiscal Year 2025 Annual Report and SEC Filings
Our financial statements for our fiscal year ended December 31, 2025 are included in our Annual Report on Form
10-K, which we will make available to stockholders at the same time as this proxy statement. This proxy statement
and our annual report are posted on the Financial Information section of our website at http://investors.arista.com
and are available from the SEC at its website at www.sec.gov. You may also obtain a copy of our annual report
without charge by sending a written request to Arista Networks, Inc., Attention: Investor Relations, 5453 Great
America Parkway, Santa Clara, California 95054.
Forward-Looking Statements
This proxy statement, along with the accompanying stockholder letter, contains forward-looking statements within
the meaning of Section 27A of the Securities Act, Section 21E of the Exchange Act and the Private Securities
Litigation Reform Act of 1995. All statements relating to events or results that may occur in the future, including, but
not limited to, statements regarding our future financial performance, new products and technology we will bring to
the market, our market opportunity, our future growth, our future strategy, our expectations regarding the features of
our compensation and stockholder engagement programs and underlying assumptions of any of the foregoing are
forward-looking statements.
When used in this proxy statement, terms such as “anticipates,” “believes,” “continue,” “could,” “estimates,”
“expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “should” or “will” or the negative of those terms and
similar expressions that convey uncertainty of future events or outcomes are intended to identify forward-looking
statements. These forward-looking statements are subject to a number of risks, uncertainties and assumptions and
are described in our reports and filings with the SEC, including, without limitation, our Annual Report on Form 10-K
for the fiscal year ended December 31, 2025, under the section entitled “Risk Factors.” Moreover, we operate in a
very competitive and rapidly changing environment, and new risks emerge from time to time. It is not possible for our
management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which
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any factor, or combination of factors, may cause actual results to differ materially from those contained in any
forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking
events and circumstances discussed in this proxy statement may not occur and actual results could differ materially
and adversely from those anticipated or implied in the forward-looking statements. You should not rely upon forward-
looking statements as predictions of future events.
Each forward-looking statement contained in this proxy statement is specifically qualified in its entirety by the
aforementioned factors. Readers are cautioned not to place undue reliance on these forward-looking statements,
which apply only as of the date of this proxy statement. Unless required by law, we do not intend, and undertake no
obligation, to update or publicly release any revision to any forward-looking statements, whether as a result of the
receipt of new information, the occurrence of subsequent events, the change of circumstance or otherwise.
* * *
The board of directors does not know of any other matters to be presented at the Annual Meeting. If any additional
matters are properly presented at the Annual Meeting, the persons named in the enclosed proxy card will have
discretion to vote the shares of our common stock they represent in accordance with their own judgment on such
matters.
It is important that your shares of our common stock be represented at the Annual Meeting, regardless of the
number of shares that you hold. You are, therefore, urged to vote by telephone or by using the Internet as instructed
on the enclosed proxy card or execute and return, at your earliest convenience, the enclosed proxy card in the
envelope that has also been provided.
THE BOARD OF DIRECTORS
Santa Clara, California
April 16, 2026
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APPENDIX A
Reconciliation of Selected GAAP to Non-GAAP Financial
Measures
The following table reconciles our financial results reported in accordance with accounting principles generally
accepted in the United States (“GAAP”) to non-GAAP financial results (in millions).
Twelve Months Ended
December 31,
2025
2024
GAAP gross profit
$5,768.7
$4,491.3
GAAP gross margin
64.1%
64.1%
Stock-based compensation expense
26.9
15.8
Intangible asset amortization
19.8
16.8
Non-GAAP gross profit
$5,815.4
$4,523.9
Non-GAAP gross margin
64.6%
64.6%
GAAP income from operations
$3,856.1
$2,944.6
GAAP operating margin
42.8%
42.0%
Stock-based compensation expense
439.2
355.4
Intangible asset amortization
41.7
26.8
Non-GAAP income from operations
$4,337.0
$3,326.8
Non-GAAP operating margin
48.2%
47.5%
NON-GAAP EXECUTIVE INCENTIVE PLAN (“INCENTIVE PLAN”) PERFORMANCE METRICS IN
COMPENSATION DISCUSSION AND ANALYSIS
We use certain non-GAAP financial performance metrics in our Incentive Plan, as described on pages 58 and 64.
2026 PROXY STATEMENT
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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(Mark One)
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended December 31, 2025
Or
☐
TRANS
R
ITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the transition period from
to
Commission file number: 001-36468
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ARISTA NETWORKS, INC.
(Exact name of registrant as specified in its charter)
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Delaware
20-1751121
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification Number)
5453 Great America Parkwa
k
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Santa Clara, Califor
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nia 95054
(Address of principal executive offi
f ces)
(408) 547-5500
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, $0.0001 par value
ANET
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defin
f ed in Rule 405 of the Securities Act.
Yes ☒
No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.
Yes ☐No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be fil
f ed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for
f
such shorter period that the registrant was required to file
f
such reports), and (2) has been subj
u ect to such filing requirements for
f
the past
90 days.
Yes ☒No ☐
Indicate by check mark whether the registrant has submitted electronically every I
r
nteractive Data File required to be subm
u
itted pursuant to Rul
R e 405 of Regulation
S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to subm
u
it such files).
Yes ☒
No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging
growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the
Exchange Act.
Large accelerated filer
☒
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
f
complying with any new or
revised fin
f ancial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has file
f
d a report on and attestation to its management's assessment of the effe
f ctiveness of its internal control over
financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered publ
u ic accounting firm that prepared or issued its audit report.
☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filin
f
g
reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any
of the registrant’s executive officers dur
d
ing the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rul
R e 12b-2 of the Exchange Act).
Yes ☐No ☒
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant was app
a
roximately $105.6 billion as of June 30,
2025 (the last busines d
s d y
ay
f
of hthe r g
egistrant's most recently
tly completed seco d
nd fifisc lal quarte )r) ba
b sed on the closing price of the registrant’s common stock on the New
York Stock Exchange on such date. Shares held by persons who may be deemed affi
f liates have been excluded. This determination of affiliate status
t
is not necessarily a
conclusive determination for
f
other purpo
r
ses.
On Februa
r
ry 10, 2026, 1,256,537,906 shares of the registrant’s common stock were outstanding.
DOCUMENTS INCORPORAT
R
ED BY REFERENCE
Portions of the registrant’s defin
f itive Proxy Statement relating to its 2026 Annual Meeting of Stockholders to be file
f
d pursuant to Regulation 14A within 120 days
afte
f r the registrant’s fiscal year end of December 31, 2025 are incorpo
r
rated by refer
f ence into Part III of this Annual Report on Form 10-K.
ARISTA NETWORKS, INC.
TABLE OF CONTENTS
Page
PART I
Item 1.
Business
1
Item 1A.
Risk Factors
12
Item 1B.
Unresolved Staff Comments
47
Item 1C.
Cybersecurity
y
y
47
Item 2.
Properties
p
48
Item 3.
Legal Proceedings
g
g
48
Item 4.
Mine Safety Disclosures
y
48
PART II
Item 5.
Market for
f
Registrant's Common Equi
q ty, Related Stockholder Matters and Issuer
g
q
y,
Purchases of Equity Securities
q
y
49
Item 6.
[Reserved]
[
]
51
Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
g
y
Operations
p
52
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
Q
Q
63
Item 8.
Financial Statements and Supplementary Data
pp
y
64
Item 9.
Change in and Disagreements With Accountants on Accounting and Financial
g
g
g
Disclosure
95
Item 9A.
Controls and Procedur
d
es
95
Item 9B.
Other Infor
f
mation
96
Item 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
g
g
g
p
96
PART III
Item 10.
Directors, Executive Offic
f ers, and Corpor
r
ate Governance
,
,
p
97
Item 11.
Executive Compensation
p
98
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related
y
p
g
Stockholder Matters
98
Item 13.
Certain Relationships and Related Transactions and Director Independence
p
p
98
Item 14.
Principal Accountant Fees and Services
p
98
PART IV
Item 15.
Exhibits and Financial Statement Schedules
99
Item 16.
Form 10-K Summary
102
Signatur
t
es
g
103
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K, including the sections entitled “Business,” “Risk Factors,” and “Management’s
Discussion and Analysis of Financial Condition and Results of Operations,” contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, which statements involve subs
u
tantial risks and uncertainties. The words “believe,” “may,” “will,” “potentially,”
"likely" “estimate,” “continue,” “anticipate,” “intend,” “could,” “would,” "should", “project,” “plan,” “predict,” “expect”, the
negative of any of these words and similar expressions that convey uncertainty of future events or outcomes are intended to
identify f
f
or
f
ward-looking statements.
These for
f
ward-looking statements include, but are not limited to, statements concerning the fol
f lowing:
•
our ability to maintain an adequate rate of revenue growth and our future financial performance, including our
expectations regarding our revenue, cost of revenue, gross profit
f
or gross margin and operating expenses;
•
our belief that the networking market is rapi
a dly evolving and has a significant potential opportunity for growth;
•
our business plan and our ability to effe
f ctively manage our growth;
•
our ability to expand our leadership position in the networking industry a
r
nd to develop new products and expand our
business into existing and new markets such as the artific
f ial intelligence ("AI"), cloud, data center networking, routing,
campus, softw
f
are and services;
•
our ability to satisfy the requirements for
f
networking solutions and to successful
f ly anticipate technological shifts and
market needs, including the impact of AI, innovate new products, rapidly develop new featur
t
es and appl
a
ications, and
bring them to market in a timely manner;
•
our expectation that we will continue to derive subs
u
tantially all of our product revenue from sales of our switching and
routing platfor
f
ms for the foreseeable future;
•
our ability to fulfill
f
our customers’ orders despite suppl
u
y chain delays, issues with access to key commodities or
technologies or geopolitical events that impact our manufact
f
ur
t
ers or their suppl
u
iers such as the escalating tariff a
f
nd
non-tariff-related international trade measures, the Russia-Ukraine conflic
f
ts or the impact of global pandemics;
•
our expectations related to our inventory a
r
nd purchase commitments;
•
the potential impact of tightening supply conditions, including in the memory m
r
arket;
•
our ability to identify,
f
complete and realize the benefits of recent and fut
f ur
t
e acquisitions of, o
f
r investments in,
complementary c
r
ompanies, products, services or technologies;
•
costs associated with defending intellectual property infri
f ngement and other claims and legal proceedings, and the
potential outcomes of such disputes, such as any claims discussed in “Legal Proceedings”;
•
our ability to retain and increase sales to existing customers and attract new customers, including large customers;
•
our ability to expand our business domestically and internationally;
•
the effe
f cts of increased competition in our market and our ability to compete effectively;
•
the budgeting cycles and purchasing practices of customers, including large customers who may receive lower pricing
terms due
d
to volume discounts or who may elect to re-assign allocations to multiple vendors based upon specific
f
network roles or projects;
•
the growth and buying patterns of our large customers and resulting volatility in our customer concentration in which
large bulk purchases may or may not occur in certain quarters or may be deferred into fut
f ur
t
e quarters or cancelled due
to adju
d stments in their capital expenditure forecasts;
•
the deferral or cancellation of orders by customers, warranty retur
t
ns or delays in acceptance of our products;
•
our ability to fur
f
ther penetrate our existing customer base and sell more complex and higher-performance
config
f urations of our products;
•
our belief that increasing channel leverage will extend and improve our engagement with a broad set of customers;
•
our plans to continue to expand our sales for
f
ce, marketing activities and relationships with channel, technology and
system-level partners;
•
our ability to scale our operational and manufact
f
ur
t
ing capacity;
•
our plans to invest in our research and development;
•
our ability to timely and effectively scale and adapt
a
our existing technology;
•
the potential of our produc
d
ts, including the benefits
f
realized by our customers in their use of our products and services
including lower total cost of ownershihip;
•
our b
abili
ility t d
o detec b
t bre
h
aches of our y
cybersecurity systems or other security b
y breaches;
•
the effe
f cts of cyclical trends on our results of operations;
•
our relationships with and expectations concerning third parties, including, but not limited to our large customers,
suppl
u
iers, distributors, systems integrators, channel partners and value-added resellers;
•
the attraction and retention of qualified employees and key personnel;
•
our ability to maintain, protect and enhance our brand and intellectual property;
•
economic and industry t
r
rends;
•
estimates and estimate methodologies used in preparing our financial statements;
•
fut
f ur
t
e trading prices of our common stock;
•
our belief that we have adequately reserved for uncertain tax positions;
•
the impact of global economic and political conditions that introduce instabi
a lity into the U.S. and o hther economies;
•
the impact of global and domestic tax refor
f
m;
•
the impact of tariffs or other changes in international trade policies imposed by the U.S. on goods from other countries
and tariffs
f
imposed by other countries on U.S. goods;
•
our belief that we will not pay any cash dividends in the for
f
eseeable future; and
•
our belief that our existing cash and cash equivalents together with cash flo
f w fro
f
m operations will be sufficient to meet
our working capital requirements and our growth strategies for the foreseeable future.
These for
f
ward-looking statements are subject to a number of risks, uncertainties and assumptions, including those
described in the section titled “Risk Factors” and elsewhere in this Annual Report on Form 10-K. Moreover, we operate in a
very competitive and rapi
a dly changing environment, and new risks emerge fro
f
m time to time. It is not possible for
f
our
management to predict all risks, nor can we assess the impact of all fact
f
ors on our business or the extent to which any factor, or
combination of fact
f
ors, may cause actual results to diffe
f r materially from those contained in any forward-looking statements we
may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this
Annual Report on Form 10-K may not occur and actua
t
l results could diffe
f r materially and adversely fro
f
m those anticipated or
implied in the forward-looking statements. You should not rely upon forward-looking statements as predictions of future
events.
The for
f
ward-looking statements made in this Annual Report on Form 10-K relate only to events as of the date on
which the statements are made. We undertake no obligation to upda
u
te any for
f
ward-looking statements made in this Annual
Report on Form 10-K to refle
f ct events or circumstances afte
f r the date of this Annual Report on Form 10-K or to refle
f ct new
information or the occurrence of unanticipated events, except as required by law. We may not actua
t
lly achieve the plans,
intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-
looking statements. Our forward-looking statements do not reflect the potential impact of any fut
f ur
t
e acquisitions, mergers,
dispositions, joint ventur
t
es or investments we may make.
PART I
Item 1. Business
In a world where data is increasingly a precious commodity and competitive diffe
f rentiator, Arista was founde
f
d to
enable our customers to access all their centers of data in the quickest, most reliabl
a e, and secure manner. Over the last two
decades, we have emerged as an industry l
r
eader, delivering data-driven, client-to-cloud networking-as-a-service. Our “Centers
of Data” strategy is a fundamental pivot from legacy networking approaches that create incongrue
r
nt silos to a unifie
f d, data-
driven approach in which the network is a service that interconnects four
f
primary d
r
omains: AI Centers, Data Centers, Campus
Centers, and WAN Centers. Anchored by Arista’s state-oriented Extensible Operating System (EOS) and Network Data Lake
(NetDL), our network-as-a-service platform delivers a seamless, consolidated networking experience regardless of data
location.
Our solutions are diffe
f rentiated because they:
•
offer uncompromising reliabi
a lity derived fro
f
m the foundation of robust quality assurance capabilities, and a
suite of automated diagnostics,
•
are based on advanced open and standards-based technology that avoids what is ofte
f n expensive vendor lock-
in, and
•
provide consistent real-time telemetry and intelligent automation to decrease the manual workload on the
operator.
This strategy and diffe
f rentiation have also allowed us to deliver our comprehensive suite of products, services, and
technologies to a global customer base segmented into three primary categories: Cloud and AI Titans, AI and Specialty
Providers, and Enterprise. Market research confir
f ms that we continue to be a leader in high-speed Ethernet switching.
Our Market Drivers and Products
Centers of Data Drive the World
1
In the modern competitive landscape
a
, the ability to access, manipulate, and leverage data is funda
f
mental to an
organization’s growth and viability. This is especially true in the era of Large Language Models (LLMs), agentic AI, and
physical AI, where data has evolved from a byproduct of operations into the primary engine of intelligence and autonomy.
Consequently, the network has matured beyond traditional "IT infrastructur
t
e" to become the spine or central nervous system. It
serves as the critical conduit through which data flo
f ws from cloud and edge environments to the AI models that drive decision-
making. This heightened dependency on real-time data movement underscores the necessity for a network architectur
t
e defin
f ed
by unprecedented scale, availabi
a lity, predictabl
a e performance, and open programmabi
a lity. Operational simplicity and robust
security are essential to ensure the business can compete in a world of massive, networked transactions.
Publ
u ic cloud titans and, more recently, AI Neocloud providers have been at the for
f
efro
f
nt of this evolution, pioneering
the development of large-scale data and AI centers to meet the growing demands of their users, including business customers.
These networks have become the benchmark for superior performance and efficiency of IT infrastructur
t
e at the lowest unit cost.
Enterprises and service providers worldwide are therefor
f
e adopting these hyperscale technologies and principles for
f
their own
network operations to achieve similar performance, operational efficiencies, and cost reductions.
Arista establ
a ished itself as a market leader with platforms, products, and people to enabl
a e some of these hyperscalers’
most consequential networks. Our network-as-a-service appr
a
oach now empowers customers of all sizes to seamlessly leverage
their data through offer
f ings spanning three key categories: Core (AI, Cloud, and Data Center Networking), Cognitive
Adja
d cencies (Campus and Routing), and Cognitive Networks (Software and Services). With world-class engineering expertise
and platfor
f
m innovation, our customers gain the predictabl
a e performance and operational simplicity required to tur
t
n data into a
sustainabl
a e competitive advantage in a modern, AI-driven world.
Networking at Scale for
f
the AI Center
The rapid expansion of generative, agentic, and physical AI computing and distributed applications is blurring the lines
between fro
f
ntend and backend AI, Cloud, and Data Centers. Modern workloads are both data- and compute-intensive and place
significant demands on the underlying network. For instance, a typical AI job involves large, sparse matrix math, distributed
across hundreds or thousands of AI accelerators (XPU, GPU, TPU, etc.) with intense computations for a period of time. This
type of workload requires a high-bandwidth, scalabl
a e, lossless, and power-efficient network, based on open standards, to
eliminate operational costs and complexities associated with proprietary approaches.
2
As a pioneer of leaf and spine networking for cloud and data centers, Arista’s "AI Center" now delivers a unified, data-
driven network architectur
t
e that integrates distinct connectivity layers to optimize time-to-first-jo
- b, AI job completion times,
and XPU utilization/effi
f ciency. This strategy addresses the massive bandwidth and traffic fid
f elity requirements of AI workloads
through three specific domains:
•
Scale Up: Currently dominated by proprietary technologies, this domain involves high-bandwidth, low-
latency interconnects linking multiple XPUs within a single rack. We believe Scale Up represents a future incremental
opportunity as the market shifts toward open standards like Ethernet for
f
Scale Up Networks (ESUN).
•
Scale Out: This network connects XPUs across multiple racks to support massive training or inferencing
clusters. The industry t
r
rend toward replacing legacy, proprietary approaches, such as Infin
f iBand, with Ethernet, as
defined by the Ultra Ethernet Consortium, creates an opportunity for us to gain share while enabling customers to scale
from thousands to a million XPUs and beyond.
•
Scale Across: Power and space constraints, along with the need for
f
AI inference closer to the edge, are
driving the need for distributed clusters spread across large geographic distances. Our Scale Across solutions deliver
the capabilities necessary to enable long-distance routed access while accounting for
f
factors such as packet loss and
delays, as well as data security on the wire.
The Arista Etherlink portfol
f io comprises a family of over twenty products designed to support the diverse range of AI
Scale Out and Scale Across use cases today and Scale Up in the future. Our portfol
f io of 800G switches, coupled with Arista's
EOS innovations such as Smart System Upgrades (SSU), AI Analyzer, and optimal load-balancing, offe
f rs compelling solutions
for contemporary A
r
I appl
a
ications and deployments. Arista also continues to be innovative in areas such as deep packet buffe
f r
architectur
t
es, virtual output
t
queuing, non-disrupt
r
ive upgr
u
ades, optics, reversible cooling, and overall system power effi
f ciency.
The Arista 7800R AI Spine, 7060 AI Leaf, a
f
nd the 7700R4 Distributed Etherlink Switch ("DES") are designed to address the
demanding scale and performance requirements of AI Scale Out, Scale Up and Scale Across networking.
Next Generation Campus and Routing
The traditional concept of a “campus” has been redefined in the post-pandemic world, and the boundaries between the
offi
f ce, home, teleworker, and user have converged. At the same time, the proliferation and sophistication of devices that
connect the campus, such as smart devices, security cameras, and the Internet of Things ("IoT"), have grown dramatically. The
3
challenge lies in successful
f ly transitioning the existing siloed campus into a data-driven, distributed campus with a common
operating model, while addressing the growing security and availability needs.
Arista’s cognitive campus portfol
f io was driven by customers seeking the same quality and operational efficiency
availabl
a e in the data center across their enterprise networks. We offer a robust set of solutions, ranging from modular and fix
f ed-
form-fact
f
or campus spine switches to Power-over-Ethernet ("PoE") leaf switches and Wi-Fi access points, all managed through
CloudVision®.
Recently, we also added the VeloCloud SD-WAN portfol
f io, which complements our wired and wireless campus
portfolio by enhancing the branch center by providing leading cloud-delivered SD-WAN s
A
olutions with integrated security.
This portfol
f io of solutions offe
f rs expanded choice and enhanced performance for our customers, enabling global WAN services
that seamlessly interconnect data centers and distributed campus offi
f ces.
Arista’s Cloud-Grade Routing platfor
f
ms, powered by EOS, combine high-performance routing, high port density, deep
buffers, integrated dense wavelength division multiplexing (DWDM), and wire-speed encrypt
r
ion. Our 7280R4 Universal Leaf
and 7500R3 and 7800R4 Universal Spine platfor
f
ms serve a variety of use cases, including high-speed multi-cloud connect,
Data Center Interconnect (DCI), controller-based traffi
f c engineering, peering, business VPNs, core routing, and secure
enterprise edge routing.
Software and Services: AI Ops, Management, Observability, Zero Trust Networking, and A-Care Services
The Arista EOS network architectur
t
e provides a foundational set of services for continuous streamed device state,
telemetry,
r
packet, flo
f w, alert, sensor, and third-party data into an aggregated Network Data Lake (“Arista NetDL™”). NetDL
makes these diverse datasets available via a single service endpoint, enhancing Arista and third-party appl
a
ications and enabl
a ing
customer-specific private clouds.
CloudVision is Arista’s modern, multi-domain AI Ops and management platfor
f
m that leverages cloud networking
principles to deliver a simplifie
f d end-to-end network operations experience for our Enterprise market. Unlike traditional
domain-specific
f
management solutions, CloudVision enabl
a es consistent, zero-touch network operations across data centers,
campus wired and wireless networks, routing interconnects, and multi-cloud networks, thus helping to break down the
complexity of siloed management approaches.
Arista AVA (autonomous virtua
t
l assist) is an agentic AI-enabl
a ed decision-suppor
u
t system that provides unprecedented
visibility and responsiveness for
f
network and security operations. It combines cloud scalability with the codified expertise of
real-world profes
f
sionals to proactively identify i
f
ssues such as unusual connectivity jitter, failing optics, a lack of disk space, or
network security threats, while reducing operational noise so teams can focus on the most impactful issues. AVA capa
a
bi
a lities
also expand to include automating provisioning changes and running network audits. With AVA agents, our goal is to alert
users abou
a
t potential network problems and pre-compute answers by anticipating the operator’s questions. We thus attempt to
significantly simplify n
f
etwork management for our customers and allow human operators to focus on high-level strategy and
innovation, rather than mundane network operations.
4
Zero trus
r
t architectur
t
es aim to mitigate the risks posed by cyber threats by eliminating the assumption that a device is
trus
r
ted simply because it is on the “internal” network. However, this is easier said than done, given today’s changing definition
of the network that spans campus, data center, cloud, and more. Adding multiple network security layers, such as fir
f ewalls,
network access control, and threat detection, among others, comes with tremendous cost, complexity, and brittleness, whereas
the benefit
f s are ofte
f n hard to quantify.
f
We offe
f r a comprehensive suite of security solutions that align with the Cybersecurity and Infra
f structur
t
e Security
Agency’s Zero Trus
r
t Matur
t
ity Model and help organizations accelerate toward optimal zero trust maturity. Moreover, these
network security controls can help address gaps in an organization’s zero trust posture across other domains such as identity,
devices, workloads, and data.
5
We have designed our customer suppor
u
t offerings, Arista A-Care Services, to deliver high levels of suppor
u
t to our
customers. Our global team of suppor
u
t engineers engages directly with client IT teams and is availabl
a e by email, phone, or
through our website.
We offe
f r multiple service options, allowing our customers to select the product replacement service level that best
meets their needs. We stock spare parts in over 200 locations worldwide through our third-party logistics suppliers. All our
service options include unlimited access to bug fixes, new-featur
t
e releases, online case management, and our community
forums.
The Arista Data-Driven Cloud Networking-as-a-Service Platform
The core of our cloud networking-as-a-service platfor
f
m is our data-driven operating system, EOS®, which runs
r
on top
of standard Linux and offer
f s programmabi
a lity at all layers of the stack. System state and data are stored in EOS and maintained
in a highly efficient, centralized system databa
a
se where data is accessed via an automated publish/subs
u
cribe model. This distinct
design principle provides module independence, self-h
f
ealing resiliency, and multi-process softw
f
are stabi
a lity.
Our Competitive Strengths
•
Broad and Diffe
f rentiated Portfolio: Using best-of-b
f
reed merchant silicon, we deliver high-performance,
purpose-built platforms with industry-
r
leading capacity and designed to support a variety of customer needs, including low
latency, high port density, deep packet buffe
f rs, and modular chassis. Our diagnostics and infra
f structur
t
e service ("NetdiTM)
ensures these platforms deliver the highest quality levels with supe
u
rior signal integrity and power effi
f ciency.
•
Rich Software-Driven Networking-as-a-Service: Our networking-as-a-service platform addresses the
inherent limitations of legacy network architectur
t
es by relying on a single operating system (EOS), a single data lake (NetDL),
and a single management solution (CloudVision). This strategy allows us to address a broad set of needs fro
f
m client to cloud
while maintaining fea
f
ture consistency across our entire product portfol
f io. Unlike the competition, our modular, softw
f
are-driven
architectur
t
e enabl
a es us to partner closely with our customers and rapi
a dly evolve our offe
f rings to address changing needs while
maintaining struc
r
tural integrity and quality. Customers thus lower their total network operations costs with a modern operating
model powered by capabilities such as streaming real-time telemetry,
r
in-service software upgrades, and AI Ops.
6
•
Award-winning Support System: Our Technical Assistance Center ("TAC") provides 24/7/365 suppor
u
t to
reduce downtime, improve operational effic
f iency, and protect our customers' infrastructur
t
e. Our unwavering commitment to
customer experience and deep collaboration has earned us an industry-
r
leading Net Promoter Score, reflecting the trus
r
t our
customers place in our hardware and softw
f
are leadership.
Our Customers
Our customers include large cloud customers or Cloud and AI Titans, other internet and service providers, including
specialty and AI Neoclouds, and a wide breadth of enterprise customers, including financial services organizations and
government agencies. We continue to diversify t
f
he types of enterpr
r
ise customers we serve and have expanded our presence
across a wide spectrum
r
of industries, including media and entertainment, healthcare, oil and gas, educ
d
ation, manufac
f
turing and
industrial sectors, among others. Two of our customers accounted for more than 10% of our sales for
f
the year ended December
31, 2025. Sales to these two customers represented 26% and 16% of our total revenue for the year ended December 31, 2025,
respectively.
Sales and Marketing
We market and sell our produc
d
ts through our direct sales for
f
ce and in partnership with our channel partners, including
distributors, value-added resellers, systems integrators and original equipment manufac
f
turer ("OEM") partners. We also partner
with various technology companies to sell our products. To fac
f
ilitate channel coordination and increase productivity, we have
establ
a ished the Arista Partner Program, designed to engage partners who provide value-added services and extend our reach
into the marketplace. Authorized training partners deliver technical training to our channel partners and end customers. Our
partners typically receive an order fro
f
m an end customer before placing an order with us, and we verify the end customer's
identific
f ation befor
f
e accepting such orders. Our partners generally do not stock inventory r
r
eceived fro
f
m us.
Our sales organization is supported by systems engineers with deep technical expertise who are responsible for pre-
sales technical suppor
u
t and solutions engineering for
f
our customers, systems integrators, OEMs, and channel partners. In
general, the personnel in our sales organization are organized into teams, and each team is responsible for a specific
f
geographical territory,
r
manages a number of major direct end-customer accounts, or has been assigned accounts in a particular
vertical market. A pool of shared channel sales and marketing representatives also suppor
u
ts these teams.
Our marketing activities consist primarily of technology confer
f ences, webinars, web marketing, trade shows, product
demonstrations, seminars and events, public relations, analyst relations, demand generation and direct marketing to build our
brand, increase customer awareness, communicate our product advantages and generate qualified leads for
f
our field sales force
and channel partners.
Research and Development
Our success relies on our foundation of deep engineering partnerships with our customers, which enabl
a es us to
enhance existing products and develop new solutions and fea
f
tures that address changing customer needs and technological
advancements. Our in-house engineering personnel are responsible for the development, testing, documentation, suppor
u
t and
release of our products. We have a highly skilled team of software and hardware engineers with extensive experience in wired
and wireless networking technologies, network protocols, network security, operating systems, programming languages,
compilers, databa
a
ses, hardware system design, Field-Programmabl
a e Gate Array ("FPGA") programming, high-speed signal
integrity, and other related technologies.
Our research and development strategy foc
f
uses on advancing our core products and expanding into new markets while
maintaining high product quality. We currently focus our research and development efforts in (1) adapting EOS for
f
new and
existing silicon architectur
t
es, especially to support the unique requirements of AI workloads; (2) adding or enhancing EOS
control plane and management plane functionality; (3) expanding our CloudVision management stack with enhanced
automation, provisioning, monitoring, and security capabilities; (4) building related services, such as microsegmentation,
network detection and response ("NDR") and Network Access Control ("NAC"); (5) improving the security and scalabi
a lity of
our softw
f
are development infra
f structur
t
e and software suppl
u
y chain; and (6) continuing to enhance our practice of delivering
high hardware quality, reliabi
a lity and power effi
f ciency that serve to minimize operational costs for customers.
We have dedicated significant time and resources to automate testing and ensure high test pass rates. Our engineers
work closely with our suppor
u
t team to resolve technical issues that customers experience with our products and use that
information to continuously improve our practices. Collabor
a
ation with customers and other industry l
r
eaders is integral to our
approach. Looking ahead, we plan to continue investing in our research and development efforts, thereby evolving and
7
extending the capabilities of our portfol
f io. This will ensure that our products continue to address dynamic market needs and
solidify o
f
ur industry l
r
eadership.
Manufac
f
turing
We subc
u
ontract the manufac
f
turing of the majority of our products to various contract manufac
f
turers. Our primary
manufact
f
ur
t
ing partners are Jabi
a l Inc., Sanmina Corpor
r
ation and Foxconn Hon Hai. These partners manufact
f
ur
t
e our products
internationally in Malaysia, Vietnam, Mexico and other countries. We require all our manufac
f
turing locations to be ISO-9001
certifie
f d. Afte
f r manufact
f
ur
t
ing and testing, the products are shipped to direct ful
f fillment facilities in the United States, the
Netherlands and Singapor
a
e for
f
further transformation as needed and distribution. We have four direct fulfil
f lment facilities
worldwide to hold fin
f ished goods inventory a
r
nd perform final product config
f uration and shipping to customers and partners.
Afte
f r distribution, our produc
d
ts are typically installed by customers or by third-party service providers such as system
integrators or value-added resellers on their behalf.
Our contract manufact
f
ur
t
ing partners procure the components needed to build our products and assemble them
according to our design specifications. This allows us to leverage the purchasing power of our contract manufac
f
turing partners.
We retain complete control over the bill of materials, qualified component suppl
u
iers, test procedur
d
es and quality assurance
programs. Our personnel work closely with our partners and review for
f
ecasts, inventory l
r
evels, processes, capacity, yields and
overall quality on an ongoing basis.
Our products rely on key components, including merchant silicon, integrated circuit components and power suppl
u
ies,
which are purchased from a limited number of suppliers, including certain sole source providers. We may also see increased
consolidation among our component suppl
u
iers. In particular, we are primarily reliant upon
u
our predominant merchant silicon
vendor, Broadcom, for
f
our switching chips. Generally, neither we nor our contract manufac
f
turers have a written agreement with
these component providers to guarantee the supply of the key components used in our products, nor do we have exclusive rights
to such key components. Furthermore, our arrangements with contract manufac
f
turers and suppliers typically do not impose
purchase obligations for specific quantities beyond the amounts established in our subm
u
itted purchase orders or for
f
ecasts.
Our product development effor
f
ts also depend upon continued collabor
a
ation with our key suppliers, such as Broadcom.
As we develop our produc
d
t roadmap and continue to expand our relationships with these and other merchant silicon vendors, it
is cruc
r
ial that we collabor
a
ate closely with our key merchant silicon vendors to ensure that their silicon incorporates enhanced
featur
t
es and that our produc
d
ts leverage these improvements. This enables us to foc
f
us our development resources on core
software competencies and leverage investments made by merchant silicon vendors to achieve cost-effective solutions.
Competition
The markets in which we participate are highly competitive and characterized by rapi
a dly transforming technology,
changing end-customer needs, evolving industry s
r
tandards, frequent introductions of new products and services and industry
r
consolidation. We expect competition to intensify in the fut
f ur
t
e as the market for cloud and AI networking expands and existing
competitors and new market entrants introduce new products or enhance existing products.
The data center and campus networking markets have historically been dominated by Cisco, with competition also
coming from other large network equipment and system vendors, including Dell/EMC, Extreme Networks, Hewlett Packard
Enterprise, Huawei, Juniper Networks, Nvidia, and white box networking vendors that utilize open-source operating systems.
Most of our competitors and some strategic alliance partners have made acquisitions and/or have entered into or extended
partnerships or other strategic relationships to offe
f r more comprehensive product lines, including cloud networking solutions.
For example, Broadcom has acquired VMware, Hewlett Packard Enterpr
r
ise has acquired Juniper Networks and Nvidia has
made significant investments in several AI Neoclouds. We often see that these types of acquisitions and strategic investments
are used to influ
f ence buying decisions rather than allowing for the selection of a best-of-breed vendor.
With the emergence of AI networking, new competitive technologies may enter the market to address the requirements
of AI clusters. Ethernet, faces competition fro
f
m both Infin
f iBand ("IB") and NVLink interconnects for
f
back-end AI networking
clusters. IB has traditionally been used in supe
u
rcomputer clusters due to its high reliabi
a lity, low latency and high bandwidth.
Both IB and NVLink are ofte
f n sold as part of a vertical solution along with the GPUs fro
f
m Nvidia.
We also face competition fro
f
m other companies and new market entrants, current technology partners, and customers
who may acquire or develop network switches and cloud service solutions for internal use and/or broaden their product
portfol
f ios to market and sell to customers. Some of these entities are developing white box networking products based on open-
source network operating systems that may be provided for
f
free using off-t
f
he-shelf or commoditized hardware technology
8
(“white box” hardware). Others may adopt a disaggregated approach to the procurement of hardware and leverage their own
proprietary software. The arrival of new market entrants and the rapi
a d adoption of alternative technologies may create
downward pricing pressure. Such shifts
f
could result in lost sales and materially harm our operating results and fin
f ancial
condition.
In the NDR market, our Arista NDR offe
f rings compete with other network security vendors including Cisco,
Darktrace, and ExtraHop. In the network packet broker ("NPB") market, Arista DANZ Monitoring Fabr
a
ic ("DMF") competes
with Cisco, Gigamon, Keysight, Netscout and other network monitoring software providers.
Our relationships with our strategic alliance partners or suppl
u
iers may also shift as industry d
r
ynamics change. If
strategic alliance partners acquire or develop competitive products or services, our relationship with those partners may be
adversely impacted, which could lead to more variabi
a lity in our results of operations and impact the pricing of our solutions.
The principal competitive fac
f
tors applicable to our products include:
•
breadth of product offer
f ings and feat
f
ur
t
es;
•
reliabi
a lity and product quality;
•
ease of use;
•
pricing;
•
total cost of ownership, including automation, monitoring and integration costs;
•
performance and scale;
•
programmabi
a lity and extensibility;
•
interoperability with other products;
•
abi
a lity to be bundled with other vendor offe
f rings;
•
product availabi
a lity and shipment lead times; and
•
quality of service, suppor
u
t and fulfil
f lment.
Intellectual Property
Our success and ability to compete depend subs
u
tantially upon our core technology and intellectua
t
l property. We rely
on patent, trademark and copyright laws, trade secret protection and confid
f entiality agreements with our employees, customers,
resellers, systems integrators, manufac
f
turers, and others to protect our intellectua
t
l property rights. We file U.S and foreign
patent applications to protect our intellectua
t
l property and we believe that the dur
d
ation of our issued patents is adequate relative
to the expected lives of our products. Patents generally have a dur
d
ation of twenty years from fili
f
ng. The remaining duration on
the individual patents in our patent portfol
f io varies.
We cannot assure that any of our patent applications will result in the issuance of a patent or whether the examination
process will result in patents of valuabl
a e breadth or applicability. In addition, any patents that may be issued may be contested,
circumvented, fou
f
nd unenfor
f
ceable or invalidated, and we may not be able to prevent third parties fro
f
m infri
f nging upon them.
We also license softw
f
are fro
f
m third parties for
f
integration into our products, including open-source software and other software
availabl
a e on commercially reasonable terms. We own a number of trademarks in the U.S. and other jurisdictions, and Arista,
EOS, and CloudVision are among our core trademarks.
We control access to and use of our software, technology and other proprietary information through internal and
external controls, including contractua
t
l protections with employees, contractors, customers and partners. Our software is
protected by U.S. and international copyright, patent and trade secret laws. Despite our effo
f
rts to protect our softw
f
are,
technology and other proprietary information, unauthorized parties may still copy or otherwise obtain and use our software,
technology and other proprietary information. In addition, we intend to expand our international operations, and effe
f ctive
patent, copyright, trademark and trade secret protection may not be availabl
a e or may be limited in for
f
eign countries.
Our indu
d stry is characterized by the existence of a large number of patents and fre
f quent claims and related litigation
regarding patents and other intellectua
t
l property rights. If we become more successful
f , we believe that competitors will be more
likely to try t
r
o develop products that are similar to ours and that may infri
f nge upon our proprietary rights. It may also be more
9
likely that competitors or other third parties will claim that our products infringe upon their proprietary rights. In particular,
large and establ
a ished companies in our industry h
r
ave extensive patent portfol
f ios and are regularly involved in both offensive
and defen
f
sive litigation. From time to time, third parties, including certain large companies and non-practicing entities, may
assert patent, copyright, trademark and other intellectual property rights against us, our channel partners or our end customers,
whom our standard license and other agreements obligate us to indemnify a
f
gainst such claims.
Successful
f
claims of infringement by a third-party, if any, could prevent us from distributing certain products or
performing certain services, require us to spend time and money to develop non-infringing solutions or force us to pay
subs
u
tantial damages, royalties or other fees. We cannot assure that we do not currently infringe, or that we will not in the fut
f ur
t
e
infringe, upon
u
any third-party patents or other proprietary rights.
Human Capital Management
At Arista, we seek to maintain an environment that is open and inclusive, and where our people feel
f
valued and
accountabl
a e. One of our key principles is always doing the right thing for
f
our employees. We are committed to uphol
u
ding the
highest standards of professional and ethical conduct in our global business operations. As of December 31, 2025, Arista
employed appr
a
oximately 5,115 full-time employees worldwide. None of our employees are represented by unions. We also hire
part-time employees and contractors to support our operations, and these service providers do not represent a material portion
of our workforce. We consider our relationship with our employees to be good and have not experienced operational
interrupt
u ions due to labor
a
disagreements. Arista’s Human Capi
a tal Strategy is developed by our Senior Leadership Team and led
by our Group Vice-President of Worldwide Human Resources and Operations who presents human capi
a tal upda
u
tes quarterly to
our Board of Directors.
Arista is proud that its excellent cultur
t
e and practices were widely recognized in 2025. Forbes magazine
named Arista as one of America’s Best Companies. Time Magazine named Arista as one of the World’s Best Companies.
Arista has been recognized by Comparabl
a y as one of the best large companies for
f
cultur
t
e, happi
a
ness, leadership and career
growth as well as compensation. And Most Loved Workplace named Arista a Most Loved Workplace for
f
Wellness and
Volunteering.
Equal Oppo
O
rtunity
We seek to maintain an environment that encourages and supports equal opportunity, and where our employees feel
valued. We condu
d ct annual employee engagement surveys globally to gather information and feedba
d
ck from our team
members. We use a holistic organization-wide approach to respond to the results of the surveys, analyzing the data for
f
potential
actions and positive changes that can be taken in the areas of leadership, communication, culture, professional development and
other areas. We strive to build an inclusive culture that encourages, supports and celebrates the voices of our employees. As part
of the Arista way, we believe in treating peers with respect, mentoring individuals and developing teams for
f
overall success.
We affi
f rm the principle of equal employment opportunity without regard to any protected characteristic, including but
not limited to race, religion, national origin, color, gender, age, disabi
a lity, pregnancy, marital status, ancestry,
r
military s
r
tatus or
sexual orientation. We practice and promote such policies in all locations as appropriate under appl
a
icable law. We affi
f rm this
principle of fre
f edom from discrimination in all aspects of the employment relationship fro
f
m recrui
r tment and hiring, through
performance evaluations, compensation and promotions. At Arista, we believe that all employees should be treated with dignity
and respect.
Arista is proud to be one of the few
f
S&P 500 companies with both a fem
f
ale CEO and CFO.
Health
l
and Saf
S
et
f yt
We are committed to protecting the health and safet
f y of our employees, visitors, guests and the public. Our health and
safety policy is to maintain our facilities and conduct our business operations in a manner that does not compromise the
occupa
u
tional safet
f y of our employees. We have implemented our injury a
r
nd illness prevention program to protect employees
from occupa
u
tional risks of inju
n ry or illness.
Compensation and Benefi
e ts
i
We offe
f r competitive and comprehensive benefit
f
packages that are designed to help and empower employees to make
informed decisions for themselves, their fam
f
ilies and their lifes
f
tyles. In the United States, we offe
f r our employees an employee
stock purchase plan, healthcare and retirement benefits, paid time off and fam
f
ily leave, flexible time away, fam
f
ily planning
benefits, backup
k
resources for
f
childcare and elder care, and other employee assistance programs including behavioral health and
10
emotional support services. In addition to base salary and benefits
f
, Arista’s employees participate in stock and bonus incentive
plans that support our organizational philosophy of allowing employees to share in our performance and success. Arista's
compensation philosophy is to pay our employees based on their performance and contribution and impact to improving
customer and shareholder success. We are committed to paying our employees fairly, equitabl
a y, and we work with a third party
annually to identify a
f
nd resolve any gaps
a
. Our executive compensation program is designed to attract, retain, and reward
performance and align incentives with the achievement of Arista’s strategic plan and both short- and long-term operating
objectives. Our compensation committee provides oversight of our compensation policies, plans, benefit programs and overall
compensation philosophy.
Along with our traditional healthcare benefit
f s, we offe
f r a broad variety of physical and mental wellness offerings to
our global employees in a virtual as well as on-demand format, including fitness classes, webinars on practical wellness
takeaways, strategies for stress reduc
d
tion, financial planning and education, career development and social activities. We also
host periodic wellness weeks, whose purpos
r
e is to raise awareness on health issues, increase education on preventive medicine
and availabl
a e services and shift employee behavior through interactive activities and live presentations. We proudly support an
active community employee engagement program, which provides opportunities for
f
our employees to volunteer and participate
in community service in support of the communities where they live, work, and thrive. We employ remote and hybrid work
models for designated roles, giving our employees the fle
f xibility to work offs
f ite or onsite and annual survey our employees to
gain valuable feedba
d
ck and suggestions on improvements to our culture and strategy.
AI & Emp
E
loyee
o
Traini
i
ng
i
, D
g
evelopm
l
ent and Upskillin
l
g
Arista has made AI skills development an enterpr
r
ise-wide priority as we strive to embed AI in our everyd
r
ay business
processes to develop more effi
f cient, higher quality and fas
f
ter cycle times and responses to our customers and for the benefit of
our shareholders.
In 2025, employees participated in many general and department-specific live, webinar, and self-paced
training to improve their overall and job-specific AI skills and capabilities. In addition, our employees receive regular training
on various subj
u ects, including our Code of Ethics and Business Conduct, information security, data privacy, intellectual
property, insider trading, and anti-corrup
r
tion. Our employees are required to complete Code of Ethics and Business Conduct
and infor
f
mation security trainings every y
r
ear. In addition, we provide extensive training and accreditation opportunities to
employees in Sales, Customer Engineering and Software Research and Development roles including our Arista Certifie
f d
Engineer (“ACE”) certific
f ation program as well as mentorship programs. Additional career development content including
management and leadership development training is available through our E-Learning portal to faci
f
litate a culture of lifel
f ong
learning and allow employees to personalize their development. Our Technical employees can fur
f
ther upskill through our
internal Arista Training Program, technical summits, and participation in industry c
r
onfer
f ences or associations.
Available Infor
f
mation
Our website is located at www.arista.com and our investor relations website is located at investors.arista.com. Our
Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to reports
filed or fur
f
nished pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended (“Exchange Act”),
are availabl
a e fre
f e of charge on the Investors portion of our website as soon as reasonabl
a y practicable afte
f r we electronically fil
f e
such material with, or fur
f
nish it to, the Securities and Exchange Commission ("Commission"). The Commission maintains an
Internet site that contains reports, proxy and infor
f
mation statements, and other infor
f
mation regarding issuers that fil
f e
electronically with the Commission at www.sec.gov.
Webcasts of our earnings calls and certain events we participate in or host with members of the investment community
are on our investor relations website. Additionally, we announce investor information, including news and commentary a
r
bout
a
our business and financial performance, Commission filings, notices of investor events, and our press and earnings releases, on
our investor relations website. Investors and others can receive real-time notific
f ations of new infor
f
mation posted on our
investor relations website by signing up for email alerts and RSS feeds. Further corpor
r
ate governance information, including
our corporate governance guidelines, board committee charters, and code of conduct, is also availabl
a e on our investor relations
website under the heading “Governance.” The contents of our websites, or information that can be accessed through our
websites, are not incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file
f
with the Commission, and any references to our websites are intended to be inactive textual references only.
11
Item 1A. Risk Factors
You should c
l
onsider
d
carefu
e lly the risks and uncertainties described below, t
w
ogether with all of t
o
he
t
othe
t
r infor
f
mation in
this Annual Repo
e
rt on Form 10-K, which could m
l
aterially a
l
ff
a ect
f
our business, financial condition, results of operations and
prospe
s
cts.
t
The risks described below are not the only r
l
isks facing us. Risks and uncertainties not currently known to us or that
t
we currently deem to be immaterial may a
a
lso materially a
l
ffe
a
ct our business, financial condition, results o
t
f o
o
pe
o
rations and
prospe
s
cts.
t
Risk Factors Summary
Our business is subject to numerous risks and uncertainties. These risks include, but are not limited to, the fol
f lowing:
Risks Related to Our Business and Industry
•
some of the key components in our products come from sole or limited sources of su
l
ppl
u
y a d
nd increases the iri k
sk of
su
l
ppl
u
y shortages, exte d
nded l
d l
d
ead itimes or s
l
upply cha g
nges;
•
l
•
arge purchases by a limited number of customers represent a subs
u
tantial portion of our revenue;
•
escalated or escalating United States (the "U.S.") tariffs as well as countermeasures and retaliatory actions taken by
other countries, may have a negative effect on global economic conditions, fin
f ancial markets and our business;
•
adverse economic conditions, continuing uncertain economic conditions or reduced information technology and
network infra
f structur
t
e spending may adversely affect our business;
•
our revenue and revenue growth rates are volatile and may decline or not meet our or our investor's expectations;
•
we expect our gross margins to vary over time and may be adversely affected by numerous factors;
•
our results of operations may vary s
r
ignificantly from period to period and can be unpredictabl
a e;
•
the networking market is rapi
a dly evolving;
•
fai
f lure to successful
f ly carry out new product and service offerings and expand into adja
d cent markets could adversely
impact our business;
•
we fac
f
e intense competition and industry c
r
onsolidation;
•
we are subj
u ect to risks associated with the expansion of our international sales and operations;
•
we face
f
risks associated with the investments in and acquisitions of complementary c
r
ompanies, products or
technologies;
•
industry c
r
yclili
l
cality
ity may cause flfluctuations in our revenue;
•
flfluctuations in curren y
cy ex h
change rates c
l
ould advers lely affect our business;
•
faililure to raise addi
ddi itional capital on terms sa itisfactory t
r
o us.
Risks Related to Customers and Sales
•
inabi
a lity to attract new large customers or sell additional products and services to our existing customers could
adversely affect our revenue growth;
•
sales of our switching and routing platfor
f
ms generate most of our product revenue;
•
inabi
a lity to increase market awareness or acceptance of our new products and services may adversely affect our
revenue;
•
sales prices of our products and services may decrease;
•
sales cycles can be long and unpredictabl
a e;
•
inabi
a lity to offer
f
high quality suppor
u
t and services offe
f rings could adversely affect our business;
•
declines in maintenance renewals and suppor
u
t contracts by customers could harm our business;
•
indemnific
f ation provisions under our standard sales contracts could expose us to losses;
•
we rely on distributors, systems integrators and value-added resellers to sell our products;
•
sales to government entities are subj
u ect to a number of challenges and risks;
•
we are exposed to the credit risk of our channel partners and some of our end customers.
Risks Related to Products and Services
•
product quality problems, defects, errors or vulnerabi
a lities could harm our business;
•
fai
f lure to anticipate technological shifts could harm our business;
•
our products must interoperate with operating systems, software applications and hardware that is developed by others.
Risks Related to Supply Chain and Manufac
f
turing
pp y
g
•
insuffi
f cient component suppl
u
y and inventory m
r
anagement;
12
•
primarily reliant upon a predominant merchant silicon vendor;
•
we depend on third-party manufac
f
turers to build our products;
•
fut
f ur
t
e sales forecasts may materially change, which could result in incorrect levels of inventory a
r
nd purchase
commitments;
•
shipment interrupt
u ions or delays could cause our revenue to fall.
Risks Related to Intellectual Property and Other Proprietary Rights
p
y
p
y
g
•
assertions by third parties of intellectua
t
l property rights infri
f ngement, misappropriation or other violation could harm
our business;
•
fai
f lure or inability to protect or assert our intellectua
t
l property rights could harm our competitive position;
•
we rely on the availabi
a lity of licenses to third-party softw
f
are and other intellectua
t
l property;
•
fai
f lure to comply with licenses to softw
f
are and other technology could restrict our ability to sell our products;
•
our competitors could develop products that are similar to or better than ours because we provide access to our
software and selected source code to certain partners.
Risks Related to Cybersecurity and Data Privacy
y
y
y
•
defect
f
s, errors or vulnerabi
a lities in our products, services and external faci
f
ng or internal network systems, or the
misuse of our products or services, or those of third parties on which we rely, could lead to cybersecurity incidents or a
failure to detect cybersecurity incidents, or otherwise negatively impact our business;
•
we, or third parties on which we rely, could experience cybersecurity incidents, which could disrupt
u
our operations,
cause vulnerabi
a lities in our produc
d
ts or services, compromise intellectua
t
l property or other sensitive data, or otherwise
negatively impact our business.
Risks Related to Accounting, Compliance, Regulation and Tax
g,
p
,
g
•
for
f
eign investment laws and regulations, and other trade or regulatory b
r
arriers, may have a negative effect
f
on global
economic conditions, fin
f ancial markets and our business;
•
enhanced import/export restrictions, such as enhanced export controls the U.S. has adopted targeting trade with China,
as well as countermeasures taken by affected countries may negatively affect our business;
•
fai
f lure to maintain effe
f ctive internal control over fin
f ancial reporting could adversely affect the accuracy and timing of
our financial reporting;
•
if our critical accounting policies are based on incorrect assumptions, our results of operations could fal
f l below analyst
and investor expectations and result in a decline in the market price of our common stock;
•
changes in our income taxes, effe
f ctive tax rate or tax laws could adversely affect our results;
•
fai
f lure to comply with government laws and regulations, including privacy laws, environmental laws and export
controls could harm our business; and
•
issues in the development and use of artific
f ial intelligence, combined with an uncertain regulatory e
r
nvironment, may
result in reputational harm, liability, or other adverse consequences to our business operations;
Risks Related to Ownership of Our Common Stock
p
•
the trading price of our common stock has been and may continue to be volatile and the value of your investment could
decline;
•
any future decisions to reduce or discontinue repurchasing our common stock pursuant to our stock repurchase
programs could cause the market price of our common stock to decline;
•
insiders have substantial control over us;
•
our charter documents and Delaware law could discourage takeover attempts and lead to management entrenchment.
General Risks
•
we may become involved in litigation that may materially adversely affect us;
•
inabi
a lity to hire, retain, train and motivate qualified personnel and senior management could cause our business to
suffer;
•
natur
t
al disasters, social unrest, violent confli
f cts, systemic failures, and other catastrophic events could harm our
business; and
•
we have not paid dividends in the past and do not intend to pay dividends for the foreseeabl
a e fut
f ur
t
e.
13
Risks Related to Our Business and Industry
Some of the key components in our products come from sole or limited sources f
of supply.
Our products relyly on component t
s hat we purchase, or our contract manufact
f
ur
t
ers purchase on our behalf from a
limited number of suppliers, including certain sole source providers. In particular, we are primarily reliant upon our
predominant merchant silicon vendor, Broadcom, for our switching chips.
Our reliance on component suppl
u
iers yields the potential for the infringement, misappropriation or other violation of
third-party intellectua
t
l property rights due
d
to the incorpor
r
ation of such components into our products. We may not be
indemnifie
f d by such component suppl
u
iers for such infri
f ngement, misappropriation or other violation claims. Any litigation for
f
which we do not receive indemnific
f ation could require us to incur significant legal expenses in defending against such claims or
require us to pay substantial royalty payments or settlement amounts that would not be reimbursed by our component suppl
u
iers.
Our produc d
t dev lelopment effor
f
ts are als
d
o dependent upon hthe success of our continued c lollabor
a
ation with our key
merchant isililicon ve d
ndors such as Bro d
adcom. As we develop our pr d
oduct roadmap, we s lelect sp
i
ecifific mer h
chant sililicon from
hthese vendors for
f
ea h
ch new product. It is critic lal hthat
e
w work in tandem with these vendors to ensure that their silicon includes
improved feat
f
ur
t
es, that our produc
d
ts take advantage of such improved feat
f
ur
t
es, and that such vendors are able to suppl
u
y us with
sufficient quantities on commercially reasonabl
a e terms to meet customer demand. Reliance on these relationships allows us to
focus our research and development resources on our software core competencies while leveraging their investments and
expertise. The merchant silicon vendors may not be successful
f
in continuing to innovate, develop products that outpe
t
rform
their competitors or meet the requirements of our customers, meet deadlines for
f
the release of their products or produce a
sufficient supply of their products. Moreover, these vendors may not collaborate with us or may become competitive with us by
selling merchant silicon for “white boxes” with open-source network operating systems or other products to our customers.
If our key merchant silicon vendors do not continue to innovate, develop products that outpe
t
rform their competitors or
fail to meet the requirements of our customers, if there are delays in the release of their products or suppl
u
y shortages, if they no
longer collabor
a
ate in such fas
f
hion or if such merchant silicon is not offe
f red to us on commercially reasonabl
a e terms, our
products may become less competitive, our own product launches could be delayed or we may be required to redesign our
products to incorporate alternative merchant silicon, which could result in lost sales, reduc
d
e gross margins, damage to our
customer relationships or otherwise have a material effect on revenue and business, financial condition, results of operations
and prospects.
We expect la g
rge purchases
y
by a limited number of customers to continue to represent a substantial portion of our
revenue, and any loss, delay, decline or other change in expected purchases could result in material quarter-to-quarter
fluctuations of our revenue or otherwise adversely affect our results of operations.
Large purchases by a relatively limited number of customers have accounted for a significant portion of our revenue.
For example, sales to one end customer represented 16%, 15%, and 21% of our total revenue, and sales to the other end
customer represented 26%, 20%, and 18% of our total revenue for the years ended December 31, 2025, 2024, and 2023,
respectively. We have experienced unpredictabi
a lity in the iti i
mi g
ng of orders from our la g
rge customers primarilily d
y due
d
to hthe overallll
comple ixi yty of hthes l
e large orders and cha g
nge i
s i
d
n demand spe icifific to these customers, in lcl di
udi g
ng reduc itions in or h
change i
s in the
i
mix of capital expendiditure b
s by these customers a d
nd hth i
e impact of cost reduc ition a d
nd other effi
ffi icien y
cy effo
f
rt b
s by these customers.
In addition, the va iri b
abili
ility i
y in customer concentratio
i
n i l
s linked to the itiming of new pr d
oduc d
t deployments, a d
nd spendidi g
ng y
cy lcles
i
wi hth hthese customers, as w lell as the itime it takes these customers to evaluate, test, qualif
lify a
f
d
nd accept our pr d
oducts and ser ivices,
and we expect continued variabi
a lity in our customer concentration and timing of sales on a quarterly and annual basis. In
addition, we yty ipi
l
callyly providide more fav
f
or b
able terms a d
nd co di
ndi itions to la g
rge customers, than we typi
ypicalllly d
y do to o hther customers,
in lcl di
udi g
ng pricing d
g discounts, b
dl
bundl d
ed
g
upgr d
ades, extended warranties, acceptance terms i
, i d
ndemnifific
f ation terms, a d
nd other rigights,
which may reduce gross margins for
f
the period in which such sales occur.
Changes in the business requirements or foc
f
us, upgr
u
ade cycles, vendor selection, project prioritization, assignment of
spending allocations among vendors based upon specific network roles or proje
o cts, financial prospects, lack of growth of our
large customers, capital resources and expenditures or purchasing behavior and deceleration in spending of these customers
could significantly decrease our sales to such customers or co luld l
d l
d
ead to delays, r d
educ
d
itions or canc lella itions of
lplanned
pur h
chases of our pr d
oduc
d
ts or services
I
.
n addi
ddi ition, an increased focus on the deployment of AI-enabl
a ed solutions by these
customers has accelerated the need for
f
advanced technology offe
f rings, including some offe
f rings from potential new market
entrants. This prio iri itization of AI r lelat d
ed infrastructur
t
i
e investment has at times come in conjnjunc ition
i
wi hth hthe announcement of
14
va irious cost reduc ition measure b
s by such customers i
, includidi g
ng opti i
imiza ition a d
nd increas d
ed effifi
f
icien y
cy in non-AI related capital
expe di
nditures,
h
which c
l
ould n g
egativ lely i
y impact our revenue I
.
n addition, although the foc
f
us on deployment of AI-enabl
a ed
solutions has driven increased demand for networking, the long-term trajectory remains unknown. As such, demand estimates
for our new products are diffi
f cult to forecast and can create volatility in our revenue. In some instances, such f
h fact
f
or h
s hav h
e h d
ad,
and m y
ay continue to have, a i
n impact on cert iain current or future projojects a d
nd reduce our ivi isibibilili yty to customer dema d
nd and m y
ay
result in a r d
educ
d
ition or uncertain yty in hthe timing of o d
rders fro
f
m these la g
rge customers, whihi h
ch may n g
egativ lely i
y impact our
revenue and i
d increase the iri k
sk of excess and obs lolet i
e inventory c
r
ha g
rges on our pr d
oducts.
Moreover, because our sales are based p iri a
m rily on purchase orders, some of our customers have previously and could
continue to cancel, delay, reduce or otherwise modify their purchase commitments with little or no notice to us.
h
These
customers m y
ay de icide to delay or cancel such o d
rders for
f
any reason.
h
This lili i
mited visibibilility
ity re
i
quires us to r lely on estimat d
ed
dema d
nd forecasts to determin
h
e how mu h
ch mate iri lal to pur h
chase a d
nd pr d
oduct to manufac
f
ture. Fur hther, extended s
l
upplie l
r lead
itimes on some newer te h
ch
l
nologi
ogies can creat g
e greater pressure on our b
abili
ility to for
f
ecast fut
f ur
t
d
e demand,
h
which can le d
ad to excess
inventory o
r
r product short g
ages and t d
o d lel y
ays i
s n ful
f filling current and fut
f ur
t
e purchase orders that can impede production by our
customers and harm our customer relationships.
If any of the factors discussed above
a
drive some of our large customers to cancel all or portion of their business
relationships with us, the growth in our business and the abi
a lity to meet our current and long-term financial for
f
ecasts may be
materially impacted. As a result, we may be unabl
a e to sustain or increase our revenue from our large customers, grow revenue
with new or other existing customers at the rate we anticipate or at all, or offset a decline or discontinuation of concentrated
purchases by our larger customers with purchases by new or existing customers. We expect that such concentrated purchases
will continue to contribute materially to our revenue for
f
the for
f
eseeable future and that our results of operations may flu
f ctua
t
te
materially as a result of such larger customers’ buying patterns. In addition, we may see consolidation of our customer base,
such as among Internet companies and cloud service providers, which could result in the loss of customers. The loss of such
customers, or a significant delay or reduction in their purchases, including reductions or delays due to customer departur
t
es from
recent buying patterns, or an unfav
f
orable change in competitive or economic conditions could materially harm our business,
financial condition, results of operations and prospects.
Escalated or escalating U.S. tariffs
f , as well as countermeasures and retaliatory actions taken by other countries, may
have a negative effect
f
on global economic conditions, financial markets and our business.
Our products are primarily manufactur
t
ed in Malaysia, Vietnam, and Mexico, and we also procure a limited number of
products originating fro
f
m China, Taiwan, Thailand and the Philippines. In addition, our contract manufac
f
turing partners
procure some components fro
f
m China for use in the manufac
f
turing of our products. Because our products are primarily
manufact
f
ur
t
ed internationally, the import of our products into the U.S. may be affe
f cted by applicable tariff policies.
Over the last decade, and especially under the current administration, the U.S. government has enacted various new
and increased tariffs a
f
ffecting the import of various items fro
f
m various countries. For example, since 2018, the U.S.
government has enacted various tariffs o
f
n products from China under Section 301 trade authorities, including on
communications equipment products and components manufac
f
tured and imported fro
f
m China. Since Februa
r
ry 2025, the U.S.
has also imposed additional country-specific tariffs
f
on most trading partners, including China, as well as additional commodity-
specific tariffs
f
on certain imported items, in both instances pursuant to executive orders issued under various trade authorities,
including the International Emergency Economic Powers Act and Section 232 of the Trade Expansion Act of 1962.
In response to these and other U.S. measures, China, Mexico and other countries have taken or threatened to take a
range of retaliatory measures. These include the imposition of retaliatory tariffs on certain U.S.-origin goods; the
implementation of new export controls by China on various critical minerals, including rare earths metals; the scheduling of
further retaliatory tariff measures; and other actions that may affect us directly or indirectly.
The situation regarding these tariffs
f
and trade policies has been and continues to be flu
f id, leading to significant
uncertainty about the fut
f ur
t
e relationship between the U.S., and other countries, with respect to tariffs and trade policies.
The U.S., China, Malaysia, Vietnam, Mexico, Taiwan, Thailand, the Philippines and other governments may place
additional tariffs
f
and trade barriers on communication equipment products, our products and services, our inputs, or other items,
which could result in higher costs to us and negatively affect our gross margins.
An increase in trade-related costs associated with these tariff a
f
ctions may affect our cost of production, impair the
profita
f
bi
a lity of our international production, affe
f ct our ability to procure certain items, strain our suppl
u
iers’ abi
a lity to provide
15
inputs necessary to produce certain items, and otherwise affe
f ct our manufac
f
turing partners’ abi
a lity to provide our products at
previously contracted prices. We also may not be able to pass on the ful
f l burden of the increase in trade-related costs to our
partners and/or customers which could impact our profit
f ability and/or our competitiveness. We are adjusting our suppl
u
y chain
and manufact
f
ur
t
ing practices to minimize the impact of the tariffs a
f
nd any impact on the suppl
u
y chain of components sourced
from affe
f cted countries, but our effo
f
rts may not be successful
f . In addition, there can be no assurance that we will not experience
a disrupt
u ion in our business related to these or other changes in trade practices, and the process of changing suppl
u
iers in order to
mitigate any such tariff costs could be complicated, time-consuming, and costly.
Tariffs may also cause customers to delay or to request an expedition for their orders as they evaluate where to take
delivery o
r
f our produc
d
ts in connection with their effo
f
rts to mitigate their own tariff exposure. Such delays or expeditions may
create forecasting diffi
f culties for
f
us and increase the risk that orders might be canceled or might never be placed. Current or
future tariffs may also negatively impact our customers' sales, thereby causing an indirect negative impact on our own sales.
Even in the abs
a
ence of further tariffs
f , the related uncertainty and the market's fear of escalating trade tensions and related
macroeconomic effe
f cts might cause our distributors and customers to place fewer orders for
f
our products, which could have a
material adverse effect
f
on our business, liquidity, fin
f ancial condition, and/or results of operations.
Adverse econo
i
mic con i
di itions, contin i
ui g
ng uncert iain econo
i
mic con i
di itions or reduced information technology
gy and
networ
i
k i f
nfra
f
structure spe
i
ndi g
ng may adversely affffect our business, fifinancial con i
di ition, results
f
of operations and
prospects.
Our business depends on the overall demand for infor
f
mation technology, network connectivity and access to data and
applications. Weak domestic or global economic conditions and continuing economic uncertainty, fear
f
or anticipation of such
conditions, a recession, geopolitical pressures, including international trade disputes, changes in tariff p
f
olicies, global
pandemics, a reduc
d
tion in infor
f
mation technology and network infrastructur
t
e spending or a deterioration of the fin
f ancial
performance, condition or prospects of our customers, could adversely affect our business, financial condition, results of
operations and prospects in a number of ways, including longer sales cycles, reduc
d
ed demand or lower prices for our products
and services, higher defau
f
lt rates among our channel partners, reduced unit sales and lower or no growth. In addition, the global
macroeconomic environment has been negatively affe
f cted by, among other things, the uncertainty in the global banking and
financial services markets, epidemics, instability in global economic markets, changes in government administration and policy
positions, increased uncertainty associated with recent schedul
d ed, threatened and/or anticipated increases in tariffs and other
trade barriers, inflationary pressures, higher interest rates, instabi
a lity in the global credit markets, the impact and uncertainty
regarding global central bank monetary policy, instability, tension and confli
f ct in the geopolitical environment, and for
f
eign
governmental debt concerns which have caused, and are likely to continue to cause, uncertainty and instabi
a lity in local
economies and in global fin
f ancial markets. In addition, a government shutdown or a default by the U.S. government on its debt
obligations, or related credit-rating downgrades could also have adverse effects on the broader global economy and contribute
to, or worsen, an economic recession.
We believe that any extended or renewed economic disrupt
r
ions or deterioration in the global economy could have an
adverse impact to our liquidity or to our current and projected business operations, fin
f ancial condition or results of operations.
For example, if banks or other fin
f ancial institut
t ions with whom we have banking relationships or whose corpor
r
ate bonds are
held in our marketable securities investment portfol
f io, enter receivership or become insolvent in the future, we may be unabl
a e to
access, and we may lose some of our existing cash, cash equivalents and investments to the extent those funds
f
are not insured or
otherwise protected by the Federal Deposit Insurance Corpor
r
ation ("FDIC"). In addition, in such circumstances we might not be
able to timely pay key vendors and others. We regularly maintain cash balances that are not insured or are in excess of the
FDIC’s insurance limit. Any delay in our ability to access our cash, cash equivalents and investments (or the loss of such funds
f
)
or to timely pay key vendors and others could have a material adverse effect on our operations and cause us to need to seek
additional capital sooner than planned. Furthermore, a downtur
t
n or a recession may also significantly affe
f ct financing markets,
the availabi
a lity of capital and the terms and conditions of any fin
f ancing arrangements, including the overall cost of financing as
well as the fin
f ancial health or creditworthiness of our customers. Circumstances may arise in which we need, or desire, to raise
additional capital, and such capital may not be availabl
a e on commercially reasonabl
a e terms, or at all.
In addition, business disrupt
u ions and supply chain and manufact
f
ur
t
ing disrupt
u ions may result in customers delaying or
canceling or reprioritizing capital expenditures on infor
f
mation technology and network infrastructur
t
e, which may affe
f ct the
overall demand for
f
our produc
d
ts. We also believe that our customers continue to assess the impact of macroeconomic factors on
their business and future investment plans, resulting in business uncertainty. Continuing or worsening economic instability or
the deterioration of the financial performance, condition or prospects of our customers could result in a cancellation of, or
16
defaults in the payments for
f
, such orders or otherwise adversely affect spending for IT, network infra
f structur
t
e, systems and
tools, and limit our ability to forecast future demand for our products, which could reduc
d
e expected revenue or result in a write-
down of excess or obsolete inventory.
r
We have entered into isignifific
f ant purchase com
i
mitments and are suscep itible to supply short g
ages, extended lead times or
supply cha g
nges, w i
hich could disrupt or delay our scheduled product deliveries to our customers and m y
ay resul i
t in the
loss f
of sales and customers.
Generally, we do not have guaranteed supply contracts with our component suppl
u
iers. Our suppl
u
iers have, or in the
future could continue to, suffe
f r shortages, require longer lead times, delay shipments, prioritize shipments to other vendors,
reje
e ct, or decommit orders, increase prices, impose expedite fees or cease manufac
f
turing their products or selling them to us at
any time. Suppl
u
y of these components worldwide was and could continue to be adversely affected by suppl
u
y constraints,
including as a result of industry c
r
onsolidation and geopolitical conditions such as international trade restrictions and increased
political tensions. For example, we see tightening supply conditions in the memory m
r
arket. Although we have taken steps to
mitigate these constraints, resulting shortages, increased lead times, reduced component allocations, and/or order
decommitments may still adversely impact our revenue and gross margins.
Although we have entered into significant purchase commitments to suppor
u
t long-term customer demand, if we are
unable to obtain suffi
f cient quantities of any of these components on commercially reasonabl
a e terms or in a timely manner, or if
we are unabl
a e to obtain alternative sources for these components, shipments of our products could be delayed or halted entirely,
or we may be required to redesign our produc
d
ts. Any of these events could result in the cancellation of orders, lost sales,
reduced gross margins or damage to our customer relationships, which would adversely impact our business, financial
condition, results of operations and prospects. Additionally, if our suppl
u
iers do not meet their commitments, customers cancel
orders or actua
t
l demand is less than our demand forecasts, it could result in excess or obsolete inventory,
r
which we would be
required to write down to its estimated realizable value, which in tur
t
n could impact our cash flows and result in lower gross
margins and operating income.
In the event of a shortage or supply interrupt
u ion fro
f
m our component suppl
u
iers, we may not be able to develop
alternate or second sources in a timely manner. Further, long-term suppl
u
y and maintenance obligations to customers increase
the dur
d
ation for
f
which specific components are required, which may increase the risk of component shortages or the cost of
carrying inventory.
r
In addition, our component suppl
u
iers change their selling prices frequently in response to market trends,
including industry-wide increases in demand such as has occurred in the market for memory,
r
or charge additional fee
f
s to
expedite orders, and because we do not have contracts with these su
l
ppl
u
iers or guarant
d
eed pricing, we are suscep itiblble to
av iailabibi
a lity
lity or price flu
f ctua
t
itions related to raw mate iri lals a d
nd components. If we are unablbl
a e to pass component pric i
e increases
lal
g
ong to our customers or m iaint iain stablbl
a e p iri ici g
ng, our gross margigins co luld b
d be advers lely affect d
ed and our business, fifinancial
co di
ndi ition, results of opera itions and prospects co luld suffe
f r.
Our revenue and revenue growth rates are volatile and may dec iline or not meet our or ou i
r investors' expectations.
Our revenue growth rates in previous periods may not be indicative of our future performance. We have experienced
annual revenue growth rates of 28.6%, 19.5%, 33.8%, a d
nd 48.6% in 2025, 2024, 2023 and 2022, respectiv lely. In hthe fut
f ur
t
e, our
revenue grow hth rates will
ill continue to be
l
volatilil d
e due
d
to y
cy lclic lal trends in our business, and as w b
e become more embedd
dded with
our exis iting c
g ustomer base and product markets and look to enter and expand into new markets. Ou g
r growth strat g
egy r lelies on
maintaining our
g
agilility
ity and i
d increasing our investment in resear h
ch and d
d dev lelopment t
d
o d leliver ma k
rket l-leadidi g
ng featur
t
es to
enhance the func itionality
lity of exis iting clo d
ud networkiki g
ng
lplatform, expa d
nd our pr d
oduct offe iri g
ngs and b
d b iuildld upon our te h
ch
l
nol gy
ogy
le d
ader h
ship. We must continue to expa d
nd our pr d
oduct offe iri g
ngs and b
d b iuildld upon our te h
ch
l
nol gy
ogy le d
ader h
ship. In addi
ddi ition we must
continue to expa d
nd our glgl b
obal s lales force a d
nd deepen our h
channel partner h
ships to reach new customers more effectiv lely a d
nd
increase s lales to exis iting customers. An increase in customer trials and contracts with acceptance pro ivi isions, a d
nd an increas i
e in
hthe v lolatili
ili yty and m g
ag initude of our pr d
oduc
d
d
t defer
f red revenue balances h
, have creat d
ed va iri b
abili
ili yty in our revenue. A y
ny delays in
acceptance, or rejeje
e ction, or any retur
t
n, of hthose products co luld f
d fur
f
hther nega itiv lely i
y impact our revenue. W h
e have also pre iviouslyly
expe irien
d
ced su
l
ppl
u
y constr iaints tha h
t have res lulted i
d in manufact
f
ur
t
ing a d
nd h
shipment delays, whihi h
ch have nega itiv lely affect d
ed hthe
i i
timing of revenue recogni
gni ition. If hthese manufac
f
tu iri g
ng and s
l
upply chain didisrupt
r
ions recur a d/
nd/or ifif we are unablbl
a e to r d
educ
d
e our
le d
ad itime i
s it couldld
lalso result in hthe can
l
cella ition of orders by
by customers, reduc
d
e demand f
d fro
f
m e ixisting customers in future
pe iri d
ods, a d
nd increas d
e dififfifi
f culty
lty in d
addidi g
ng new customers. O hther factors m y
ay lalso cont iribute t
d
o declilines in our revenue grow hth
rates, in lcl di
udi g
ng h
change i
s i d
n demand f
d for
f
our pr d
oduc
d
ts and ser ivices, partic lularlyly from our la g
rge customers, the dete irioration of the
fifinancial performance, co di
ndi ition or prospects of our la g
rge customers, cha g
nge
i
s in capital spe di
ndi g
ng by
by our la g
rge customers,
17
increas d
ed competition, price sen isi iti ivi ities from our customer t
s o increases in our pricing, our ability to successful
f ly manage our
expansion or continue to capitalize on growth opportunities, the matur
t
ation of our business, geopolitical pressures,
macroeconomic conditions, recession risks and monetary policy shifts, and our ability to be successful
f
in the AI market and
adja
d cent markets, such as campus switching, Wi-Fi networking markets and network security markets. Recent technologies,
such as generative and agentic AI models, have emerged, and while they have driven increased demand for networking, the
long-term trajectory o
r
f such technologies is unknown and it is difficult for us to predict the demand for
f
such new technologies.
Customers may overestimate demand for their AI build outs and cancel, delay, reduc
d
e or otherwise modify their purchase
commitments with little or no notice to us. Customers may also implement changes to their network architectur
t
e to improve
effi
f ciencies and reduc
d
e demand for
f
our produc
d
ts. As such, demand estimates for
f
our new products are diffi
f cult to forecast and
create volatility in our revenue. In addition, gigiven the itiming a d
nd prio iri itization of customer o d
rders a d
nd h
shipment patterns, near-
term revenue trends may not be reflflec itive of current dema d
nd levels F
.
urthermore, any prolonged economic disrupt
r
ions or
deterioration in the global economy could have a negative impact on demand fro
f
m our customers in fut
f ur
t
e periods, particularly
in the enterpr
r
ise market where we are continuing to expand our penetration. which may result in reductions in overall demand
from these customers in future periods and negatively impact our revenue, fin
f ancial condition, business or prospects. You
should not rely on our revenue for any prior quarterly or annual period as an indication of our future revenue or revenue growth.
If we are unabl
a e to maintain consistent revenue or revenue growth, our business, financial condition, results of operations and
prospects could be materially adversely affected, and our stock price could be volatile.
We expect ou g
r gross ma g
rgins to vary over time and may be adversely affffected
y
by numerou f
s fac
f
tors.
We expect our gross margins to vary over time and the gross margins we have achieved in recent years may not be
sustainabl
a e and m y
ay be ad
adversely affec
f
ted in the future by numerous factors, including but not limited to pricing pressure on
our products and services due to competition, the abi
a lity of more fully integrated competitors to bundle their networking
products with other products, or utilize proprietary silicon in their products, the mix of sales to large customers who generally
receive lower pricing, the mix of produc
d
ts sold, manufact
f
ur
t
ing-related costs, including costs associated with sourcing key
components fro
f
m sole or limited suppl
u
iers and potential changes to our manufac
f
turing and supply chain to respond to
international trade tensions, supply chain sourcing activities, merchant silicon costs, excess/obsolete inventory a
r
nd suppl
u
ier
liability charges, and fee
f
s to expedite supplier components and costs related to tariffs from our products that are manufac
f
tured
internationally. In addition, other fac
f
tors that may impact our gross margins over time include the introduction of new products
and new business models including the sale and delivery o
r
f more softw
f
are and subs
u
cription solutions, entry into new markets or
growth in lower margin markets, entry in markets with different pricing and cost structur
t
es, pricing discounts given to
customers, costs associated with defen
f
ding intellectua
t
l property rights infri
f ngement, misappropriation or other violation claims
and the potential outcomes of such disputes, increased costs arising from epidemics, changes in distribution channels, increased
warranty costs, and our ability to execute our operating plans. In addition, inflationary pressures and shortages, such as the
recent tightening of supply conditions in the memory m
r
arket, have increased and may continue to increase costs for certain
materials, components, suppl
u
ies and services. As a result of cost inflflatio
i
n in our su
l
ppl
u
y chain, w h
e hav i
e implement d
ed ta g
rget d
ed
pric i
e increases from time to itime. However, these pric i
e increases co luld res lul i
t in a decreas i
e i
d
n demand f
d for
f
our pr d
oduc
d
ts
h
which
wo luld d
d decrease revenue I
. n addition, if our business were subject to sustained economic stress or recession, many of the risk
factors identifie
f d in this risk fact
f
ors section could be heightened. We determine our operating expenses largely on the basis of
anticipated revenue and a high percentage of our expenses are fix
f ed in the short and medium term. As a result, a failure or delay
in generating or recognizing revenue could cause significant variations in our operating results and operating margin from
quarter to quarter. Failure to sustain or improve our gross margins reduces our profit
f ability and may have a material adverse
effe
f ct on our business and stock prices.
Our results f
of operations have varied sigig i
nifificant yly from pe iriod to pe iriod and are unpredictable and ifif we fail to meet the
expectations
f
of analysts or investors or our previous yly issued fifinancia g
l g i
uidance, or ifif any f
y for
f
ward-looking f
g fin
f
an icial
guidance does not meet the expecta ition
f
of analysts or investors, the market p irice
f
of our common stock could dec iline
substantia y
lly.
Our results of operations have historically varied from period to period, and we expect that this trend will continue,
which could cause the market price of our common stock to be volatile. As a result, you should not rely upon our past financial
results for any period as indicators of fut
f ur
t
e performance. Our results of operations in any given period have been and could
continue to be influenced by a number of fac
f
tors, many of which are outside of our control and may be diffi
f cult to predict,
including:
18
•
disrupt
u ions in our business due
d
to general economic and market conditions, such as recessionary risks and a global
economic downtur
t
n, international trade tensions and tariff p
f
olicies, higher interest rates, monetary policy shifts,
inflationary pressures, supply chain and labor shortages, changes in government administration, and geopolitical
pressures;
•
our in b
ability
ility to fulflfill
ill
f
our customers’ orders or hth
d
e defer
f ral, reduc ition or canc lella ition of o d
rder d
s due
d
to hth
d
e d lel y
ay i
s in
h
shipment of our pr d
oducts for a y
ny reason;
•
hthe r d
educ
d
ition in future dema d
nd for our pr d
oducts by
by our customers o i
r increas d
ed didiffi
fficulty
lty in d
addidi g
ng new customers due
to the unavailabi
a lity or unpredictabl
a e supply of inventory,
r
suppl
u
y chain delays, access to key commodities or
technologies, manufact
f
ur
t
ing disrupt
u ions or other events that impact our manufact
f
ur
t
ers or their suppl
u
iers;
•
a reduction, or uncertainty in the timing, of orders from our large customers;
•
announcements by
by us or other compe ititors of new products or pr d
oduct e h
nhancements, warranty retur
t
ns g
, gener lal
economic co di
ndi itions or other fac
f
tors;
•
our b
abili
ility t i
o increase s lales to exis iti g
ng customers a d
nd attract new customers i, includidi g
ng la g
rge customers;
•
hth b
e budge
udge iting, sales, implementation a d
nd refre h
sh y
cy lcles, pur h
ch s
a ing practices, technology roadmaps
a
and priorities and
buying patterns of customers;
•
changes in the growth rates of existing or new customers and the networking market the deterioration of the financial
performance, condition or prospects of existing or new customers, including large customers and service providers,
changes in end-customer, distributor or reseller;
•
the inclusion of any acceptance provisions in our customer contracts and increased customer trials, and any delays in
acceptance, or reje
e ction, or any retur
t
n, of those products;
•
increased expenses resulting fro
f
m increases in component, production and logistics costs resulting fro
f
m fac
f
tors such as
global infla
f tionary pressures, or the tariffs
f
imposed by the U.S. on goods from other countries and tariffs
f
imposed by
other countries on U.S. goods;
•
changes in our pricing policies, whether initiated by us or as a result of competition;
•
the amount and timing of operating costs and capital expenditur
t
es related to the operation and expansion of our
business such as those expenses related to construc
r
tion of a new building in Santa Clara, Califor
f
nia;
•
diffi
f culty forecasting, budgeting and planning due to limited visibility into the spending plans of current or prospective
customers;
•
excess or obsolete inventory r
r
esulting in write-downs and charges related to supplier liabi
a lities;
•
the actua
t
l or rum
r
ored timing and success of new product and service introductions by us or our competitors or any
other change in the competitive landscape of our industry,
r
including consolidation among our competitors or
customers;
•
our ability to successful
f ly expand our business domestically and internationally;
•
our ability to increase the size and production of our sales or distribution channel, or any disrupt
u ion in, or termination
of, o
f
ur sales or distribution channels;
•
decisions by potential customers to purchase our networking solutions from larger, more establ
a ished vendors, white
box vendors with open-source network operating systems or their primary n
r
etwork equipment vendors;
•
insolvency or credit diffi
f culties confro
f
nting our customers, which could adversely affect their abi
a lity to purchase or
pay for
f
our products and services, or confro
f
nting our key suppliers, including our sole source suppl
u
iers, which could
disrupt
r
our suppl
u
y chain;
•
cyclical fluctuations in our markets; and
•
other risk factors described in this filing.
Any one of the fact
f
ors above
a
or the cumulative effect of several of the factors described above may result in significant
fluctuations in our financial and other results of operations and may cause the market price of our common stock to decline.
This variability and unpredictabi
a lity could result in our failure to meet our revenue, gross margins, results of operations or other
expectations contained in any forward-looking financial guidance we have issued or the expectations of securities analysts or
investors for
f
a particular period. If we fail to meet or exceed such guidance or expectations for these or any other reasons, the
market price of our common stock could decline subs
u
tantially, and we could face
f
costly lawsuits, including securities class
action suits. In the past, we have fai
f led to meet investor expectations and the market price of our common stock declined.
The networking market is rapidly evolving. If this market does not evolve as we anticipate or our target customers do
not adopt our networking solutions, we may not be able to compete effe
f ctively, and our ability to generate revenue will
suffer.
f
19
A substantial portion of our business and revenue depends on the growth and evolution of the networking market,
including the market for
f
AI networks and the future deployment of Ethernet networking solutions in these AI networks. The
market demand for networking solutions has increased in recent years as customers have deployed larger, more sophisticated
networks and have increased the use of virtua
t
lization and cloud computing. The continued growth of this market will be
dependent upon many factors including but not limited to the demand for our customers’ products and services, the expansion,
of our customers’ networks, the capa
a
city utilization of existing network infrastructur
t
es, changes in the technological
requirements for
f
the products and services to be deployed in these networks, the amount and mix of capi
a tal spending by our
customers, including any changing technology priorities such as the deployment of AI and related technologies, the
development of network switches/routers and cloud service solutions by our large customers for internal use, the financial
performance and prospects of our customers, the availabi
a lity of capi
a tal resources to our customers, changes in government
regulation that could impact networking business models including those regulations related to AI, cybersecurity, privacy, data
protection and net neutrality, our ability to provide networking solutions that address the needs of our customers more
effe
f ctively and economically than those of other competitors or existing technologies and general economic conditions.
In particular, recent technologies, such as generative and agentic AI models, have emerged, and while they have driven
increased demand for networking, the market is rapidly changing, and the long-term trajectory is unknown. Customers may
overestimate demand for their AI build outs and cancel, delay, reduc
d
e or otherwise modify their purchase commitments with
little or no notice to us. In addition, customers may implement changes to their network architectur
t
es to improve effi
f ciencies
and reduc
d
e demand for
f
our produc
d
ts. As such, demand estimates for
f
our new products are diffi
f cult to forecast and create
volatility in our revenue and inventory l
r
evels. If the AI market does not develop as anticipated or at all, then the potential
demand for AI infra
f structur
t
e may not be realized. Moreover, even if the market for
f
AI applications does develop, the successful
f
adoption of AI Ethernet products will be dependent upon their abi
a lity to compete against more establ
a ished Infin
f iBand products
or against the AI Ethernet products of other competitors to address AI networking clusters.
If the networking solutions market including the AI Ethernet market does not develop in the way we anticipate or
otherwise experiences a slowdown, if our solutions do not offe
f r benefit
f s compared to competing networking products or if
customers do not recognize the benefit
f s that our solutions provide, then our business, financial condition, results of operations
and prospects could be materially adversely affected.
We pursue new product and service offeri
f
ngs and expand into adja
d
cent markets, and if we fail to successful
f
ly carry out
these initiatives, our business, financial condition, or results of operations could be adversely impacted.
We have made subs
u
tantial investments to develop new products and services, make enhancements to existing products,
and expand our product offer
f ings through our acquisitions and internal research and development efforts. If we are unabl
a e to
anticipate technological changes in our industry b
r
y introducing new, enhanced or expanded products and services in a timely
and cost-effe
f ctive manner or if we fai
f l to introduce products and services that meet market demand or gain market share, we
may lose our competitive position, our produc
d
ts may become obsolete, and our business, financial condition or results of
operations could be adversely affect
f
ed. For exam lple,
i
wi hth our most recen ltly i
y introduc d
ed 800
b
GbE, AI focused E hthernet products
and AI-D iriven Campus and Branch Netwo k
rking Offe iri g
ngs, our b
abili
ility to m iaint iain our competitive position with our customers
i
willll depe d
nd on our b
abilility
ity to deliliver these new products in a tim lely manner, our customers' acceptance of these pr d
oduc
d
ts and the
grow hth of hthe markets hthat hthese products serve. In d
addidi ition, hthe evaluation, testing a d
nd qualilififica ition of our new product b
s by our
customers m y
ay be le g
ngthy
hy and m y
ay re
i
quire increased customer t iri lals a d
nd contracts with acceptance
lclauses,
h
which d
h d lel y
ay
revenue recogni
gni ition and m y
ay nega itivelyly impact our revenue.
We remain in a period of new pr d
oduc i
t introduc itions, addi
ddi g
ng new customers and expa d
nded use cases, partic lularlyly in hthe
AI Ethernet ma k
rket. Thihi h
s has result d
ed in increas d
ed customer trials and contracts with acceptance periods, a d
nd an increase in hthe
l
volatility
ility and m g
ag initude of our pr d
oduc
d
d
t defer
f red revenue balances, whihi h
ch in turn may create variabibi
a lili yty in our revenue results
on a quarterlyly and annual b
l basis. In addi
ddi ition, ifif we are not b
able to sa itis y
fy hthe req iuirements u d
nder customer t iri lals or contracts with
acceptance periods, we m y
ay be re
i
quired to accept product retur
t
ns from our customers,
h
which w
l
ould prevent us from
recogni
gni izi g
ng revenue on such transactions and m y
ay result in hthe w irite d
-down of i
f inventory.
r
d
Addidi itionally
lly, fro
f
m time to time, we invest in expansio
i
n into adjdjacent markets
i
, includidi g
ng campus and Wi- i
Fi
networkiki g
ng, AI networkiki g
ng, lcl
d
oud and enterpr
r
ise routing markets, netwo k
rk secu iri yty ma k
rkets a d
nd SD-WAN ma k
rkets.
l
Al hthough
ough
we belilieve these solu itions are com lplementa y
ry to our current offe
f
iri g
ngs, w h
e hav l
e less expe irience and a more lili i
mited opera iti g
ng
hihistory i
y i
r
n these ma k
rkets, and our effo
f
rt i
s in thihis area m y
ay not be successf lul
f . Expa di
ndi g
ng our services in exis iti g
ng and new ma k
rkets
and i
d increasing the depth and
nd breadth of our presence imposes significant burdens on our marketing, compliance, and other
20
administrative and managerial resources. In addition, the markets for our products, particularly the AI Ethernet segment, are
characterized by rapi
a d evolution and volatility; consequently, these markets may experience significant fluctuations, including
prolonged slowdowns, cyclical contractions, or the correction of speculative bubbles that could adversely affect demand. Our
plan to expand and deepen our market share in our existing markets and possibly expand into additional markets is subj
u ect to a
variety of risks and challenges. Our success in these new markets depends on a variety of factors, including but not limited to
our abi
a lity to develop new products, product fea
f
tures and services that address the customer requirements for
f
these markets,
attract a customer base in markets in which we have less experience, compete with new and existing competitors in these
adja
d cent markets, and gain market acceptance of our new products. In addition, when we introduce new products, we expect
that it will take time for manufac
f
turing to ramp production and ful
f fill customer demand.
Developing our produc
d
ts is expensive, and the investment in product development typically involves a long payback
cycle.
We expect to continue to make subs
u
tantial i
l investments t
i
o introduce new pr d
oducts and ser ivices and e h
nhance the
func itionalility of our exis iti g
ng lcl
d
oud networkiki g
ng lplatform hthrough
ugh investment i
s in our resear h
ch and d
d dev lelopment o g
rganization, and
investment i
s in or acq iui isi itions of complementary c
r
ompa inies, products and tech
l
hnologi
ogies to expa d
nd our pr d
oduct offe iri g
ngs and
bui
buildld upon our te h
ch
l
nol gy
ogy le d
ader h
ship W
.
e expect that our results of operations will be impacted by the timing and size of these
investments. These investments may take several years to generate positive retur
t
ns, if ever.
Additionally, fut
f ur
t
e market share gains may take longer than planned and cause us to incur significant costs. If we are
unable to attract new large customers or to sell additional products and services to our existing customers, our revenue growth
will be adversely affec
f
ted, and our revenue could decrease. Difficulties in any of our new product development efforts or our
effo
f
rts to enter adja
d cent markets could adversely affect our operating results and fin
f ancial condition.
We fac
f
e intense competition, especially from larger, well-established companies and industry consolidation may lead to
increased competition, which may harm our business, financial condition, results of operations and prospects.
The markets in which we compete, including the markets for data center, campus networking, network visibility and
security and AI, are intensely competitive, and we expect competition to increase in the future from established competitors,
industry c
r
onsolidation and new market entrants. This competition has resulted in increased pricing pressure, which could result
in reduced profit
f
margins, increased sales and marketing expenses and the loss of market share, any of which would likely harm
our business, financial condition, results of operations and prospects.
The data center and campus networking markets have been historically dominated by Cisco, with competition also
coming from other large network equipment and system vendors, including Dell/EMC, Extreme Networks, He l
wlett P
k
ackard
Enterp irise, Huawei, Nvididia and whihite box networkiki g
ng ve d
ndors u il
tilizing open-source opera iting systems. Most of our
competitors and some strat g
egic lalliliance partners have made acq iui isi itions and/d/or have entered i
d into, or exte d
nded, partnershihips or
other strat g
egic rela itionshihips to offe
f r more compr h
ehen isive pr d
oduc l
t lines i
, includidi g
ng
lcl
d
oud networkiki g
ng solu itions and netwo k
rk
secu iri yty. For exam lple,
i
Cisco acq iuired Acacia Comm
i
unications, Bro d
adcom acq iuired Bro
d
cade Commu inica itions and VMware,
Dellll acq iuired Force10 Netwo k
rks, He l
wlett Packa d
rd Enterp irise acq iuired J
i
uniper Netwo k
rks, and N ivididi
h
a has made
isigni
gnifificant
investment in several AI Neo lcl
d
ouds. Moreover, la g
rge system vendors are increa isingl
ngly seekiki g
ng to deliliver ver iticalllly i
y int g
egrated
lcl
d
oud networkiki g
ng solu itions to customers that combibine lcl
d
oud-focused h
d hardware a d
nd software solu itions as an lalternative to our
pr d
oducts. We expect hthis trend to continue as companies attempt to stre g
ngthen their ma k
rket posi i
itions in an ev lol ivi g
ng industry
r
and as compa inies are acq iuired or are unablbl
a e to continue opera itions. I d
ndustry c
r
ons lolididation m y
ay result in stro g
nger compe ititors
hthat ar b
e better ablbl
a e to compete
i
wi hth us, a d
nd hthis co luld l
d lead to more variabibi
a lili yty ini
our results of operations and could have a
material adverse effect
f
on our business, the pricing of our solutions, financial condition, results of operations and prospects.
We also face competition fro
f
m other companies and new market entrants, including current technology partners,
suppl
u
iers and customers or other cloud service providers who may acquire or develop network switches and cloud service
solutions for internal use and/or to broaden their portfol
f io of products to market and sell to customers. Some of these
competitors are developing "white box" networking products based on open-source network operating systems that may be
provided for
f
free and off-t
f
he-shelf or commoditized hardware technology, or “white box” hardware, while other competitors
may adopt a disaggregated approach to the procurement of hardware and their proprietary software. Customers may also
increase their adoption of networking solutions based upon
u
open-source network operating systems that may be provided for
f
free and used either on “white box” or proprietary hardware. As new markets emerge like AI, we expect the fie
f ld to remain
intensely competitive as our competitors have made significant investments in such new markets. In addition, we have not
establ
a ished broad market awareness or acceptance of our AI Ethernet products that will compete against more establ
a ished
InfiniBand produc
d
ts or against the AI Ethernet products of other competitors. Furthermore, the entrance of new competitors into
21
our markets or the increased adoption of these new technology solutions or consumption models may cause downward pricing
pressures, result in lost sales or otherwise have a material adverse effect on our business, prospects, financial condition and
operating results.
Our relationships with our strategic alliance partners or suppliers may also shift as industry a
r
nd market dynamics
change. If strategic alliance partners acquire or develop competitive products or services, our relationship with those partners
may be adversely impacted, which could lead to more variabi
a lity to our results of operations and impact the pricing of our
solutions.
Many of our existing and potential competitors enjo
n y substantial competitive advantages, such as greater name
recognition and longer operating histories, larger sales and marketing budgets and resources, broader distribution and
establ
a ished relationships with channel partners and end customers, the ability to leverage their sales effo
f
rts across a broader
portfolio of products, the ability to bundle competitive offerings with other products and services or to reduc
d
e the price of
products and services that compete with ours in order to promote the sale of other products or services, the ability to develop
their own silicon chips, the abi
a lity to set more aggressive pricing policies, lower labor and development costs, greater resources
to make acquisitions, larger intellectua
t
l property rights portfol
f io, and subs
u
tantially greater fin
f ancial, technical, research and
development or other resources.
In addition, large competitors may have more extensive relationships with and within existing and potential customers
that provide them with an advantage in competing for
f
business with those customers or may have a dominant market position in
certain markets that they can utilize to leverage sales of their Ethernet switching and routing products. For example, certain
large competitors encourage customers of their other products and services to adopt their data networking solutions through
discounted bundled produc
d
t packages. Our ability to compete will depend upon our ability to provide a better solution than our
competitors at a more competitive price. We may be required to make substantial additional investments in research,
development, marketing and sales in order to respond to competition, and we cannot assure you that these investments will
achieve any retur
t
ns for us or that we will be abl
a e to compete successful
f ly in the fut
f ur
t
e.
We also expect increased competition if our market continues to expand. As we continue to expand globally, we have
seen and continue to see new competition in diffe
f rent geographic regions. In particular, we have experienced and could
continue to experience price-focused competition from competitors in Asia, especially from China. As we expand into new
markets, we will face competition not only fro
f
m our existing competitors but also from other competitors, including existing
companies with strong technological, marketing, and sales positions in those markets, as well as those with greater resources,
including technical and engineering resources, than we do. Conditions in our market could change rapi
a dly and significantly as a
result of technological advancements or other fact
f
ors.
We are subject to a number of risks associated with the expansion of our international sales and operations.
Our abi
a lity to grow our business and our future success will depend to a significant extent on our ability to expand our
operations and customer base worldwide. Many of our customers, resellers, partners, suppliers and manufac
f
turers operate
around the world. Operating in a global marketplace, we are subject to risks associated with having an international reach and
compliance and regulatory r
r
equirements. Our international operations are subject to a number of additional risks, including the
following:
•
abi
a lity to establ
a ish necessary business relationships and to comply with local business requirements, including
distributor and reseller relationships;
•
greater diffic
f ulty in enforcing contracts and accounts receivabl
a e collection and longer collection periods and non-
standard terms with customers related to payment, warranties or performance obligations;
•
increased management complexity involved in, and expenses incurred in establishing and maintaining our international
operations;
•
deterioration of political relations between the U.S. and China, Canada, Mexico, Russia and the European Union
("EU"), including increased trade and tariff related disputes changes in trade controls, economic sanctions, for
f
eign
investment laws and regulations, or other international trade regulations, all of which have generally recently trended
toward increasing breadth and complexity, and which may affe
f ct our ability to import or export our products to and
from various countries;
•
flu
f ctua
t
tions in exchange rates between the U.S. dollar and foreign currencies where we do business;
•
general economic and political conditions in these for
f
eign markets;
•
global macroeconomic conditions, including recessionary cycles;
22
•
U.S. and foreign legal requirements, including those relating to anti-corrupt
u ion, anti-bribery,
r
foreign investment,
telecommunications, cybersecurity, supply chain integrity, privacy, data protection and AI and cloud technology;
•
government trade restrictions and compliance, related to the exportation, re-exportation, sale, shipment or other
transfer
f
of programming, technology, components, and/or services to foreign persons;
•
unexpected changes in regulatory p
r
ractices, tariffs
f
and tax laws and treaties;
•
possible deterioration in relations between Taiwan and China, and other factors affecting military,
r
political, or
economic conditions in Taiwan or elsewhere in Asia;
•
the uncertainty of protection and enforcement for
f
intellectual property rights in some countries; and
•
heightened risk of unfai
f r or corrupt
u
business practices in certain geographies and of improper or fra
f udulent sales
arrangements that may impact fin
f ancial results and result in restatements of, or irregularities in, financial statements.
These and other fac
f
tors could harm our ability to gain future international revenue and, consequently, materially affect
our business, financial condition, results of operations and prospects. Expanding our existing international operations and
entering additional international markets will require significant management attention and fin
f ancial commitments. Our fai
f lure
to successful
f ly manage our international operations and the associated risks effectively could limit our future growth or
materially adversely affect our business, financial condition, results of operations and prospects.
New and changing laws, regulations, executive orders, directives, and enforcement priorities can adversely affect the
Company’s business by increasing the Company’s costs, limiting the Company’s abi
a lity to continuously navigate global supply
chain options in lieu of optimizing tariff outcomes, offe
f r a product or service to customers in a timely manner, impacting
customer demand for the Company’s products and services, and requiring changes to the Company’s business or supply chain.
New and changing laws, regulations, executive orders, directives, and enforcement priorities can also create uncertainty about
how such laws and regulations will be interpreted and applied.
We have invested and m y
ay continue to invest in or ac
i
quire other businesses w i
hich could req i
uire isignifific
f ant man g
agement
attention,
i
disrupt our business,
i
dilute stockholder value and adversely affffect our business, fifinancial con i
di ition, results f
of
opera itions and prospects.
As part of our business strategy, we have made and could continue to make investments in complementary companies,
products or technologies which could involve licenses, additional channels of distribution, discount pricing or investments in or
acquisitions of other companies. For example, we completed the acquisition of VeloCloud in June 2025 which required
management to focus efforts on integrating the VeloCloud business with the Company. In addition, the privately held
companies in which we invest are in the startup o
u
r development stages. These investments are inherently risky b
k
ecause the
markets for
f
the technologies or products these companies are developing are typically in the early stages and may never
materialize, and we could lose our entire investment in these companies. We may not be able to find suitabl
a e investment or
acquisition candidates and we may not be able to complete such investments or acquisitions on favorable terms, if at all. If we
do complete investments or acquisitions, we may not ultimately strengthen our competitive position or achieve our goals, and
any investments or acquisitions we complete could be viewed negatively by our customers, investors and securities analysts.
Through acquisitions, we continue to expand into new markets and we may experience challenges in entering into new markets
for which we have not previously manufac
f
tured and sold products, including facing exposure to new market risks, difficulty
achieving expected business results due to a lack of experience in new markets, products or technologies or the initial
dependence on unfam
f
iliar distribution partners or vendors.
In addition, investments and acquisitions may result in unfor
f
eseen operating difficulties and expenditures. If we are
unsuccessful
f
at integrating any acquisitions or retaining key talent from those acquisitions, or the technologies associated with
such acquisitions, into our company, the business, financial condition, results of operations and prospects of the combined
company could be adversely affected. Any integration process may require significant time and resources, and we may not be
able to manage the process successfully. Acquisitions may also disrupt
u
our ongoing business, divert our resources and require
significant management attention that would otherwise be availabl
a e for
f
development of our business. We may not successful
f ly
evaluate or utilize the acquired technology or personnel or accurately forecast the fin
f ancial effe
f cts of an acquisition transaction,
including accounting charges. Any acquisition or investment could expose us to unknown liabi
a lities. Moreover, we cannot
assure you that the anticipated benefits of any acquisition or investment would be realized or that we would not be exposed to
unknown liabi
a lities. We may not be successful
f
in retaining or expanding the customers and sales activities of any acquired
business or in realizing the expected operational and cost effi
f ciencies anticipated with the acquisition. We may have to pay
cash, incur debt or issue equity securities to pay for
f
any such investment or acquisition, each of which could adversely affect
our fin
f ancial condition or the market price of our common stock. The sale of equity or issuance of debt to finance any such
23
acquisitions could result in dilution to our stockholders. The incurrence of indebtedness would result in increased fixed
obligations and could also include covenants or other restrictions that would impede our ability to manage our operations.
Moreover, if the investment or acquisition becomes impaired, we may be required to take an impairment charge, which could
adversely affect our financial condition or the market price of our common stock.
Industry cyclicality may cause flu
f
ctuations in our revenue and results of operations.
Our business is reliant on demand for network infrastructur
t
e, which rises and fal
f ls in cycles. Moreover, business cycles
vary somewhat in different geographical regions and by customer type. Our customers’ demand is driven by, among other
factors, the development of new network infra
f structur
t
e and the refre
f shment of existing network infra
f structur
t
e. Cyclical changes
in our customers’ demand for our produc
d
ts and services, particularly changes in the demand of our largest customers, could
result in fluctuations in our revenue, revenue growth and results of operations. We believe that this cyclicality results from a
number of fac
f
tors, including the specific procurement, budgeting and deployment cycles of our customers as well as the impact
of general economic conditions on business operations and investment. The effe
f cts of supply chain disrupt
r
ions and our rapi
a d
growth may have reduc
d
ed the impact of cyclical factors that might otherwise have influ
f enced our business and broader industry
r
performance. If our growth rates slow, cyclical variations in our operations may become more pronounced over time and may
materially affe
f ct our business, financial condition, results of operations and prospects.
We are exposed to fluctuations in currency exchange rates, which could adversely affect our business, financial
condition, results of operations and prospects.
Our sales contracts are primarily denominated in U.S. dollars, and therefor
f
e, subs
u
tantially all of our revenue is not
subj
u ect to foreign currency risk; however, an increase in the U.S. dollar could result in an increase in the cost of our products to
our customers outside of the U.S., which could adversely affect our business, financial condition, results of operations and
prospects. In addition, a decrease in the value of the U.S. dollar relative to for
f
eign currencies could increase our product and
operating costs in foreign locations. Further, a portion of our operating expenses is incurred outside the U.S., is denominated in
foreign currencies and is subj
u ect to fluctuations due to changes in for
f
eign currency exchange rates. If we are not able to
successful
f ly hedge against the risks associated with the currency flu
f ctua
t
tions, our business, financial condition, results of
operations and prospects could be adversely affected.
Any fai
f lure to raise additional capital to expand our operations, invest in new products or for other corporate purposes
on terms satisfactory to us could reduce our ability to compete and could harm our business, financial condition, results
of operations and prospects.
We expect that our existing cash and cash equivalents, will be sufficient to meet our anticipated cash needs for the
foreseeabl
a e fut
f ur
t
e. If we did need to raise additional funds
f
to expand our operations, invest in new products or for other
corporate purpos
r
es, we may not be able to obtain additional debt or equity financing on terms satisfactory t
r
o us. If we raise
additional equity financing, our stockholders may experience significant dilution of their ownership interests, and the market
price of our common stock could decline. Furthermore, if we engage in debt financing, the holders of such debt would have
priority over the holders of common stock, and we may be required to accept terms that restrict our ability to incur additional
indebtedness or impose other restrictions on our business. We may also be required to take other actions that would otherwise
be in the interests of the debt holders, including maintaining specified liquidity or other ratios, any of which could harm our
business, financial condition, results of operations and prospects. If we need additional capital and cannot raise it on acceptabl
a e
terms, we may not be abl
a e to, among other things, enhance our products and services, expand our sales and marketing and
research and development organizations, acquire complementary t
r
echnologies, products or businesses, and respond to
competitive pressures or unanticipated working capital requirements. Our fai
f lure to do any of these things could seriously harm
our business, financial condition, results of operations and prospects.
Risks Related to Customers and Sales
If we are unable to attract new large customers or to sell additional products and services in the AI Ethernet, Campus
Workspace and Network Security Markets, to our existing customers, our revenue growth will be adversely affected and
our revenue could decrease.
To increase our revenue, we must add new customers, especially large customers, and sell additional products and
services to existing customers. For example, one of our sales strategies is to expand our current footpr
t
int by targeting our
current customers for
f
specific proje
o cts as opportunity with current customers is significant given their existing infrastructur
t
e
and expected future spend. We are also foc
f
used on increasing penetration in the enterprise, campus and AI markets. However,
24
sales strategies foc
f
used on expansion to adjacent markets can require more time and effort since enterpr
r
ise and campus
customers typically start with small purchases, and in the case of new markets such as AI where we are introduc
d
ing new
products there are ofte
f n longer testing and qualification periods. For this reason, in order to grow our revenue, it is important for
us to attract new large customers. Some factors that may limit our ability to attract new large customers include, but are not
limited to, saturation with certain large cloud networking customers, customers priorities and initiatives to invest in new
technology, competition, decreased capi
a tal spending by such customers, a limited number of such customers, and a decline in
growth at such customers. Additionally, fro
f
m time to time we update our sales struc
r
ture, systems, procedur
d
es and policies, and
the fai
f lure of any of these updates to perform as expected or our inability to successful
f ly manage such updates could adversely
impact our business, financial condition, results of operations and prospects. If we fail to attract new large customers, including
enterprise, campus and AI customers, fail to reduce the sales cycle and sell additional products to our existing customers or if
our products are not accepted by these customers, our business, financial condition, results of operations and prospects will be
harmed.
Sales of our switches and routing platforms generate most of our product revenue, and if we are unable to continue to
grow sales of these products, our business, financial condition, results of operations and prospects will suffe
f r.
i
Historic lallyly, w
h
e hav
d
e deriv d
ed subs
u
tantially
lly
lall of our pr d
oduct revenue from s lales of our swit h
ching a d
nd routing
plplatforms, and we expect to continue to do so for the forese
b
eable future. W h
e have expe irienced d
d d
l
eclines in sales for
f
some of our
pr d
oducts over time as hth y
ey mature and are supe
u
rs d
ed d
ed by
by pr d
oducts
i
wi hth improved performance and f
d func
f
itionalility.
d
A decliline in
hthe p irice of switches a d
nd related ser ivices, or our in b
abili
ili yty to increase s lales of hthese products, w
l
ould h
d harm our business, fifinancial
co di
ndi ition, results of opera itions and prospects more se iriouslyly hthan ifif we de irived sigig inifificant revenue from a la g
rg rer variety of
product lines and services. Our fut
f ur
t
e fin
f ancial performance will also depend upon successful
f ly developing and selling next-
generation versions of our switches. If we fail to deliver new products, new featur
t
es, or new releases that customers want and
that allow us to maintain leadership in what will continue to be a competitive market environment, our business, financial
condition, results of operations and prospects will be harmed.
If we are unable to increase market awareness or acceptance of our new products and services, our revenue may not
continue to grow or may decline.
We have not yet est b
ablilished b
d bro d
ad ma k
rket awareness or acceptance of pr d
oducts and ser ivices hthat we have intr d
oduc d
ed in
hthe AI E hthernet, campus wo k
rkspace and netwo k
rk secu iri yty ma k
rkets. Market awareness of our value proposition and products and
services will be essential to our continued growth and our success, particularly for the service provider and broader enterpr
r
ise
markets. Additionally, because we are introducing new products in markets such as the AI Ethernet market, some products are
subj
u ect to trials, testing, qualific
f ation and acceptance periods. If our marketing efforts are unsuccessful
f
in creating market
awareness of our company and our products and services or in gaining access to new customer markets, or ifif hthese new
pr d
oducts and ser ivices are not accept d
ed by
by customers, hthen our business, fifinancial c
di
ondi ition, results of opera itions n
a d prospects
will be adversely affected, and we will not be able to achieve sustained growth.
The sales prices of our products and services may decrease, which may reduce our gross profits and adversely affe
f ct our
results of operations.
The sales prices for our produc
d
ts and services may decline for
f
a variety of reasons, including competitive pricing
pressures, discounts, a change in our mix of products and services, the introduction of new products and services by us or by
our competitors including the adoption of “white box” solutions, promotional programs, or broader macroeconomic factors. In
addition, we have provided, and plan to continue to provide in the fut
f ur
t
e, pricing discounts to large customers, which may result
in lower margins for the period in which such sales occur. Our gross margins may also fluctuate as a result of the timing of such
sales to large customers.
We have hihistoric lallyly expe irien
d
ced de lclines in sales p irices for
f
some of our pr d
oducts and ser ivices a d
nd co luld continue to
expe irience su h
ch de lclines. Compe iti ition continues t i
o increas i
e in the ma k
rket i
s in whihi h
ch we participate, and we expect competi i
ition
to furthe i
r increase i
e n the future, thereby leading to increased pricing pressures. Larger competitors with more diverse product
and service offe
f rings may reduc
d
e the price of products and services that compete with ours or may bundle them with other
products and services. Additionally, although we generally price our products and services worldwide in U.S. dollars, currency
fluctuations in certain countries and regions may adversely affect actual prices that partners and customers are willing to pay in
those countries and regions. Furthermore, sales prices and gross profit
f s for
f
our products may decrease over product life c
f
ycles.
Decreased sales prices for
f
any reason may reduce our gross profits and adversely affect our result of operations.
25
Our sales cycles can be long and unpredictable, and our sales efforts require considerable time and expense. As a result,
our sales and revenue are diffi
f cult to predict and may vary substantially fro
f
m period to period, which may cause our
results of operations to flu
f
ctuate signific
f antly.
The timing of our sales and revenue recognition is diffi
f cult to predict because of the length and unpredictabi
a lity of our
products’ sales cycles. A sales cycle is the period between initial contact with a prospective customer and any sale of our
products. End-customer orders ofte
f n involve the purchase of multiple products. These orders are complex and diffi
f cult to
complete because prospective customers generally consider a number of fact
f
ors over an extended period of time befor
f
e
committing to purchase the products and solutions we sell. Customers, especially our large customers, often view the purchase
of our products as a significant and strategic decision and require considerable time to evaluate, test and qualify our products
prior to making a purchase decision and placing an order. The length of time that customers devote to their evaluation, contract
negotiation and budgeting processes varies significantly. In addition, customers may delay upgr
u
ades to their network
infrastructur
t
e which extends the upgr
u
ade and sales cycle. Our products’ sales cycles are lengthy in certain cases, especially with
respect to our prospective large customers and certain markets including the enterpr
r
ise, campus and AI markets. During the
sales cycle, we expend significant time and money on sales and marketing activities and make investments in evaluation
equipment, all of which lower our operating margins, particularly if no sale occurs. Even if a customer decides to purchase our
products, there are many fac
f
tors affe
f cting the timing of our recognition of revenue, which makes our revenue difficult to
forecast. For example, there may be unexpected delays in a customer’s internal procurement processes, particularly for some of
our larger customers for
f
which our produc
d
ts represent a very small percentage of their total procurement activity. In addition,
due to macroeconomic uncertainties, the sales cycle may be extended and there may be delays and reduc
d
tions of expenditures
and cancellations by customers. There are many other fact
f
ors specific to customers that contribute to the timing of their
purchases and the variabi
a lity of our revenue recognition, including acceptance terms contained in such agreements, the strategic
importance of a particular project to a customer, budgetary constraints and changes in their personnel.
In addition, the significance and timing of our product enhancements, and the introduction of new products by our
competitors, may also affe
f ct customers’ purchases. For all of these reasons, it is diffi
f cult to predict whether a sale will be
completed, the particular period in which a sale will be completed or the period in which revenue from a sale will be
recognized, if at all. If our sales cycles lengthen or acceptance of such products is not achieved, our revenue could be lower than
expected, which would have an adverse effect
f
on our business, financial condition, results of operations and prospects.
If we are unable to offer high-quality support and services offe
f rings, this could adversely affect our business, financial
condition, results of operations and prospects.
Once our produc
d
ts are deployed within our customers’ networks, our customers depend on our suppor
u
t organization
and our channel partners to resolve any issues relating to our products. High-quality support is critical for
f
the successful
f
marketing and sale of our produc
d
ts. If we or our channel partners do not assist our customers in deploying our products
effe
f ctively, do not succeed in helping our customers resolve post-deployment issues quickly or do not provide adequate
ongoing suppor
u
t, or if we experience quality issues with these new products, it could adversely affect our ability to sell our
products to existing customers and could harm our reputation with potential customers. In addition, as we continue to expand
our operations internationally, our suppor
u
t organization will face additional challenges, including those associated with
delivering support, training and documentation in languages other than English. Our fai
f lure or the fai
f lure of our channel
partners to maintain high-quality suppor
u
t and services could have a material adverse effect on our business, financial condition,
results of operations and prospects.
Declines in maintenance renewals and support contracts by customers could harm our future business, financial
condition, results of operations and prospects.
We typically sell our produc
d
ts with maintenance and suppor
u
t as part of the initial purchase, and a portion of our
revenue comes fro
f
m renewals of maintenance and support contracts. Our customers have no obligation to renew their
maintenance and suppor
u
t contracts after the expiration of the initial period, and they may elect not to renew their maintenance
and support contracts, to renew their maintenance and suppor
u
t contracts at lower prices through alternative channel partners or
to reduce the product quantity under their maintenance and suppor
u
t contracts, thereby reduc
d
ing our future revenue from
maintenance and suppor
u
t contracts. If our customers, especially our large customers, do not renew their maintenance and
suppor
u
t contracts or if they renew them on terms that are less favorable to us, our revenue may decline and our business,
financial condition, results of operations and prospects will suffe
f r.
26
Our standard sales contracts contain indemnific
f ation provisions requiring us to defend our customers against third-
party claims that could expose us to losses which could seriously harm our business, financial conditions, results of
operations and prospects.
Under the indemnific
f ation provisions of our standard sales contracts, we agree to defen
f
d our customers and channel
partners against third-party claims asserting infri
f ngement, misappropriation or other violation of certain intellectua
t
l property
rights, which may include patents, copyrights, trademarks or trade secrets, and to pay judgments entered on such claims. An
adverse rul
r ing in such litigation may potentially expose us to claims in the event that claims are brought against our customers
based on the ruling and we are required to indemnify s
f
uch customers.
Our exposure under these indemnific
f ation provisions is frequently limited to the total amount paid by our customer
under the agreement. However, certain agreements include indemnific
f ation provisions that could potentially expose us to losses
in excess of the amount received under the agreement. Any of these events, including claims for indemnific
f ation, could
seriously harm our business, financial condition, results of operations and prospects.
In addition to our own direct sales force, we rely on distributors, systems integrators and value-added resellers to sell
our products, and our fai
f lure to effe
f ctively develop, manage or prevent disruptions to our distribution channels and the
processes and procedures that support them could cause a reduction in the number of customers of our products.
Our fut
f ut re success is highly dependent upon maintaining our relationships with distributors, systems integrators and
value-added resellers and establishing additional sales channel relationships. We anticipate that sales of our products to a
limited number of channel partners will continue to account for a material portion of our total product revenue for the
foreseeabl
a e fut
f ur
t
e. We provide our channel partners with specific training and programs to assist them in selling our products,
but these steps may not be effe
f ctive. In addition, our channel partners may be unsuccessful
f
in marketing, selling and supporting
our products and services. If we are unabl
a e to develop and maintain effective sales incentive programs for
f
our channel partners,
we may not be able to incentivize these partners to sell our products to customers. These partners may have incentives to
promote our competitors’ produc
d
ts to the detriment of our own or may cease selling our products altogether. One of our channel
partners could elect to consolidate or enter into a strategic partnership with one of our competitors, which could reduc
d
e or
eliminate our future opportunities with that channel partner. Our agreements with our channel partners may generally be
terminated for any reason by either party with advance notice. We may be unabl
a e to retain these channel partners or secure
additional or replacement channel partners. The loss of one or more of our significant channel partners requires extensive
training, and any new or expanded relationship with a channel partner may take several months or more to achieve productivity.
Where we rely on the channel partners for
f
sales of our products, we may have little or no contact with the ultimate
users of our produc
d
ts that purchase through such channel partners, thereby making it more diffi
f cult for us to establish brand
awareness, ensure proper delivery a
r
nd installation of our products, service ongoing end-customer requirements, estimate end-
customer demand and respond to evolving end-customer needs. In addition, our channel partner sales struc
r
ture could subject us
to lawsuits, potential liabi
a lity and reputational harm if, for example, any of our channel partners misrepresent the functionality
of our produc
d
ts or services to customers, fail to comply with their contractua
t
l obligations or violate laws such as the U.S.
Foreign Corrupt
u
Practices Act or other applicable anti-corrupt
u ion laws or our corporate policies. If we fail to effe
f ctively manage
our existing sales channels, or if our channel partners are unsuccessful
f
in fulfill
f
ing the orders for our products, if we are unabl
a e
to enter into arrangements with, and retain a suffi
f cient number of, high-quality channel partners in each of the regions in which
we sell products and keep them motivated to sell our products, our ability to sell our products and our business, financial
condition, results of operations and prospects will be harmed.
A portion of our revenue is generated by sales to government entities, which are subject to a number of challenges and
risks.
We anticipate increasing our sales efforts to U.S. and foreign, federal, state and local governmental customers in the
future. Sales to government entities are subject to a number of risks. Selling to government entities can be highly competitive,
expensive and time consuming, ofte
f n requiring significant upf
u
ro
f
nt time and expense without any assurance that these effo
f
rts
will generate a s lale.
h
The s b
ubstantial majajority of our sales t d
o date t g
o government en i i
titie h
s hav b
e been m d
ad i
e i di
ndirectlyly hthrough
ugh our
h
channel partners. Government certifific
f
tation requirements for
f
products like ours may change and, in doing so, restrict our ability
to sell into the government sector until we have attained revised certifications. Government demand and payment for our
products and services may be affect
f
ed by public sector budgetary cycles and fundi
f
ng authorizations, with fundi
f
ng reductions or
delays adversely affect
f
ing public sector demand for our products and services. Government entities may have statutory,
contractua
t
l or other legal rights to terminate contracts with our distributors and resellers for convenience or due to a defau
f
lt.
27
Selling to government entities requires us to comply with various regulations that are not applicable to sales to non-government
entities, including regulations that may relate to pricing, prohibitions against use of certain foreign components in our products
and services, anti-corrupt
u ion and other matters. The U.S. government may require certain products that it purchases to be
manufact
f
ur
t
ed in, or may require that products it purchases contain a certain threshold of “domestic origin” components fro
f
m,
the U.S. and other relatively high-cost manufac
f
turing locations, and we may not manufact
f
ur
t
e all products in locations that meet
these requirements.
Complying with these regulations also requires us to put in place controls and procedur
d
es to monitor compliance with
applicable regulations that may be costly or not possible. Governments also routinely investigate and audit government
contractors’ administrative processes and contract compliance. Failure to comply with the terms of our government contracts or
applicable regulations, or an unfav
f
orable audit, could result in the government ceasing to buy our products and services, a
reduction of revenue, fin
f es or civil or criminal liabi
a lity, all of which could have a material adverse effect on our business,
financial condition, results of operations and prospects.
We are exposed to the credit risk of our channel partners and some of our customers, which could result in material
losses.
Most of our contracts with customers are on an open credit basis, with standard pa
p yment terms of 30 to 90 days. We
mo inito i
r i di
ndi ividu lal end-customer payment cap b
abili
ili yty in gran iting
n
such open credit arrangements, seek to limit such open credit
to amounts we believe the customers can pay and maintain reserves we believe are adequate to cover exposure for
f
doubtful
accounts. We are unabl
a e to recognize revenue from shipments until the collection of those amounts becomes reasonabl
a y
assured. Any significant delay or default in the collection of significant accounts receivabl
a e could result in an increased need for
us to obtain working capital from other sources, possibly on worse terms than we could have negotiated if we had establ
a ished
such working capital resources prior to such delays or defau
f
lts. Any significant default could adversely affect our results of
operations, liquidity, and delay our ability to recognize revenue.
A material portion of our sales is derived through our distributors, systems integrators and value-added resellers. Some
of our distributors, systems integrators and value-added resellers may experience financial diffi
f culties, which could adversely
affe
f ct our collection of accounts receivable. Distributors tend to have more limited fin
f ancial resources than other systems
integrators, value-added resellers and customers. Distributors represent potential sources of increased credit risk because they
may be less likely to have the reserve resources required to meet payment obligations. Our exposure to credit risks of our
channel partners may increase if our channel partners and their customers are adversely affected by global or regional economic
conditions. One or more of these channel partners could delay payments or default on credit extended to them, either of which
could materially adversely affect our business, financial condition, results of operations and prospects.
Risks Related to Products and Services
Product quality problems, defects, errors or vulnerabilities in our products or services could harm our reputation and
adversely affect our business, financial condition, results of operations and prospects.
We produce highly complex produc
d
ts that incorporate advanced technologies, including both hardware and software
technologies. Despite testing prior to their release, our products may contain undetected defects or errors, especially when fir
f st
introduced or when new versions are released. Product defec
f
ts or errors could affect the performance of our produc
d
ts, could
result in a fai
f lure of appropriate updates to be distributed or installed, could delay the development or release of new products
or new versions of products, and could result in warranty claims and product liabi
a lity claims from customers. Any actual or
perceived defec
f
t, error, or vulnerabi
a lity in our products or services, or other allegations of unsatisfactory p
r
erformance could
cause us to lose revenue or market share, increase our service costs, cause us to incur substantial costs in analyzing, correcting
or redesigning the products or otherwise addressing defects, errors or vulnerabi
a lities, cause us to lose significant customers,
harm our reputation and market positions, subje
b ct us to liability for damages, subject us to litigation, regulatory i
r
nquiries or
investigations, and divert our resources fro
f
m other tasks, any one of which could materially adversely affect our business,
financial condition, results of operations and prospects.
From time to time, we have had to replace certain components of products that we had shipped and provide
remediation in response to the discovery of defects or bugs, including failures in software protocols or defec
f
tive component
batches resulting in reliabi
a lity issues, in such products, and we may be required to do so in the future. We may also be required
to provide full replacements or refunds for such defect
f
ive products. We cannot assure you that such remediation or any of the
28
other circumstances described above
a
, including claims, litigation, or regulatory i
r
nvestigations, would not have a material effect
on our business, financial condition, results of operations and prospects.
fIf we do not succes fsful
f
yly an iti icipate technologigical s i
hifts an
i
d introduce products and product enhancements that meet
those technologigical s i
hifts, ifif those products are not made
i
availabl i
e in a itime yly manner or do not gai
gain market acceptance,
or ifif we do not succes fsful
f
yly manage produc i
t introduc itions, we may not be able to compete effffectively, and our ability to
generate revenue
i
will suffffer.
We must continue to enhance our existing products and develop new technologies and products that address emerging
technological trends, evolving industry s
r
tandards and changing end-customer needs. The process of enhancing our existing
products and developing new technology is complex and uncertain, and new offerings require significant upf
u
ro
f
nt investment
that may not result in material design improvements to existing products or result in marketable new products or costs savings
or revenue for an extended period of time, if at all.
In addition, new technologies could render our existing products obsolete or less attractive to customers, and our
business, financial condition, results of operations and prospects could be materially adversely affected if such technologies are
widely adopted. For example, customers may prefer to address their network switch requirements by licensing software
operating systems separately and placing them on “white box” hardware rather than purchasing integrated hardware products as
has occurred in the server industry.
r
Additionally, customers may require product upgr
u
ades including higher Ethernet speeds and
additional fun
f
ctionality to address the increasing demands of cloud computing environments.
In the past several years, we have announced a number of new products and enhancements to our products and
services, including new products in the AI Ethernet, campus workspace and network security markets. The success of our new
products depends on several factors including, but not limited to, appropriate new product defin
f ition, the development of
product feat
f
ur
t
es that sufficiently meet end-user requirements, our ability to manage the risks associated with new product
production ramp-up issues, component costs, availabi
a lity of components, timely completion and introduction of these products,
prompt solution of any defec
f
ts or bugs in these products, our ability to support these products, diffe
f rentiation of new products
from those of our competitors and market acceptance of these products. For example, our new product releases will require
strong execution fro
f
m our third-party merchant silicon chip supp
u
liers to develop and release new merchant silicon chips that
satisfy end-customer requirements, to meet expected release schedul
d es and to provide sufficient quantities of these components.
If we are unabl
a e to successful
f ly manage our product introductions or transitions, or if we fai
f l to penetrate new markets, as a
result of any of these or other fact
f
ors, our business, financial condition, results of operations and prospects could be adversely
affe
f cted.
Our product releases introduced new softw
f
are products that include the capability for disaggregation of our software
operating systems from our hardware. The success of our strategy to expand our software business is subject to a number of
risks and uncertainties including the additional development efforts and costs to create these new products or make them
compatible with other technologies, the potential for our strategy to negatively impact revenue and gross margins and additional
costs associated with regulatory c
r
ompliance.
We may not be able to successful
f ly anticipate or adapt
a
to changing technology or end-customer requirements on a
timely basis, or at all. If we fail to keep up with technology changes or to convince our customers and potential customers of the
value of our solutions even in light of new technologies, we may lose customers, decrease or delay market acceptance and sales
of our present and future produc
d
ts and services and materially and adversely affect our business, financial condition, results of
operations and prospects.
If we are unable to devote the necessary resources to ensure that our products interoperate with operating systems,
software applications and hardware that is developed by others, we may lose or fail to increase market share and
experience a weakening demand for our products.
Generally, our produc
d
ts comprise only a part of the network infrastruc
r
ture and must interoperate with our customers’
existing infra
f structur
t
e, specifically their networks, servers, software and operating systems, any of which may be manufac
f
tured
by a wide variety of vendors and OEMs. Our products must comply with establ
a ished industry s
r
tandards to interoperate with the
servers, storage, software and other networking equipment in the network infra
f structur
t
e such that all systems func
f
tion
effi
f ciently together. We depend on the vendors of servers and systems in a data center to support prevailing industry s
r
tandards.
Ofte
f n, these vendors are significantly larger and more influ
f ential in driving industry s
r
tandards than we are. Also, some industry
r
29
standards may not be widely adopted or implemented uniformly and competing standards may emerge that may be preferred by
our customers.
In addition, when new or upda
u
ted versions of these software operating systems or appl
a
ications are introduced, we must
sometimes develop updated versions of our software so that our products will interoperate properly. We may not accomplish
these development effor
f
ts quickly, cost-effe
f ctively or at all. These development efforts require capi
a tal investment and the
devotion of engineering resources. If we fai
f l to maintain compatibility with these systems and appl
a
ications, our customers may
not be able to adequately utilize our produc
d
ts, and we may lose or fai
f l to increase market share and experience a weakening in
demand for our produc
d
ts, among other consequences, which would adversely affect our business, financial condition, results of
operations and prospects.
Risks Related to Supply Chain and Manufac
f
turing
pp y
g
Insuffi
ffi icient component supply and inventory man g
agement and the itime to ma
f
nufac
f
ture our products may resul i
t in lost
sales opportunities or delayed revenue, while excess inventory may harm our gross margins.
Managing our manufact
f
ur
t
ing capacity and extended supply chain is complex, and our inventory m
r
anagement systems
and related suppl
u
y-chain visibility tools may not enable us to effe
f ctively manage the suppl
u
y of our products and product
components. Our abi
a lity to manage our suppl
u
y chain has also and could continue to be adversely affected by other fac
f
tors
including geopolitical conditions such as international trade tensions between the U.S. and China, Canada, Mexico and other
countries where we manufact
f
ur
t
e our produc
d
ts including Malaysia and Vietnam, the Russia-Ukraine confli
f ct and related
economic sanctions against Rus
R
sia, and political tensions between China and Taiwan. Global geopolitical and macroeconomic
uncertainties have resulted in prolonged manufac
f
turing and supply chain disrupt
r
ions, including temporary c
r
losures of certain
manufact
f
ur
t
ing and suppl
u
ier fac
f
ilities particularly within China and controls on certain suppl
u
ies including China's restrictions on
the use of certain U.S. products and its export controls on metals used in semiconductor manufac
f
turing such as gallium and
germanium which, in tur
t
n, have caused and may continue to cause shortages of, and extended lead times for, components used
to manufact
f
ur
t
e our produc
d
ts, increases in the prices for
f
such components, a reduc
d
tion, unpredictabi
a lity or interrupt
u ion of supply,
prioritization of component shipments to other vendors and decommitments of orders. Insufficient component suppl
u
y, and
increases in the time required to manufac
f
ture our products could lead to prolonged inventory s
r
hortages, manufac
f
turing
disrupt
r
ions and increased customer lead times for
f
our products, and could result in increased cancellation of orders or loss of
future sales opportunities altogether as potential customers tur
t
n to competitors’ products that are readily availabl
a e. In addition,
in order to meet customer lead times, we have had to, and may continue to expedite the supply of components and make
incremental investments in our suppl
u
y chain to increase our capacity for
f
manufact
f
ur
t
ing products, which increases our product
costs and negatively affects our gross margin.
In order to reduc
d
e lead times in our suppl
u
y chain and plan for
f
adequate component suppl
u
y, we have issued and expect
to continue to issue purchase orders for
f
components and produc
d
ts that are non-cancellabl
a e and non-returnable, including
purchase commitments for
f
semiconductors as disclosed in Note 5. Commitments and Contingencies of the Notes to
Consolidated Financial Statements included in Part II, Item 8, of this Annual Report on Form 10-K. We anticipate continued
volatility in our inventory a
r
d
nd pur h
chase com i
mitments.
h
This va iri b
abili
ility i
y i
d
s d irive
b
n by new pr d
oduc i
t introduc itions, shihift
i
s in
customer dema d
nd, a d
nd flfluctuations in su
l
ppl
u
ie l
r lead times. In par iticular, we have increas d
ed our pur h
chase com i
mitments to
resp
d
ond to hthe rapidid de lpl y
oyment of AI netwo k
rks a d
nd reduce overallll le d
ad itimes whihi h
ch
i
willll increase our wo k
rking capit lal
re
i
quirement .s In addition, we m y
ay have to increase our pur h
chase com i
mitment
i
s in response to the tig
tightening of s
l
upply
co di
ndi itions in hthe memory m
r
arket.
h
Ther
i
e is n
g
o guarantee hthat su
l
ppl
u
iers
i
willll meet hth ieir commit
mitments or that actua
t
l customer
demand will not be lower than our demand forecasts. Additionally, certain customers have and may continue to engage in cost
reduction measures including reductions in capi
a tal expenditures and other efficiency effo
f
rts, which may result in a cancellation
of orders or reduce demand for
f
our produc
d
ts. We establish a liability for non-cancellabl
a e, non-returnable purchase commitments
with our component inventory s
r
uppliers for quantities in excess of our demand forecasts, or for
f
products that are considered
obsolete. In addition, we establ
a ish a liability and reimburse our contract manufact
f
ur
t
er for component inventory p
r
urchased on
our behalf that has been rendered excess or obsolete due
d
to manufac
f
turing and engineering change orders, or in cases where
inventory l
r
evels greatly exceed our demand for
f
ecasts. The magnitude of these balances, combined with shifti
f ng product
priorities, has resulted in increased risk that we may not be able to sell all of this inventory,
r
which in tur
t
n has resulted, and may
in the fut
f ur
t
e result, in additional excess and obsolete inventory-
r
related charges. Our non-cancellabl
a e commitments and the cash
deposits to secure our purchases with our contract manufact
f
ur
t
ers are disclosed in Note 5. Commitments and Contingencies of
the Notes to Consolidated Financial Statements included in Part II, Item 8, of this Annual Report on Form 10-K. If we
ultimately determine that we have excess or obsolete inventory,
r
we may have to reduc
d
e our prices and write down inventory t
r
o
30
its estimated realizable value, which in turn could result in lower gross margins. If we are unabl
a e to effectively manage our
suppl
u
y and inventory,
r
our business, financial condition, results of operations and prospects could be adversely affected.
We are susceptible to manufac
f
turing delays and pricing fluctuations that could prevent us from shipping end-customer
orders on time, if at all, or on a cost-effective basis, which may result in the loss of sales and customers.
We depe d
nd on hthird-party contract manufact
f
ur
t
ers to manufac
f
ture our pr d
oduc l
t lines. A isigni
gnifificant por ition of our cost of
revenue consists of payments to
hthese thihi d
rd-par yty contract manufact
f
ur
t
ers. Our r leliance on these
hthird-party contract
manufact
f
ur
t
ers r d
educ
d
es our control over the manufac
f
tu iri g
ng process, quality
lity assurance, pr d
oduct costs and product s
l
upply a d
nd
i i
timing,
h
which exposes us to opera itional risks in lcl di
udi g
ng hth ieir abibi
a lili yty to b
obt iain suffifi
f
icient components for
f
our pr d
oducts in a tim lely
manner a d
nd to ramp manufact
f
ur
t
ing suffifi
f
icien ltly to meet our customer dema d
nd. Our reliance on contract manufac
f
turers also
yields the potential for their infringement, misappropriation or other violation of third-party intellectua
t
l property rights in the
manufact
f
ur
t
ing of our produc
d
ts or their infri
f ngement, misappropriation or other violation of our intellectua
t
l property rights in the
manufact
f
ur
t
ing of other customers’ products. If we are unabl
a e to manage our relationships with our third-party contract
manufact
f
ur
t
ers effect
f
ively, or if these third-party manufact
f
ur
t
ers suffe
f r delays or disrupt
u ions or quality control problems in their
operations, experience increased manufac
f
turing lead times, capacity constraints or fai
f l to meet our future requirements for
f
timely delivery, our ability to ship produc
d
ts to our customers would be severely impaired, and our business, financial condition,
results of operations and prospects would be seriously harmed.
To the extent that our produc
d
ts are manufact
f
ur
t
ed at facilities in for
f
eign countries, we may be subj
u ect to additional risks
associated with complying with local rul
r es and regulations in those jurisdictions. Shelter in place orders, factory c
r
losures or
reductions in staffi
f ng at our manufac
f
turing sites would result in material disrupt
u ions, increased lead times and supply shortages
of our products. Due to their existence in for
f
eign locations, our contract manufac
f
turers may also be subject to or become subject
to new or increased tariffs w
f
hich, if suffi
f ciently high, may affect the profitabi
a lity of these operations and may require relocation
to new locations, moves which may require bearing associated costs. There is no guarantee that any contract manufact
f
ur
t
ing
location will not be targeted by tariffs o
f
r other trade measures imposed by the United States or another country.
Our contract manufact
f
ur
t
ers typically fulfill
f
our suppl
u
y requirements on for
f
ecasts and individual purchase orders. We
do not have long-term contracts with our third-party manufac
f
turers that guarantee capacity, the continuation of particular
pricing terms or the extension of credit limits. Accordingly, they are not obligated to continue to fulfil
f l our suppl
u
y requirements,
which could result in supply shortages, and the prices we are charged for manufac
f
turing services could be increased on short
notice. For example, our contract with one of our contract manufact
f
ur
t
ers permits it to terminate the agreement for
f
convenience,
subj
u ect to prior notice requirements. We may not be able to develop alternate or second contract manufac
f
turers in a timely
manner.
If we add or change contract manufac
f
turers or change any manufact
f
ur
t
ing plant locations within a contract
manufact
f
ur
t
er network, we would add additional complexity and risk to our suppl
u
y chain management and may increase our
working capital requirements. Ensu iri g
ng a new contract manufac
f
turer or new
lplan l
t locatio
i
n is qualilififi d
ed and h
d has suffi
ffi icient
manufact
f
ur
t
ing cap
i
aci yty to manufac
f
ture our pr d
oduc
d
ts to our standa d
rds a d
nd industry r
r
eq iuirements c
l
ould t k
ake sigig inifificant effort and
be
be itime consu i
ming a d
nd expensive, and a y
ny delays or faililures to
d
adequatelyly ramp pr d
oduc ition to meet our customer dema d
nd
co luld n g
egativ lely i
y impact our bu isiness, fin
f an ici lal co di
ndi ition, results of opera itions and prospects. A y
ny
d
addidi ition or
h
change in
manufact
f
ur
t
ers m y
ay be extrem lely cos ltly, itime consuming a d
nd we may not be b
able to do so successf lul
f lyly. Furthermore, when we
introduce new products, it could take time for manufac
f
turing to ramp production and ful
f fill customer demand.
In addition, we may be subje
b ct to additional significant challenges to ensure that quality, processes and costs, among
other issues, are consistent with our expectations and those of our customers. A new contract manufac
f
turer or manufac
f
turing
location may not be able to scale its production of our products at the volumes or quality we require. This could also adversely
affe
f ct our ability to meet our scheduled produc
d
t deliveries to our customers, which could damage our customer relationships
and cause the loss of sales to existing or potential customers, late delivery p
r
enalties, delayed revenue or an increase in our costs
which could adversely affe
f ct our gross margins. This could also result in increased levels of inventory s
r
ubjecting us to
increased risk of excess and obsolete inventory c
r
harges that could have a negative impact on our operating results.
Any production interrupt
u ions, labor shortages or disrupt
u ions for any reason, including those noted above, as well as a
natural disaster, epidemic, war, capacity shortages, adverse results from intellectua
t
l property litigation or quality problems, at
one of our manufactur
t
ing partners would adversely affect sales of our product lines manufact
f
ur
t
ed by that manufact
f
ur
t
ing partner
and adversely affect our business, financial condition, results of operations and prospects.
31
We base our inventory requirements on our for
f
ecasts for
f
future sales. If these demand for
f
ecasts materially change from
our initial projections, we may procure inventory that we may be unable to use in a timely manner or at all.
We and our contract manufact
f
ur
t
ers procure components and build our products based on our forecasts. These for
f
ecasts
are based on estimates of fut
f ur
t
e demand for
f
our products, which are in tur
t
n based on historical trends and analysis fro
f
m our
sales and marketing organizations, adjusted for
f
overall market conditions and other factors. In order to address customer
demand and extended lead times, we have entered, and may continue to enter, into significant purchase commitments with our
contract manufact
f
ur
t
ers and suppl
u
iers, with issuance of non-cancellabl
a e purchase orders for
f
such commitments. In particular, we
have increased our purchase commitments to respond to the rapid deployment of AI networks and reduce overall lead times
which will increase our working capital requirements. We may also need to increase our purchase commitments in response to
the tightening of supply conditions in the memory m
r
arket. There is no guarantee that suppl
u
iers will meet their commitments or
that actua
t
l customer demand will directly match our demand forecasts. If our forecasts materially change from our initial
projections, customers' orders are cancelled or if we otherwise do not need such inventory,
r
we may under- or over-procure
inventory,
r
which could materially and adversely affect our business, financial condition and results of operations.
Interruptions or delays in shipments could cause our revenue for the applicable period to fall below expected levels.
We have been and could be subje
b ct to manufac
f
turing disrupt
r
ions and supply chain delays in the fut
f ur
t
e. This places
significant pressure on supply chain management, manufact
f
ur
t
ing, inventory a
r
nd quality control management, shipping and
trade compliance. Consequently, this has hindered and may continue to hinder our ability to for
f
ecast component suppl
u
y,
manufact
f
ur
t
ing capacity and timing of inventory r
r
eceipts. A significant interrupt
u ion in these critical functions has resulted and
could continue to result in delayed order fulfil
f lment or cancellation of orders, which may negatively impact our relationships
with our customers, reduce fut
f ur
t
e sales or otherwise adversely affect our business, financial condition, results of operations and
prospects and result in a decline in the market price of our common stock.
Risks Related to Intellectual Property and Other Proprietary Rights
p
y
p
y
g
Assertions by third parties of infringement, misappropriation or other violations by us of their intellectual property
rights, or other lawsuits asserted against us, could result in significant costs and substantially harm our business,
financial condition, results of operations and prospects.
Patent and other intellectua
t
l property rights disputes are common in the network infra
f structur
t
e, network security and
Wi-Fi industries and have resulted in protracted and expensive litigation for
f
many companies. Many companies in the network
infrastructur
t
e, network security and Wi-Fi industries, including our competitors and other third parties, as well as non-
practicing entities, own large numbers of patents, copyrights, trademarks, trade secrets and other intellectua
t
l property rights,
which they may use to assert claims of infringement, misappropriation, or other violations of intellectua
t
l property rights against
us. From time to time, they have or may in the fut
f ur
t
e also assert such claims against us, our customers or channel partners
whom we typically indemnify a
f
gainst claims that our products infringe, misappropriate or otherwise violate the intellectua
t
l
property rights of third parties.
As the number of products and competitors in our market increases and overlaps occur, or if we enter into new
markets, claims of infringement, misappropriation and other violations of intellectual property rights may increase. Any claim
of infringement, misappropriation or other violations of intellectua
t
l property rights by a third-party, even those without merit,
could cause us to incur substantial costs defending against the claim, distract our management from our business and require us
to cease use or practice of such intellectua
t
l property. In addition, some claims for patent infri
f ngement may relate to
subc
u
omponents that we purchase fro
f
m third parties. If these third parties are unabl
a e or unwilling to indemnify u
f
s for
f
these
claims, we could be substantially harmed.
The patent portfol
f ios of most of our competitors are larger than ours. This disparity may increase the risk that our
competitors may sue us for patent infri
f ngement and may limit our ability to counterclaim for
f
patent infringement or settle
through patent cross-licenses. In addition, future assertions of patent rights by third parties, and any resulting litigation, may
involve patent holding companies or other adverse patent owners who have no relevant product revenue and against whom our
own patents may therefore provide little or no deterrence or protection. We cannot assure you that we are not infringing,
misappr
a
opriating or otherwise violating any third-party intellectua
t
l property rights.
The third-party asserters of intellectua
t
l property rights infri
f ngement claims may be unreasonabl
a e in their demands, or
may simply refuse to settle, which could lead to expensive settlement payments, longer periods of litigation and related
expenses, additional burdens on employees or other resources, distraction from our business, suppl
u
y stoppages and lost sales.
32
An adverse outcome of a dispute may require us to pay substantial damages or penalties including treble damages if
we are found
f
to have willful
f ly infringed a third-party’s patents; cease making, licensing, using or importing into the U.S.
products or services that are alleged to infringe, misappropriate or violate the intellectua
t
l property rights of others; expend
additional development resources to attempt to redesign our products or services or otherwise to develop non-infringing
technology, which may not be successful
f ; enter into potentially unfav
f
orable royalty or license agreements in order to obtain the
right to use necessary technologies or intellectual property rights; and indemnify o
f
ur partners and other third parties. Any
damages, penalties or royalty obligations we may become subj
u ect to as a result of an adverse outcome, and any third-party
indemnity we may need to provide could harm our business, financial condition, results of operations and prospects. Royalty or
licensing agreements, if required or desirable, may be unavailabl
a e on terms acceptable to us, or at all, and may require
significant royalty payments and other expenditures. Further, there is little or no infor
f
mation publicly availabl
a e concerning
market or fair values for license fees, which can lead to overpayment of license or settlement fee
f
s. In addition, some licenses
may be non-exclusive, and therefore our competitors may have access to the same technology licensed to us. Suppl
u
iers subj
u ect
to third-party intellectua
t
l property rights infri
f ngement claims also may choose or be for
f
ced to discontinue or alter their
arrangements with us, with little or no advance notice to us. Any of these events could seriously harm our business, financial
condition, results of operations and prospects.
In the event that we are found
f
to infringe, misappropriate or violate any third-party intellectua
t
l property rights, we
could be enjoined, or subject to other remedial orders that would prohibit us, from making, licensing, using or importing into
the U.S. or elsewhere such produc
d
ts or services. In order to resume such activities with respect to any affected products or
services, we (or our component suppl
u
iers) would be required to develop technical redesigns that no longer infri
f nge,
misappr
a
opriate or violate the third-party intellectua
t
l property right. In any effo
f
rts to develop technical redesigns for these
products or services, we (or our component suppl
u
iers) may be unabl
a e to do so in a manner that does not continue to infringe the
third-party intellectua
t
l property right or that is acceptabl
a e to our customers. These redesign efforts could be extremely costly
and time consuming as well as disrupt
u ive to our other development activities and distracting to management. Moreover, such
redesigns could require us to obtain appr
a
ovals from the court or administrative body to resume the activities with respect to
these affec
f
ted solutions. We may not be successful
f
in our effo
f
rts to obtain such appr
a
ovals in a timely manner, or at all. Any
failure to effectively redesign our solutions or to obtain timely appr
a
oval of those redesigns by a court or administrative body
may cause a disrupt
u ion to our produc
d
t shipments and materially and adversely affect our business, prospects, reputation, results
of operations, and financial condition. For example, in two prior investigations brought by Cisco in the International Trade
Commission (“ITC”), we were subj
u ected to remedial orders that prohibited us fro
f
m importing and selling after importation any
products the ITC found to infringe Cisco’s patents. As a result, we were required to redesign certain aspects of our products and
obtain U.S. Customs and Border Protection’s appr
a
oval of those redesigns before we could continue to import those products
into the United States.
If we are unable to protect our intellectual property rights, our competitive position could be harmed or we could be
required to incur significant expenses to enforce our rights.
We depend on our ability to protect our proprietary technology. We rely on trade secret, patent, copyright and
trademark laws and confid
f entiality agreements with employees and third parties, all of which offe
f r only limited protection.
The process of obtaining patent protection is expensive and time-consuming, and we may not be able to prosecute all
necessary or desirabl
a e patent appl
a
ications at a reasonabl
a e cost or in a timely manner. We may choose not to seek patent
protection for
f
certain innovations and may choose not to pursue patent protection in certain jurisdictions. Further, we do not
know whether any of our pending patent applications will result in the issuance of patents or whether the examination process
will require us to narrow our claims. To the extent that additional patents are issued from our patent applications, which is not
certain, they may be contested, circumvented or invalidated in the future. Moreover, the rights granted under any issued patents
may not provide us with proprietary p
r
rotection or competitive advantages, and, as with any technology, competitors may be
able to develop similar or superior technologies to our own now or in the fut
f ur
t
e. In addition, we rely on confid
f entiality or
license agreements with third parties in connection with their use of our products and technology. There is no guarantee that
such parties will abide by the terms of such agreements or that we will be able to adequately enforce our rights, in part because
we rely on “shrink-wrap” or other unsigned licenses in some instances.
We have not registered our trademarks in all geographic markets. Failure to secure those registrations could adversely
affe
f ct our ability to enfor
f
ce and defen
f
d our trademark rights and result in indemnific
f ation claims. Further, any claim of
infringement by a third-party, even those claims without merit, could cause us to incur substantial costs defending against such
33
claim, could divert management attention from our business and could require us to cease use or practice of such intellectua
t
l
property in certain geographic markets.
Despite our effo
f
rts, the steps we have taken to protect our proprietary rights may not be adequate to preclude
misappropriation of our proprietary i
r
nfor
f
mation or infringement of our intellectua
t
l property rights, and our ability to police such
misappropriation or infri
f ngement or any other violation is uncertain, particularly in countries outside of the United States.
Detecting and protecting against the unauthorized use of our products, technology and proprietary rights is expensive,
diffic
f ult and, in some cases, impossible. Litigation may be necessary in the fut
f ur
t
e to enfor
f
ce or defend our intellectua
t
l property
rights, to protect our trade secrets or to determine the validity and scope of the proprietary rights of others. Such litigation could
result in subs
u
tantial costs and diversion of management resources, either of which could harm our business, financial condition,
results of operations and prospects, and there is no guarantee that we would be successful
f . Furthermore, many of our current
and potential competitors have the abi
a lity to dedicate subs
u
tantially greater resources to protecting their technology or
intellectual property rights than we do. Accordingly, despite our efforts, we may not be able to prevent third parties fro
f
m
infringing or misappr
a
opriating our intellectua
t
l property rights, which could result in a subs
u
tantial loss of our market share.
We rely on the availability of licenses to third-party software and other intellectual property.
Many of our produc
d
ts and services include software or other intellectua
t
l property licensed fro
f
m third parties, and we
otherwise use software and other intellectual property licensed from third parties in our business. This exposes us to risks over
which we may have little or no control. For example, a licensor may have difficulties keeping up w
u
ith technological changes or
may stop supporting the software or other intellectua
t
l property that it licenses to us. Also, it will be necessary in the fut
f ur
t
e to
renew licenses, expand the scope of existing licenses or seek new licenses, relating to various aspects of these products and
services or otherwise relating to our business, which may result in increased license fees. These licenses may not be availabl
a e
on acceptabl
a e terms, if at all. In addition, a third-party may assert that we or our customers are in breach of the terms of a
license, which could, among other things, give such third-party the right to terminate a license or seek damages fro
f
m us, or
both. The inabi
a lity to obtain or maintain certain licenses or other rights or to obtain or maintain such licenses or rights on
favorable terms, or the need to engage in litigation regarding these matters, could result in delays in releases of products and
services and could otherwise disrupt
r
our business, until equivalent technology can be identifie
f d, licensed or developed, if at all,
and integrated into our produc
d
ts and services or otherwise in the conduct of our business. Moreover, the inclusion in our
products and services of software or other intellectua
t
l property licensed fro
f
m third parties on a nonexclusive basis may limit our
ability to differentiate our produc
d
ts from those of our competitors. Lastly, our use of third-party technology may subject us to
claims of infringement which could result in a material adverse effect on our business, financial condition, results of operations
and time-intensive litigation and for which we may not be eligible for indemnific
f ation protections. Any of these events could
have a material adverse effect
f
on our business, financial condition, results of operations and prospects.
Our products contain third-party open source software components, and fai
f lure to comply with the terms of the
underlying open source software licenses could restrict our ability to sell our products.
Our products contain softw
f
are modules licensed to us by third-party authors under “open source” licenses. Use and
distribution of open source softw
f
are may entail greater risks than use of third-party commercial softw
f
are, as open source
licensors generally do not provide warranties or other contractua
t
l protections regarding intellectua
t
l property rights
infringement, misappropriation or violation claims or the quality of the code. Some open source licenses contain requirements
that we make availabl
a e source code for modifications or derivative works we create based upon the type of open source
software that we use. Furthermore, many terms used in open source licenses have not yet been interpr
r
eted by courts in the U.S.
so there is a risk that the terms of such licenses could be construe
r
d to impose unanticipated obligations on us or unanticipated
conditions or restrictions on our ability to market our products and services. If we combine our software with open source
software in a certain manner, we could, under certain open source licenses, be required to release portions of the source code of
our softw
f
are to our customers or the public more generally. This would allow our competitors to create similar products with
lower development effor
f
t and time and ultimately could result in a loss of product sales for us.
Although we monitor our use of open-source software to avoid subjecting our products to conditions we do not intend,
the terms of many open source licenses have not been interpreted by U.S. courts, and these licenses could be construe
r
d in a way
that could impose unanticipated conditions or restrictions on our ability to commercialize our products. Moreover, we cannot
assure you that our processes for
f
controlling our use of open-source software in our products will be effe
f ctive. If we are held to
have breached the terms of an open source software license, we could be required to seek licenses fro
f
m third parties to continue
offe
f ring our products on terms that are not economically feasible, to re-engineer our products, to discontinue the sale of our
34
products if re-engineering could not be accomplished on a timely basis or to make generally availabl
a e, in source code form, our
proprietary code, any of which could adversely affect our business, financial condition, results of operations and prospects.
We provide access to our software and other selected source code to certain partners, which creates additional risk that
our competitors could develop products that are similar to or better than ours.
Our success and abi
a lity to compete depend substantially upon
u
our internally developed technology, which is
incorporated in the source code for our produc
d
ts. We seek to protect the source code, design code, documentation and other
information relating to our software, under trade secret, patent and copyright laws. However, we have chosen to provide access
to selected source code of our software to several of our partners for co-development, as well as for open appl
a
ication APIs,
formats and protocols. Though we generally control access to our source code and other intellectual property and enter into
confid
f entiality or license agreements with such partners as well as with our employees and consultants, this combination of
procedur
d
al and contractua
t
l safeg
f
uards may be insufficient to protect our trade secrets and other rights to our technology. Our
protective measures may be inadequate, especially because we may not be able to prevent our partners, employees or
consultants fro
f
m violating any agreements or licenses we may have in place or abus
a
ing their access granted to our source code.
Improper disclosure or use of our source code could help competitors develop products similar to or better than ours.
Risks Related to Cybersecurity and Data Privacy
y
y
y
Our products, services, and external facing or internal network systems, or those of third parties on which we rely,
could experience cybersecurity incidents, and defect
f
s, errors, or vulnerabilities in our products, or the misuse of our
products, could lead to cybersecurity incidents or a failure to detect cybersecurity incidents, create product liability
risks, damage our reputation, adversely impact our operating results, or otherwise negatively impact our business.
Our products, services, and external facing or internal network systems could experience cybersecurity incidents or
become a target for
f
security attacks, including attacks specifically designed to disrupt
u
our business and our customers and
introduce malicious software and attacks by state sponsors. For example, we could fac
f
e attacks that involve the introduction of
malicious software to our produc
d
ts, services, networks, or damage or exfiltration of our data or that of our customers; or are
perceived to have been compromised, our reputation may be damaged and our financial results may be negatively affected.
In addition defects, errors, or vulnerabi
a lities in our security platform or in the hardware upon
u
which it is deployed,
including as a result of misuse or a failure to implement updates to such platfor
f
m, could temporarily or permanently limit our
detection capabilities and expose our end-customers’ networks, leaving their networks unprotected against the latest security
threats, or otherwise lead to cybersecurity incidents. If customers of our security platform do suffer a cybersecurity incident,
even if it is not attributable to a fai
f lure of our platform, customers may believe that our platform failed to detect a threat or
vulnerability, which could harm our reputation or negatively affect our financial results.
The classific
f ations of application type, virus
r
, spyware, vulnerabi
a lity exploits, data, or URL categories by our security
platform may also fal
f sely detect, report and act on applications, content, or threats that do not actually exist. These fal
f se
positives may impair the perceived reliabi
a lity of our security platform and may therefor
f
e adversely impact market acceptance of
our security platform. Any such false identific
f ation of important files or appl
a
ications could result in damage to our reputation,
negative publicity, loss of channel partners, end-customers and sales, increased costs to remedy any problem, and costly
litigation.
We, or third parties on which we rely, could experience cybersecurity incidents relating to our information systems, or
our products, services, or data, which could disrupt our operations or our ability to provide services, cause
vulnerabilities or perceived vulnerabilities in our product, compromise intellectual property or other sensitive data,
harm our reputation, damage customer or other relationships, delay our ability to recognize revenue, lead to significant
costs, legal proceedings, legal liability, or enforcement actions, or otherwise negatively impact our business.
We, like all technology companies, depend upon information technology systems to conduct virtually all business
operations, ranging from internal operations and product development activities to marketing and sales effo
f
rts and
communications with customers and business partners. We could experience disrupt
r
ions, cybersecurity breaches, and other
cybersecurity incidents relating to our information systems, or our products, services, or data. We could also be impacted by
cybersecurity incidents through third parties on which we rely. We have outsourced some business func
f
tions to third parties,
including our manufact
f
ur
t
ers, logistics providers, and cloud service providers. We also rely upon
u
distributors, resellers and
system integrators to sell our produc
d
ts. We also depend upon
u
our employees, and the technology our employees use to comply
with the security measures we have institut
t ed to prevent and mitigate cybersecurity incidents.
35
We, or third parties on which we rely, could experience disrupt
r
ions, cybersecurity breaches, and other cybersecurity
incidents with many different types of causes, including phishing schemes and other social engineering methods, fra
f ud and
other malfeasance, denial of service attacks, vulnerabi
a lities or defect
f
s in design or manufac
f
ture, unintended technical errors,
misconfig
f urations, “bugs,” viruses, ransomware and other malware, mishandling of data or other mistakes by employees or
other insiders, and attacks by insiders or external parties. Sophisticated, or even unsophisticated, persons or organizations may
attempt to compromise our systems, or third party systems on which we rely, and access, use, destroy, impair, or obtain
confid
f ential, personal, or otherwise sensitive or proprietary information and could compromise our systems, products, services
and networks, or those of third parties on which we rely. Geopolitical tensions and conflic
f
ts, such as the Russia-Ukraine
confli
f ct, and deteriorating U.S.-China relations, may create a greater risk of cyberattacks against our company and our
manufact
f
ur
t
ers, suppliers, logistics providers, banks and other business partners. Our acquisition of Awake Security and our
provision of its NDR platform may result in us being a more attractive target for
f
such attacks. We may also face
f
increased risks
of cybersecurity incidents in connection with personnel working remotely.
We may experience cybersecurity incidents that we do not detect, or that we do not detect for extended periods of
time. The techniques used to carry out attacks are constantly evolving, and it may be more difficult to detect attacks involving
techniques that we are not aware of or have not anticipated.
If we, or any of the aforementioned third parties, or any other third parties capable of introducing risks to our system
or operations, experience a cyberattack or any other kind of cybersecurity incident, our ability to conduct our business
effe
f ctively could be damaged in a number of ways, including:
•
intellectua
t
l property or other proprietary o
r
r sensitive data regarding our business or our customers could be stolen or lost,
modified, rendered unavailabl
a e, or otherwise assessed, used, or processed in authorized manners;
•
our systems, including email and other communication methods, and access to or availabi
a lity of data, could be disrupt
u ed or
harmed, or we may experience other types of outages, and our ability to conduct operations could be seriously damaged until
such systems or data access and availabi
a lity can be restored, which we may be unabl
a e to achieve promptly, or at all;
•
our ability to process customer orders and electronically deliver products and services could be degraded, and our distribution
channels could be disrupt
u ed, resulting in delays in revenue recognition;
•
defect
f
s and security vulnerabi
a lities could be introduced into our software, thereby damaging the reputation and perceived
reliability and security of our products and potentially making the data systems of our customers vulnerabl
a e;
•
our manufact
f
ur
t
ing process, products, services, suppl
u
y chain, systems and data could be corrupt
u ed or disrupt
r
ed; and
•
personal data of our customers, employees, contractors, and business partners could be lost, accessed, obtained, modified,
disclosed, used, or otherwise processed without authorization, corrupt
u ed or made unavailabl
a e, or otherwise compromised.
If we experience a cybersecurity incident, or if any of the above
a
events occur, or are perceived to have occurred, we
could be subject to significant claims for
f
liability fro
f
m our customers and others and regulatory i
r
nvestigations and actions from
governmental agencies, and we could be required to expend signific
f ant capital and other resources to remediate and otherwise
address any incident, including to notify i
f
ndividuals, entities, or regulatory b
r
odies. In addition, our ability to protect our
intellectual property rights could be compromised and our reputation and competitive position could be significantly harmed.
The regulatory a
r
nd contractua
t
l actions, proceedings, litigation, investigations, fin
f es, penalties and liabilities relating to any
actua
t
l or perceived incidents can be significant in terms of fin
f es and reputational impact and necessitate changes to our business
operations that may be disrupt
u ive to us. We could incur significant costs to upgr
u
ade our systems and measures in an effo
f
rt to
prevent network and system disrupt
u ions and other cybersecurity incidents. Even the perception of inadequate security may
damage our reputation and negatively impact our ability to win new customers and retain existing customers. Consequently, our
financial performance and results of operations could be adversely affe
f cted by any of the foregoing types of incidents or
perceived incidents.
We cannot assure that any limitation of liabi
a lity provisions in our customer agreements, contracts with third-party
vendors and service providers or other contracts would be enfor
f
ceable or adequate or would otherwise protect us fro
f
m any
liabi
a lities or damages with respect to any particular claim relating to a security breach or other security-related matter. We also
cannot be certain that our insurance coverage will be adequate for liabi
a lities incurred, that insurance will continue to be
availabl
a e to us on economically reasonable terms, or at all, or that any fut
f ur
t
e claim will not be excluded or otherwise be denied
coverage by any insurer. The successful
f
assertion of one or more large claims against us that exceed availabl
a e insurance
36
coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large
deductible or co-insurance requirements, could have a material adverse effect on our business, including our reputation,
financial condition and operating results.
Risks Related to Accounting, Compliance, Regulation and Tax
g,
p
,
g
Foreign investment laws and regulations, and other trade or regulatory barriers, may have a negative effect on global
economic conditions, financial markets and our business.
In addition to laws aimed directly at trade, failure of our products to comply with a broader set of evolving industry
r
standards and government regulations may adversely impact our business and in particular our ability to market in particular
countries. Our products must comply with various U.S. federal government regulations and standards defin
f ed by agencies such
as the Federal Communications Commission, standards established by governmental authorities in various foreign countries
and recommendations of the International Telecommunication Union. In some circumstances, we must obtain regulatory
r
approvals or certific
f ates of compliance before we can offe
f r or distribute our products in certain jurisdictions or to certain
customers. In recent years, certain jurisdictions have tied these appr
a
ovals to concerns about international relationships,
including, e.g., concerns about entities with components sourced from or tested in China. Complying with new regulations or
obtaining certific
f ations, especially as standards evolve, may be costly and disrupt
u ive to our business and also may affect our
ability to sell our produc
d
ts where these standards or regulations apply, which in tur
t
n may prevent us fro
f
m sustaining our net
revenues or achieving profita
f
bi
a lity.
Enhanced U.S. trade restrictions affect
f
ing China and other countries, including export controls, import regulations, and
foreign investment regulations, as well as countermeasures taken by affected countries may have a negative effect on
global economic conditions, financial markets and our business.
Over the past several years, the U.S. government has enacted a series of enhanced international trade restrictions
affe
f cting China and other countries which have included additional export controls and sanctions, import regulations and
foreign investment regulations. For example, the U.S. has added additional entities, from China and elsewhere, to restricted
party lists impacting the ability of U.S. companies to provide products, and in certain cases services, to these entities and, in
some cases, receive products or services from these entities. Beginning in October 2022, the U.S. expanded controls restricting
the abi
a lity to send certain produc
d
ts and technology related to semiconductors, semiconductor manufact
f
ur
t
ing, and
supe
u
rcomputing. Although new regulations introduced in January 2025 further expanding the controls to impose a worldwide
licensing requirement on certain ICs and computing resources that are used for
f
training of AI models were rescinded prior to
the schedul
d ed compliance date, we expect the U.S. government may issue new controls on similar technologies in the fut
f ur
t
e.
The U.S. government also expanded the scope of restrictions on the development or production of advanced ICs and certain
semiconductor manufact
f
ur
t
ing equipment, and the restrictions on supe
u
rcomputing, though certain U.S. export controls have been
partially relaxed pursuant to the bilateral trade negotiations between the U.S. and China since May 2025. Further changes to any
of these policies are possible.
Due to concerns with produc
d
ts and services from certain semiconductor, telecommunications and video providers
based in China, U.S. Congress has also enacted bans on the use of certain Chinese-origin components or systems either in items
sold to the U.S. government or, in some cases, in the internal networks of government contractors and subc
u
ontractors (even if
those networks are not used for government-related proje
o cts).
Further, the U.S. government has imposed trade restrictions to address international human rights abus
a
es. For example,
in June 2022, the import restrictions contained in the Uyghur Forced Labor
a
Prevention Act ("UFLPA") became effec
f
tive. The
UFLPA creates a rebuttabl
a e presumption that any goods mined, produced or manufact
f
ur
t
ed, wholly or in part in the Xinji
n ang
Uyghur Autonomous Region (“XUAR”) of China, or produced by a UFLPA-listed entity, were made with forced labor
a
and
would therefore not be entitled to entry at any U.S. port. Importers may be required to present clear and convincing evidence
that such goods are not made with forced labor
a
. While we do not source items fro
f
m the XUAR or from UFLPA-listed parties,
and we have increased our suppl
u
y chain diligence, there is risk that our ability to import components and products may be
adversely affected by the UFLPA.
The U.S. government also recently introduced regulations that require notific
f ation of or prohibit certain transactions by
the Company with entities in China or with certain linkages to China. These regulations could appl
a
y to certain intracompany
activities with our China and Hong Kong subs
u
idiaries or other activities with entities in China or with linkages to China. These
regulations could also limit the abi
a lity of others to transact certain business with the Company if those transactions involve or
37
benefit, directly or indirectly our operations in China. Where these new rul
r es apply to a given transaction, it might limit our
ability to carry out our long-term business strategy.
These controls or any additional restrictions may impact our ability to export certain products to China or other
countries, prohibit us fro
f
m selling our produc
d
ts to certain of our customers, restrict our ability to use certain ICs in our products,
impact our suppl
u
iers who may utilize faci
f
lities or equipment described in these controls, or impact the cost of components or
inputs used to produce our produc
d
ts. These measures may also increase in response to certain geopolitical events, such as the
recently shifte
f d international trade landscape
a
, or if the relationship between the U.S. and China or between China and Taiwan
otherwise deteriorates.
The Chinese government has retaliated to, and may continue to retaliate to, these or other U.S. trade restrictions in
ways that could impact our business. For example, China has announced controls on both the use of Micron products and export
controls on certain materials used, among other things, in the production of semiconductors, optical components, and other
electronic devices including germanium and gallium. These Chinese export controls have been the subject of bilateral trade
negotiations between the U.S. and China, and have been partially relaxed since May 2025, though further changes are possible.
Further, the Chinese government has responded to these U.S. actions by adding U.S. entities to an unreliabl
a e entity list, which
limits the abi
a lity of companies on the list to engage in business with Chinese customers. These restrictions could disrupt
u
the
ability of China to procure or produce semiconductors and other electronics, impact our ability to source components fro
f
m
China, or impact the cost of components or inputs used to produce our products.
Given the relatively flu
f id regulatory e
r
nvironment in China and the United States, there is uncertainty with how the
U.S. government or foreign governments will act in response to changes in tariffs
f , trade policies, and for
f
eign investment laws
and regulations, which could directly and adversely impact our financial results and results of operations. We cannot predict
what actions may ultimately be taken with respect to trade relations between the United States and China or other countries,
what products may be subj
u ect to such actions or what actions may be taken by the other countries in retaliation. If these trade
restrictions, including foreign investment restrictions, or trade barriers remain in place or if new trade restrictions or trade
barriers are placed on products such as ours by U.S. or for
f
eign governments, especially China, our costs may increase. If we
are unabl
a e to obtain or use components for
f
inclusion in our products, if component prices increase significantly or if we are
unable to export or sell our produc
d
ts to any of our customers, our business, liquidity, fin
f ancial condition, and/or results of
operations would be materially and adversely affected.
If we fail to maintain effe
f ctive internal control over fin
f
ancial reporting in the fut
f
ure, the accuracy and timing of our
financial reporting may be adversely affe
f cted.
Assessing our processes, procedur
d
es and staffing in order to improve our internal control over fin
f ancial reporting is an
ongoing process. Preparing our financial statements involves a number of complex processes, many of which are dependent
upon individual data input or review and are subj
u ect to human error. These processes include, but are not limited to, calculating
revenue, inventory c
r
osts and the preparation of our statement of cash flo
f ws. Although we continue to automate our processes
and enhance our review controls to reduce the likelihood of errors, in the future we may not be able to assert that our internal
controls over fin
f ancial reporting are effe
f ctive under Section 404 of the Sarba
r
nes-Oxley Act, which may adversely affect the
reliability of our financial statements.
If our estimates or judgments relating to our critical accounting policies are based on assumptions that change or prove
to be incorrect or if there is a change in accounting principles, our results of operations could fal
f l below expectations of
securities analysts and investors, resulting in a decline in the market price of our common stock.
The preparation of financial statements in confor
f
mity with accounting principles generally accepted in the United
States requires management to make estimates and assumptions that affe
f ct the amounts reported in the consolidated financial
statements and accompanying notes. A change in these principles or interpr
r
etations could harm our revenue and fin
f ancial
results and could affect
f
the reporting of transactions completed befor
f
e the announcement of a change. In addition, we base our
estimates on historical experience and on various other assumptions that we believe to be reasonabl
a e under the circumstances,
as described in "Management’s Discussion and Analysis of Financial Condition and Results of Operations", in Part II, Item 7,
of this Annual Report on Form 10-K, the results of which for
f
m the basis for
f
making judgments about the carrying values of
assets, liabi
a lities, equity, revenue and expenses. Significant assumptions and estimates used in preparing our consolidated
financial statements include those related to revenue recognition, inventory v
r
aluation and supplier liabi
a lities, income taxes and
loss contingencies. If our assumptions change or if actua
t
l circumstances differ fro
f
m those in our assumptions, our results of
38
operations may be adversely affect
f
ed and may fall below the expectations of securities analysts and investors, resulting in a
decline in the market price of our common stock.
Changes in our income taxes or our effe
f ctive tax rate, enactment of new tax laws or changes in the application of
existing tax laws of various jurisdictions or adverse outcomes resulting from examination of our income tax returns
could adversely affect our results.
Our income taxes are subject to volatility and could be adversely affected by several fact
f
ors, some of which are outside
of our control, including the manner in which we structur
t
e our international operations, and any transfer pricing adju
d stments
from tax authorities as a result thereof tax effect
f
s of nondeductible compensation, including certain stock-based compensation;
changes in accounting principles; changes in tax law and regulations, treaties, or interpretation thereof; i
f
mposition of
withholding or other taxes on payments by subs
u
idiaries or customers; or a change in our decision to indefinitely reinvest certain
foreign earnings.
Judgment is required to evaluate our tax positions and determine our income tax liabi
a lity. The accounting guidance for
f
uncertainty in income taxes appl
a
ies to all income tax positions, including the potential recovery of previously paid taxes, which
if settled unfav
f
orably could adversely affect income taxes.
Taxation of earnings inside and outside of the U.S. may have adverse effects on our operating results and could impact
the tax treatment of our earnings and cash and cash equivalent balances we currently maintain. For example, on July 4, 2025,
the U.S. enacted tax legislation commonly refer
f red to as the One Big Beautiful Bill Act ("OBBB Act"), which includes changes
to the deduc
d
tibility of certain domestic expenses effe
f ctive for
f
tax years starting afte
f r December 31, 2024 and modifications to
the international tax framework effe
f ctive for
f
tax years starting on or after December 31, 2025. The Organization for
f
Economic
Cooperation and Development (“OECD”), has introduced a global minimum tax initiative (“Pillar Two”), which many
countries, including members of the EU, have adopted or are considering implementing through domestic legislation. On
January 5, 2026, the OECD announced its “side-by-side” elective safe h
f
arbor
r
package that would exempt U.S.-parented
multinational entities fro
f
m certain provisions of Pillar Two for fis
f cal years beginning on or afte
f r January 1, 2026. We have
assessed the impacts of these new laws on countries that we operate in and do not currently anticipate any material impacts on
our effective tax rate. However, we cannot provide any assurance that there will not be a material impact to our effe
f ctive tax
rate in the fut
f ur
t
e because of these developments or other proposed tax law changes.
Finally, we are subj
u ect to examination of our income tax retur
t
ns by the Internal Revenue Service (the "IRS") and other
tax authorities. Audits by the IRS or other tax authorities are subject to inherent uncertainties and could result in unfav
f
orable
outcomes, including potential fines or penalties. The expense of and time associated with defending and resolving such audits
may be significant. We regularly assess the likelihood of adverse outcomes resulting fro
f
m tax examinations to determine the
adequacy of our provision for income taxes. We cannot assure you that fluctuations in our provision for income taxes or our
effe
f ctive tax rate, the enactment of new tax laws or changes in the application or interpr
r
etation of existing tax laws or adverse
outcomes resulting fro
f
m examination of our tax retur
t
ns by tax authorities will not have an adverse effect on our business,
financial condition, results of operations and prospects.
Failure to comply with governmental laws and regulations, including privacy laws, environmental laws and export
controls, could harm our business.
Our business is subject to regulation by various federal, state, local and foreign governmental agencies, including
agencies responsible for monitoring and enfor
f
cing employment and labor
a
laws, workplace safet
f y, product safet
f y, environmental
laws (including new laws related to climate change), consumer protection laws, privacy, data protection, telecommunications,
anti-bribery l
r
aws such as the U.S. Foreign Corrupt
u
Practices Act, import/export controls and sanctions, conflic
f
t minerals,
federal securities laws and tax laws and regulations. In addition, emerging tools and technologies we utilize in providing our
products, like AI and machine learning, may also become subj
u ect to regulation under new laws or new appl
a
ications of existing
laws. Violations of these laws and regulations could result in fin
f es and penalties, criminal sanctions against us, our offi
f cers or
our employees, prohibitions on the conduct of our business, and damage to our reputation.
From time to time, we may receive inquiries from governmental agencies, or we may make voluntary d
r
isclosures
regarding our compliance with applicable governmental regulations or requirements relating to various matters, including
import/export controls, fed
f
eral securities laws and tax laws and regulations which could lead to formal investigations. Actua
t
l or
alleged noncompliance with applicable laws, regulations or other governmental requirements could lead to regulatory
r
investigations, enfor
f
cement actions, and other proceedings, private claims and litigation, and potentially may subject us to
39
sanctions, mandatory produc
d
t recalls, enfor
f
cement actions, disgorgement of profit
f s, fines, damages, civil and criminal penalties
or inju
n nctions. If any governmental fines, penalties, or other sanctions are imposed, or if we do not prevail in any possible civil
or criminal litigation, our business, financial condition, results of operations and prospects could be materially adversely
affe
f cted. In addition, responding to any investigation, action or other proceeding will likely result in a significant diversion of
management’s attention and resources and an increase in profes
f
sional fees
f
. Enfor
f
cement actions, investigations, fin
f es, penalties,
and other sanctions could harm our business, financial condition, results of operations and prospects.
Privacy L
c
aws
Many jurisdictions have passed new laws and regulations relating to privacy, data protection, and other matters, and
other jurisdictions are considering imposing additional restrictions. These laws continue to develop and may be inconsistent.
For example, the Califor
f
nia Consumer Privacy Act (“CCPA”) became operative on January 1, 2020 and was amended by the
Califor
f
nia Privacy Rights Act (“CPRA”) going into effe
f ct over time through July 1, 2023. Aspects of the CCPA/CPRA a
R
nd its
interpretation remain uncertain and are likely to remain uncertain for an extended period and may require us to incur additional
costs and expenses in an effo
f
rt to comply. In addition to the CCPA/CPRA,
R
numerous other states have enacted or are
considering similar laws that will require ongoing compliance efforts and investment. More recently, the Department of Justice
issued a fin
f al rule that places limitations, and in some cases prohibitions, on access to, or certain transfer
f s of, sensitive personal
data to business partners located in China or with other specified links to China (and other designated countries).
In addition, in certain jurisdictions, these regulatory r
r
equirements may be more stringent than those in the United
States, such as the EU's General Data Protection Regulation (“GDPR”). The GDPR provides for
f
subs
u
tantial obligations relating
to the handling, storage and other processing of data relating to individuals and administrative fin
f es for violations, which can be
up to four percent of the previous year’s annual revenue or €20 million, whichever is higher. In the past, we relied on the E.U.-
U.S. and Swiss-U.S. Privacy Shield programs, and/or the use of standard contractua
t
l clauses approved by the European
Commission ("SCCs"), to legitimize transfers of data out of the EU. EU courts later invalidated the E.U.-U.S. Privacy Shield
and imposed additional obligations in connection with use of the SCCs. The European Commission subs
u
equently issued new
SCCs. The continued validity of these new SCCs for cross-border data transfer is uncertain and diffi
f cult to predict. Among
other effects, we may experience additional costs associated with increased compliance burdens and new contract negotiations
with third parties that process data on our behalf. F
f
urther, the United Kingdom ("UK") has implemented legislation that
subs
u
tantially mirrors the GDPR, and provides for
f
fines of up t
u
o the greater of 17.5 million British Pounds or four percent of the
previous year’s annual revenue, whichever is higher. The relationship between the UK and the EU in relation to certain aspects
of data protection law remains unclear following the UK’s exit fro
f
m the EU, including with respect to regulation of data
transfer
f s between EU member states and the UK. The UK has issued new standard contractua
t
l clauses that, like the SCCs, are
required to be implemented.
We may experience reluctance or refusal by current or prospective customers in the European Economic Area (the
"EEA"), the UK, or other regions to use our products, and we may fin
f d it necessary or desirabl
a e to modify our handling of
personal data of residents of the EEA, UK, or other regions. The regulatory e
r
nvironment appl
a
icable to the handling of personal
data of EEA and UK residents, and our actions taken in response, may cause us to assume additional liabi
a lities or incur
additional costs and could result in our business, operating results and fin
f ancial condition being harmed. Additionally, we and
our customers may face
f
a risk of enfor
f
cement actions by data protection authorities relating to personal data transfers. Any such
enforcement actions could result in substantial costs and diversion of resources, distract management and technical personnel
and negatively affec
f
t our business, operating results, and fin
f ancial condition.
Among other emerging laws relating to privacy and data protection globally, India has released its Digital Personal
Data Protection Act 2023, and India’s Ministry of Electronics and Infor
f
mation Technology released finalized Draft D
f
igital
Personal Data Protection Rul
R es on November 13, 2025, addressing various matters under this law, but the ful
f l scope of the
implementation remains subj
u ect to some uncertainty. We maintain an employee and operational presence in India, and this act
may require us to modify our policies and practices and incur increased costs in our effo
f
rts to comply.
We also expect laws, regulations, industry s
r
tandards and other obligations worldwide relating to privacy, data
protection and cybersecurity to continue to evolve, and that there will continue to be new, modified, and re-interpr
r
eted laws,
regulations, standards, and other obligations in these areas. For example, the Network and Infor
f
mation Security Directive II, or
NIS2, adopted in 2023, aims to enhance cybersecurity across critical infra
f structur
t
e and essential services in the EU. It expands
the scope of the 2016 NIS Directive to include additional sectors while enfor
f
cing stricter governance and accountability
requirements. NIS2 requires all 27 EU member states to issue implementing legislation by October 2024; however, several EU
40
member states have not finalized their respective legislation and guidance. Additionally, the Digital Operational Resiliency Act,
or DORA,
R
became effe
f ctive in January 2025, and aims to establish a universal framework for managing and mitigating
information and communication technology risks that will appl
a
y to entities in the financial sector and their third-party cloud
service providers.
In addition, some countries are considering or have enacted legislation requiring local storage and processing of data
that could increase the cost and complexity of delivering our services. Accordingly, we cannot predict the full impact of other
evolving privacy and data protection obligations on our business or operations. Complying with emerging and changing legal
and regulatory r
r
equirements relating to privacy, data protection and other matters may cause us to incur costs or require us to
change our business practices, which could harm our business, financial condition, results of operations and prospects.
Enviro
i
nmental Laws
We are also subje
b ct to environmental laws and regulations governing the management and disposal of hazardous
materials and wastes, including the hazardous material content of our products and laws relating to the collection, recycling and
disposal of electrical and electronic equipment. Our fai
f lure, or the failure of our partners, including our contract manufac
f
turers,
to comply with past, present and fut
f ur
t
e environmental laws could result in fin
f es, penalties, third-party claims, reduc
d
ed sales of
our products, re-engineering our produc
d
ts, substantial product inventory w
r
rite-offs and reputational damage, any of which could
harm our business, financial condition, results of operations and prospects. We also expect that our business will be affected by
new environmental laws and regulations on an ongoing basis appl
a
icable to us and our partners, including our contract
manufact
f
ur
t
ers. To date, our expenditures for
f
environmental compliance has not had a material effe
f ct on our results of
operations or cash flo
f ws. Although we cannot predict the future effe
f ct of such laws or regulations, they will likely result in
additional costs or require us to change the content or manufac
f
turing of our products, which could have a material adverse
effe
f ct on our business, financial condition, results of operations and prospects.
Expor
x
t Con
C
trolsl
Our products are subject to various export controls and because we incorpor
r
ate encryption technology into certain of
our products, certain of our produc
d
ts may be exported fro
f
m various countries only with government authorization. If we were to
fail to comply with the appl
a
icable export control laws, customs regulations, economic sanctions or other appl
a
icable laws, we
could be subject to monetary damages or the imposition of restrictions which could be material to our business, operating
results and prospects and could also harm our reputation. Further, there could be criminal penalties for knowing or willful
violations, including incarceration for
f
culpable employees and managers. Obtaining the necessary export authorizations for a
particular sale may be time-consuming and may result in the delay or loss of sales opportunities.
Furthermore, certain export control and economic sanctions laws prohibit the shipment of certain products, technology,
software and services to embargoed countries and sanctioned governments, entities, and persons. The U.S. government also
continues to add additional entities to restricted party lists impacting the ability of U.S. companies to provide products, and in
certain cases services, to these entities and, in some cases, receive products or services from these entities.
Additionally, the U.S. government continues to expand controls enacted in October 2022 restricting the ability to
export, reexport and transfer
f
certain products and technology related to semiconductors, semiconductor manufact
f
ur
t
ing, and
supe
u
rcomputing. Although new regulations introduced in January 2025 which fur
f
ther expanded the controls to impose a
worldwide licensing requirement on certain integrated circuits and computing resources that are used for
f
training of AI models
were rescinded prior to the schedul
d ed compliance date, we expect the U.S. government may issue new controls on similar
technologies in the fut
f ur
t
e. The U.S. government also expanded the scope of restrictions on the development or production of
advanced integrated circuits and certain semiconductor manufact
f
ur
t
ing equipment and the restrictions on supe
u
rcomputing in
China and other countries. Other foreign governments may in turn impose similar or more restrictive controls. These controls or
any additional restrictions may impact our ability to export certain products to China or other countries, prohibit us fro
f
m selling
our products to certain of our customers, restrict our ability to use certain ICs in our products, or impact our suppl
u
iers who may
utilize faci
f
lities or equipment described in these controls. However, certain U.S. export controls have been the subject of
bilateral trade negotiations between the U.S. and China and have been partially relaxed since May 2025, with further changes
possible.
It also is possible that the Chinese government will retaliate to these export controls in ways that could impact our
business. For example, China has announced controls on both the use of Micron products and export controls on certain
materials used, among other things, in the production of semiconductors, optical components, and other electronic devices
41
including germanium and gallium. These Chinese export controls have been the subject of bilateral trade negotiations between
the U.S. and China and have been partially relaxed since May 2025, though further changes are possible. Further, the Chinese
government has responded to U.S. actions by adding U.S. entities to an unreliabl
a e entity list, which limits the abi
a lity of
companies on the list to engage in business with Chinese customers. These restrictions could disrupt
u
the abi
a lity of China to
procure or produce semiconductors and other electronics and impact our ability to source components fro
f
m China and could
impact the cost of components or inputs used to produce our produc
d
ts.
Any deterioration in relations between Taiwan and China could lead to additional sanctions or export controls on
China, on specific individuals or entities, or otherwise in the region which could impact our ability to sell to certain of our
customers, source components fro
f
m China, or otherwise negatively impact our business.
The United States may also continue to leverage the use of “secondary tariffs” and/or “secondary sanctions” to achieve
certain foreign policy goals, or increase its enforcement of such tools, which may directly or indirectly affe
f ct our business (see
also the “Escalated or escalating U.S. tariffs
f , as well as countermeasures taken by affected countries may have a negative effect
on global economic conditions, fin
f ancial markets and our business, as may retaliatory actions by other countries, including
China, in response to these U.S. policies” risk factor above). Even though we take precautions to ensure that we and our
channel partners comply with all relevant regulations, any failure by us or our channel partners to comply with such regulations
could have negative consequences, including reputational harm, government investigations and penalties. In addition, economic
sanctions that are vague and not subj
u ect to guidance by regulators lead to heightened compliance risk.
Although we have developed policies and procedur
d
es to comply with export control and other appl
a
icable laws,
historically, we have had some instances where we, or a business that we acquired, inadvertently did not fully comply with
certain trade laws, but we made relevant disclosures to the appropriate government agencies and implemented corrective
actions.
In addition, various countries regulate the import of certain encrypt
r
ion technology, including through import permit
and license requirements, and have enacted laws that could limit our ability to distribute our products or could limit our
customers’ ability to implement our produc
d
ts in those countries. Any change in export or import regulations, economic
sanctions or related legislation, shift i
f
n the enforcement or scope of existing regulations or change in the countries,
governments, persons or technologies targeted by such regulations could result in decreased use of our products by, or in our
decreased ability to export or sell our produc
d
ts to, existing or potential customers with international operations or create delays
in the introduction of our produc
d
ts into international markets. Any decreased use of our products or limitation on our ability to
export or sell our products could adversely affect our business, financial condition, results of operations and prospects.
Issues in the development and use of artificial intelligence, combined with an uncertain regulatory environment, may
result in reputational harm, liability, or other adverse consequences to our business operations.
We use machine learning and AI technologies in our offe
f rings and business, including in our Arista Guardian for
Network Identity offering, and we are making investments in expanding our AI capa
a
bi
a lities in our products, services, and tools,
including ongoing deployment and improvement of existing machine learning and AI technologies, as well as developing new
product fea
f
tures using AI technologies. We may rely on third party AI technologies and our ability to continue to use those
technologies and provide our applicable products, services and tools are subj
u ect to the continued availability and improvement
of those technologies. The protectability of the intellectual property in AI-generated or assisted works and inventions is unclear.
To the extent we use AI to create any valuabl
a e IP, we may not be able to protect it to the same extent that we would have, had
we not used AI.
Uncertainty around new and emerging AI technologies may require additional investment in the obtaining, developing
and maintaining of proprietary d
r
atasets and machine learning models, development of new approaches and processes to provide
attribution or remuneration to creators of training data, and development of appr
a
opriate protections, safeg
f
uards, and policies for
f
handling the processing of data with AI technologies, which may be costly and could impact our expenses. AI technologies also
present emerging legal, ethical and social issues, including with respect to potential or actual bias reflected in, or fla
f wed output
t
s
of, m
f
odels. AI technologies that we make use of may produce or create output
t
s that appe
a
ar correct but are fact
f
ua
t
lly inaccurate
or otherwise fla
f wed, which may expose us to brand or reputational harm, competitive harm, regulatory s
r
crut
r iny, and/or legal
liabi
a lity. We may also fail to adopt or implement certain AI technologies which could leave us at a competitive disadvantage.
Risks Related to Ownership of Our Common Stock
p
42
The trading price of our common stock has been and may continue to be volatile, and the value of your investment could
decline.
The trading price of our common stock has historically been and is likely to continue to be volatile and could be
subj
u ect to wide fluctuations in response to various factors, some of which are beyond our control. These flu
f ctua
t
tions could
cause you to lose all or part of your investment in our common stock. In addition, although the trading price of our common
stock has increased significantly in recent years, it is uncertain to continue to increase at the same rate and it may decrease in
the fut
f ur
t
e. Factors that could cause fluctuations in the market price of our common stock include, but are not limited to,
forward-looking statements related to future revenue, gross margins and earnings per share, changes or decreases in our growth
rate, manufact
f
ur
t
ing, suppl
u
y or distribution shortages or constraints, the decline in purchases from any of our large customers or
the degradation in our relationships with any of our material vendors or partners, ratings changes by securities analysts, actua
t
l
or anticipated announcements of new products by our company or our competitors, developments in the markets in which we
operate, both in the U.S. and globally, litigation, actua
t
l or anticipated changes or flu
f ctua
t
tions in our results of operations,
regulatory d
r
evelopments, repurchases of our common stock, departures of key executives, the financial results or financial
projections of our large customers, major catastrophic events, macroeconomic factors including changes in government
administration, international trade tensions, infla
f tion and interest rate flu
f ctua
t
tions and other broad market and industry
r
fluctuations.
In addition, technology stocks have historically experienced high levels of volatility and, if the market for
f
technology
stocks or the stock market in general experiences a loss of investor confid
f ence, the market price of our common stock could
decline for
f
reasons unrelated to our business, financial condition, results of operations and prospects. The market price of our
common stock might also decline in reaction to events that affe
f ct other companies in our industry e
r
ven if these events do not
directly affe
f ct us, or where actua
t
l fin
f ancial results do not meet the expectations set by industry a
r
nalysts or other market
participants. In the past, following periods of volatility in the market price of a company’s securities, securities class action
litigation has often been brought against that company. If the market price of our common stock is volatile, we may become the
target of securities litigation. Securities litigation could result in substantial costs and divert our management’s attention and
resources from our business and prospects. This could have a material adverse effect on our business, financial condition,
results of operations and prospects.
We have adopted stock repurchase programs to repurchase shares of our common stock; however, any fut
f
ure decisions
to reduce or discontinue repurchasing our common stock pursuant to such stock repurchase programs could cause the
market price of our common stock to decline.
Although our board of directors has authorized stock repurchase programs, any determination to execute stock
repurchases will be subj
u ect to, among other things, our financial position and results of operations, availabl
a e cash and cash
flow, capital requirements, market and business conditions, stock price, acquisition opportunities and other factors, as well as
our board of director’s continuing determination that the repurchase programs are in the best interests of our shareholders and is
in compliance with all laws and agreements applicable to the repurchase programs. Our stock repurchase programs do not
oblige us to acquire any common stock. If we fai
f l to meet any expectations related to stock repurchases, the market price of our
common stock could decline, and could have a material adverse impact on investor confid
f ence. Additionally, price volatility of
our common stock over a given period may cause the average price at which we repurchase our common stock to exceed the
stock’s market price at a given point in time.
We may fur
f
ther increase or decrease the amount of repurchases of our common stock in the fut
f ur
t
e. As part of the
Inflation Reduc
d
tion Act of 2022 signed into law in August 2022, the United States implemented a 1% excise tax on the value of
certain stock repurchases by publicly traded companies. This tax could increase the costs to us of any share repurchases, which
could reduc
d
e the number of shares we repurchase. Any reduc
d
tion or discontinuance by us of repurchases of our common stock
pursuant to our current stock repurchase programs could cause the market price of our common stock to decline. Moreover, in
the event repurchases of our common stock are reduced or discontinued, our failure or inabi
a lity to resume repurchasing
common stock at historical levels could result in a lower market valuation of our common stock.
Sales of substantial amounts of our common stock in the public markets, or the perception that such sales might occur,
could reduce the market price that our common stock might otherwise attain and dilute your voting power and your
ownership interest in us.
Sales of a subs
u
tantial number of shares of our common stock in the public market, or the perception that such sales
could occur, could adversely affec
f
t the market price of our common stock and may make it more diffi
f cult for you to sell your
43
common stock at a time and price that you deem appropriate and may dilute your voting power and your ownership interest in
us.
In addition, we have registered the offer and sale of all shares of common stock that we may issue under our equity
compensation plans. If holders, by exercising their registration rights, sell large numbers of shares, it could adversely affect the
market price of our common stock.
Insiders have substantial control over us, which could limit your ability to influence the outcome of key transactions,
including a change of control.
Our directors, executive offic
f ers and each of our stockholders who own greater than 10% of our outstanding common
stock together with their affiliates, in the aggregate, beneficially own appr
a
oximately 17.3% of the outstanding shares of our
common stock, based on shares outstanding as of December 31, 2025. As a result, these stockholders, if acting together, could
exercise a significant level of influence over matters requiring approval by our stockholders, including the election of directors
and the approval of mergers, acquisitions or other extraordinary transactions. They may also have interests that diffe
f r fro
f
m
yours and may vote in a way with which you disagree and which may be averse to your interests. This concentration of
ownership may also discourage a potential investor from acquiring our common stock due to the limited voting power of such
stock or otherwise may have the effe
f ct of delaying, preventing or deterring a change of control of our company, could deprive
our stockholders of an opportunity to receive a premium for
f
their common stock as part of a sale of our company and might
ultimately affe
f ct the market price of our common stock.
Our charter documents and Delaware law could discourage takeover attempts and lead to management entrenchment.
Our amended and restated certific
f ate of incorpor
r
ation and amended and restated bylaws contain provisions that could
delay or prevent a change in control of our company. These provisions could also make it diffi
f cult for stockholders to elect
directors that are not nominated by the current members of our board of directors or take other corporate actions, including
effe
f cting changes in our management. These provisions include:
•
a classified board of directors with three-year staggered terms, which could delay the abi
a lity of stockholders to change
the membership of a majo
a rity of our board of directors;
•
the ability of our board of directors to issue shares of preferred stock and to determine the price and other terms of
those shares, including prefer
f ences and voting rights, without stockholder appr
a
oval, which could be used to
significantly dilute the ownership of a hostile acquirer;
•
the exclusive right of our board of directors to elect a director to fill an unfil
f led seat on our board of directors created
by the expansion of our board of directors or the resignation, death or removal of a director, which prevents
stockholders from being abl
a e to fil
f l vacancies on our board of directors;
•
a prohibition on stockholder action by written consent, which for
f
ces stockholder action to be taken at an annual or
special meeting of our stockholders;
•
the requirement that a special meeting of stockholders may be called only by the chairman of our board of directors,
our chief executive offi
f cer, one of our presidents (in the absence of our chief executive officer) or our board of
directors, by a vote of a majo
a rity of the total number of authorized directors, which could delay the abi
a lity of our
stockholders to force consideration of a proposal or to take action, including the removal of directors;
•
the requirement that a director may be removed fro
f
m office by our stockholders only for
f
cause and only by the
affi
f rmative vote of holders of at least 66 2/3% of the voting power of our capital stock entitled to vote thereon;
•
the requirement for the affi
f rmative vote of holders of at least 66 2/3% of the voting power of all of the then
outstanding shares of our capi
a tal stock entitled to vote generally in the election of directors, voting together as a single
class, to amend the provisions of our amended and restated certific
f ate of incorpor
r
ation relating to the structur
t
e of our
board of directors, the management of our business, and certain rights of our stockholders (including the prohibition on
the stockholder’s ability to act by written consent), which may inhibit the ability of an acquirer to effect such
amendments to facilitate an unsolicited takeover attempt;
•
the requirement for the affi
f rmative vote of holders of at least 66 2/3% of the voting power of our capi
a tal stock entitled
to vote thereon for stockholders to amend, alter or repeal our amended and restated bylaws, which may inhibit the
ability of an acquirer to effect such amendments to facilitate an unsolicited takeover attempt;
44
•
the ability of our board of directors, by a vote of a majo
a rity of the total number of authorized directors, to amend the
bylaws, which may allow our board of directors to take additional actions to prevent an unsolicited takeover and
inhibit the ability of an acquirer to amend the bylaws to faci
f
litate an unsolicited takeover attempt; and
•
advance notice procedur
d
es with which stockholders must comply to nominate candidates to our board of directors or to
propose matters to be acted upon
u
at a stockholders’ meeting, which may discourage or deter a potential acquirer fro
f
m
conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain
control of us.
In addition, as a Delaware corpo
r
ration, we are subject to Section 203 of the Delaware General Corporation Law. These
provisions may prohibit large stockholders, in particular those owning 15% or more of our outstanding voting stock, fro
f
m
merging or combining with us for a certain period of time.
General Risks
We may become involved in litigation that may materially adversely affect us.
From time to time, we are involved in legal proceedings relating to matters incidental to the ordinary course of our
business, including patent, copyright, commercial, product liabi
a lity, employment, class action, whistleblower and other
litigation, in addition to governmental and other regulatory i
r
nvestigations and proceedings. Such matters can be time-
consuming, divert management’s attention and resources, cause us to incur significant expenses or liabi
a lity and/or require us to
change our business practices.
Because of hthe p totential risks, expenses and uncertainties of litigation, we may, from time to time, settle disputes, even
where we have meritorious claims or defenses. Although we have insurance which may provide coverage for some kinds of
claims we may fac
f
e, that insurance may not cover some kinds of claims or types of relief and may not be adequate in a
particular case. Because litigation is inherently unpredictabl
a e, we cannot assure you that the results of any of these actions will
not have a material adverse effect
f
on our business, financial condition, results of operations and prospects.
For more infor
f
mation regarding the litigation in which we have been involved, see the “Legal Proceedings”
subhe
u
ading in Note 5. Co
i
mmitments a d
nd Contingencies of the Notes to Cons lolididat d
ed
i
Financial Statement i
s included i
d in Part II,
Item 8, of hthis Annual Report on Form 10-K.
K
If we are unable to hire, retain, train and motivate qualified personnel and senior management, our business, financial
condition, results of operations and prospects could suffer.
Our fut
f ur
t
e success depends, in part, on our ability to continue to attract and retain highly skilled personnel, particularly
software engineering and sales personnel. In addition, we are expanding internationally and into adjacent markets including the
enterprise and AI market, which requires a significant investment of time, effo
f
rt and fin
f ancial resources into hiring and training
our sales force to address these markets. If we do not effe
f ctively train our direct sales for
f
ce, we may be unabl
a e to add new
customers, increase sales to our existing customers, or successful
f ly expand into new markets. Competition for highly skilled
personnel is often intense, especially in the San Francisco Bay Area where we have a substantial presence and need for highly
skilled personnel, especially with certain types of technical skills like in AI. Many of the companies with which we compete
against for
f
experienced personnel may have greater resources and be abl
a e to provide more attractive compensation packages
and other amenities. Research and development personnel are aggressively recrui
r ted by startup
t
and growth companies, which
are especially active in many of the technical areas and geographic regions in which we conduct product development. In
addition, in making employment decisions, particularly in the high-technology industry,
r
job candidates often consider the value
of the stock-based compensation they are to receive in connection with their employment. Declines in the market price of our
stock could adversely affe
f ct our ability to attract, motivate or retain key employees. In addition, our future performance also
depends on the continued services and continuing contributions of our senior management to execute our business plan and to
identify a
f
nd pursue new opportunities and product innovations. Our employment arrangements with our employees do not
generally require that they continue to work for us for
f
any specified period, and therefore, they could terminate their
employment with us at any time. If we are unabl
a e to attract or retain qualifie
f d personnel, or if there are delays in hiring required
personnel, our business, financial condition, results of operations and prospects may be seriously harmed.
Our business is subject to the risks of natural disasters, social unrest, violent conflicts, systemic fai
f lures and other
catastrophic events.
45
Our corpor
r
ate headquarters and the operations of our key manufact
f
ur
t
ing vendors, logistics providers and partners, as
well as many of our customers, are located in areas, such as the San Francisco Bay Area, Japan and Taiwan, that are exposed to
risks of natur
t
al disasters and threats, such as fir
f es, earthquakes, tsunamis, extreme precipitation or winds, high heat or outbr
t
eaks
of disease, and systemic fai
f lures, or other catastrophic events, such as widespread power outages or transportation network
malfunc
f
tions. In addition, climate change may result in greater frequency and severity of such natural disasters and systemic
failures. A signific
f ant natur
t
al disaster, epidemic or pandemic, systemic failure, flo
f od or other similar event, could have a
material adverse effect on our or their business, which could in tur
t
n materially affect our financial condition, results of
operations and prospects. These events could result in manufac
f
turing and supply chain disrupt
r
ions, shipment delays, order
cancellations, and sales delays which could result in missed fin
f ancial targets. Any such disrupt
u ion of our suppl
u
iers, our contract
manufact
f
ur
t
ers or our service providers would likely impact our suppl
u
y chain, sales and operating results. These events could
also have a material adverse effect
f
on the demand for
f
our products, which could in tur
t
n materially affect our fin
f ancial
condition, results of operations and prospects. In addition, acts of terrorism, war, and other social unrest, violent or otherwise,
could cause disrup
r
tions in our business or the business of our manufac
f
turers, logistics providers, partners or customers or the
economy as a whole. Given our typical concentration of sales at each quarter end, any disrupt
u ion in the business of our
manufact
f
ur
t
ers, logistics providers, partners or customers that affe
f cts sales at the end of our quarter could have a particularly
significant adverse effect
f
on our quarterly results.
We have not paid dividends in the past and do not intend to pay dividends for the foreseeable fut
f
ure.
We have never declared nor paid any dividends on our common stock, and we do not anticipate paying any cash
dividends in the for
f
eseeable future. As a result, you may only receive a retur
t
n on your investment in our common stock if the
market price of our common stock increases.
46
47
Item 1B. Unresolved Staff C
f
omments
Not applicable.
Item 1C. Cybersecurity
Cybersecurity Risk Management and Strategy
We have developed and implemented a cybe
y
rsecurity risk management program intended to protect the confidentiality,
integrity, and availability of our critical systems and information. In addition, our Legal and Information Tec
T
hnology
("IT")/Information Security ("IS") teams work togethe
t
r to oversee our compliance with applicabl
a e laws and regulations and
coordinate with subject matter experts throughout our business to identify,
f
monitor and mitigate risk including infor
f
ma
r
tion
security risk management and cyber defen
f
se programs.
Our cybersecurity risk management program is aligned with our overall enterpr
r
ise risk management programs
a
and
shares common methodologies, reporting channels and governance processes that app
a
ly across the enterprise risk management
programs to other legal, compliance, strategic, operational, and fin
f ancial risk areas.
Our cybersecuri
u ty risk mana
a
gement program includes:
•
an infor
f
mation security management systems policy, including a business continuity policy, acceptable use and
physical security policies, and an incident response policy and plan for
f
responding to cybersecurity incidents, among
othe
t
rs;
•
risk assessments designed to help identify m
f
aterial cybersecurity risks to our c
u
ritical systems, information, products,
services, and our broader enterpr
r
ise IT environment;
•
a security team principally responsible for managing (1) our cybersecurity risk assessment processes, (2) our security
controls, and (3) our response to cybersecurity incidents;
•
the use of internal audit teams and external service providers, where appropriate, to assess, test or otherwise assist with
aspects of our security c
t
ontrols;
•
cybersecurity awareness, data protection, and privacy training of our employees, incident response personnel, and
senior management; and
•
a vetting and management process for
f
third party service providers, suppliers, and vendors
Through this program, our IT/Cybersecurity team identifies and executes improvements based upon its own
assessments, publ
u ic cybersecurity events and the identification of new risks by third parties, including our external
cybersecurity consultants. As part of the
t
se continuou
n
s improvement effo
f
rts, there may be times when the IT/Cybersecurity team
prioritizes certain cybersecurity f
t
ix
f es or program improvements over other measures, which could lead to new known or
unknown risks being identified on an ongoing basis. Cybersecurity threat actors are often highly sophisticated and nimble in
their attacks. Despite these effo
f
rts, we cannot guarant
a ee that our priorities and effo
f
rts will prevent any c
n
ybersecurity incident
from happening.
We also engage in periodic testing programs, using both i
t
nternal assets and external consultants, including penetration
testing, and incorporate multiple layers of physical, logical and written contro
t
ls into our cybersecurity risk management
program. Our IT/Cybersecurity team leverages centralized identity management, encrypt
y ion configurations and technologies on
the systems, devices, and third-party connections used in our operations.
We also maintain cyber liability i
t
nsurance coverage. While we currently hold such coverage, we cannot be certain that
our insurance coverage will be adequate for
f
liabilities actua
t
lly incurred, tha
t
t insurance will continue to be available to us on
economically reasonable terms, or at all, or that any fut
f ur
t
e claim will not be excluded or otherwise be denied coverage by any
a
insurer.
As of the date of this report, we have not identified any r
n
isks from cybe
y
rsecurity threats, including as a result of any
previous cybersecuri
u ty incidents, that we believe have
a
, or are likely to, materially affec
f
t us, our business strategy, results of
operations, or financ
a
ial condition. For additional infor
f
mation concerning risks from cybe
y
rsecurity threats, please refer to Item
1A, “Risk Factors,” in this annual report on Form 10-K, including the risk factors in the category entitled, “Risks Related to
Cybersecurity and Data Privacy”.
Cybersecurity Governance
48
Our Board considers cybersecurity risk as part of its risk oversight function and has delegated to the Audit Committee
(Committee) oversight of cyb
y ersecurity and other information technology risks. The Committee oversees management’s
implementation of our cybersecurity risk management program. The Committee receives quarterly reports fro
f
m our Vice
President and Chief Infor
f
mation Security Offi
f cer ("CISO"), in conju
n nction with other senior managers, on cybersecurity risks.
In addition, these managers update the Committee, as necessary,
r
regarding any material cybersecurity incidents, as well as
incidents with lesser impact potential. The Committee reports to the
t
full Board on cybersecurity no less fre
f quently than once
annually. The full Board also receives briefin
f gs from management on our cyber risk management program o
a
n a periodic basis.
Our cybersecurity program includes an annual funding and for
f
ecast process, and we have further established processes
to secure additional fun
f
ding in response to emerging risks, threats and identifie
f d improvement opportunities. Our Cybersecurity
team, led by one of our Vice Presidents who also serves as our CISO, is responsible for assessing and managing risks fro
f
m
cybersecurity threats. The Cybersecurity team has primary responsibility for
f
our overall cybersecurity risk mana
a
gement
program and supervises both our internal cybersecurity personnel and our external cybersecurity consultants.
Our CISO has over 20 years of experience in the cybersecurity industry and has been instrumental in building several
key security technologies, viz. Network Intrusion Prevention Systems ("NIPS"), Host Intrusion Prevention Systems ("HIPS"),
Web Application Firewalls ("WAF
W
"), Whitelisting, Endpoint/S
t
erver Host Monitoring ("EDR") and Vir
V tualization Based
Security ("VBS"). Previously, our CISO served in senior executive and technical leadership roles in several security companies.
In addition, our CISO has experience as a pen-tester and has in-depth k
t
nowledge of operating systems, networking and security
produc
d
ts. Our CISO holds a bachelor’s degree in computer science and a master’s degree in softw
f
are systems. In addition, our
IS team includes over 20 membe
m
rs each with expe
x
rience in network security related roles, with the two
t
IS leads reporting to our
u
CISO each having more than 2
a
0 years of security experience.
Our management team, including our CISO in consultation with our Chief Technology Offi
f cer and Chief Financial
Offi
f cer, supervises effo
f
rts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents, which may include:
briefings from internal security p
t
ersonnel; threat intelligence and other information obtained fro
f
m governmental, public or
private sources, including external cybersecurity consultants; and alerts and reports produc
d
ed by security tools deployed in our
IT environment. However, as indicated abov
a
e, we canno
a
t guarantee that our e
u
ffor
f
ts will prevent any cybersecurity incident fro
f
m
occurring.
As part of our Cybersecurity program, our Cybersecurity Executive Committee and Infor
f
mation Security Steering
Committee meet throughout the year to monitor and assess infor
f
mation security risks. In addition, we perfor
f
m an enterpr
r
ise risk
assessment that is reviewed by the Committee and our Board of Directors on an annual basis and monitored on a quarterly basis
by the Committee. The enterprise risk assessment is an assessment of key risks, including information security risks, data
privacy, supply chain, human c
a
apital, and other risks.
Item 2. Properties
Our corpo
r
rate headquarters are located in Santa Clara, Califor
f
nia where we lease app
a
roximately 180,000 square feet f
of
space under a lease agreement that expires in March 2027. During the year ended December 31, 2021, we purchased land and
the improvements thereon in Santa Clara, California to construc
r
t a building for
f
offi
f ce, lab and data center space. In addition, we
lease offic
f e spaces for
f
data centers, operations, sales personnel and research and development in locations throughout the
t
U.S.
and various international locations, including Ireland, Canada, India, and Australia. We also lease data centers in the U.S.,
Ireland and Australia. We believe tha
t
t our current facilities are adequate to meet our current needs and are being utilized by our
business.
Item 3. Legal Proceedings
The infor
f
mation set for
f
th under the “Legal Proceedings” in Note 5. Commitme
t
nts and Contingencies of the Notes to
Consolidated Financial Statements included in Part II, Item 8, of this Annual Report on Form 10-K is incorpo
r
rated herein by
reference.
Item 4. Mine Safet
f y Disclosures
Not applicable.
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity
Securities
Market Information
Our common stock is listed on the NYSE under the symbol “ANE
A
T”. As of February 1
r
0, 2026, there were 38 holders
of record of our common stock. Because many of our shares of common stock are held by brokers and other institut
t ions on
behalf of stockholders, we are unabl
a e to estimate the total number of stockholders represented by these record holders.
Dividend Policy
We have never declared nor paid any cash dividends on our common stock, and we do not anticipate paying any cash
dividends in the for
f
eseeable future.
Stock Perfor
f
mance Graph
The fol
f lowing shall not be deemed “fil
f ed” for
f
purpos
r
es of Section 18 of the Exchange Act, or incorporated by
reference into any of our other fil
f ings under the Exchange Act or the Securities Act, except to the extent we specifically
incorporate it by refer
f ence into such filing.
h
The f lol
f lo i
wi g
ng graph compares the cumula itive total retur
t
n of our common stock with the total retur
t
n for
f
hthe NYSE
Composite Index a d
nd hthe Sta d
nda d
rd & Poor’s 500 Inde
(
x ( hthe “S&P 500”) f
) fro
f
m December 31, 2020 (the last tr d
ading d
g d y
ay of hthe
year) to December 31, 2025.
h
Th g
e gra h
ph
a
assume $
s $ 00
1
was invested at the market close on December 31, 2020 in the Company’s common stock and
in each of the afor
f
ementioned indices with the re-investment of dividends, if any. The stock price performance on the fol
f lowing
graph is not necessarily indicative of fut
f ur
t
e stock price performance.
Comparison of Cumulative Total Return
Arista Networks Inc
NYSE Composite
S&P 500
2020
2021
2022
2023
2024
2025
$50.00
$100.00
$150.00
$200.00
$250.00
$300.00
$350.00
$400.00
$450.00
$500.00
$550.00
$600.00
$650.00
$700.00
$750.00
$800.00
49
Securities Authorized for Issuance Under Equity Compensation Plans
The infor
f
mation set forth under "Security Ownership of Certain Benefic
f ial Owners and Management and Related
Stockholder Matters" included in Part III, Item 12 of this Annual Report on Form 10-K is incorpor
r
ated herein by reference.
Recent Sales of Unregistered Equity Securities
There were no sales of unregistered securities dur
d
ing fis
f cal year 2025.
Issuer Repurchases of Equity Securities
Under our equity incentive plans, certain participants may exercise options prior to vesting, subj
u ect to a right of
repurchase by us. During the fourth quarter of 2025, there were no repurchases of unvested shares of our common stock made
pursuant to our equity incentive plans as a result of us exercising our rights nor pursuant to any publicly-announced plan or
program.
Stock Repurchase Program
From time to time, we repurchase shares of our common stock pursuant to repurchase programs that are funded fro
f
m
working capital. In May 2025, we completed repurchases under our previous $1.2 billion stock repurchase program (the "Prior
Repurchase Program"), and our board of directors authorized a new $1.5 billion stock repurchase program (the "New
Repurchase Program" and together with the Prior Repurchase Program, the "Repurchase Programs"). This authorization allows
us to repurchase shares of our common stock that will be funded fro
f
m working capi
a tal. Repurchases may be made at
management's discretion fro
f
m time to time on the open market, through privately negotiated transactions, transactions
structur
t
ed through investment banking institut
t ions, block purchases, trading plans under Rul
R e 10b5-1 of the Exchange Act, or a
combination of the foregoing. The New Repurchase Program does not obligate us to acquire any of our common stock and may
be suspended or discontinued by the Company at any time without prior notice. During the year ended December 31, 2025, we
repurchased a total of $921.0 million of our common stock under our Prior Repurchase Program and $682.1 million of our
common stock under our New Repurchase Program. As of December 31, 2025, the remaining authorized amount for stock
repurchases under the New Repurchase Program was appr
a
oximately $817.9 million.
Our repurchases for the three months ended December 31, 2025 are disclosed as below (in millions, except per share
amounts). For our repurchase activities made for
f
the year ended December 31, 2025, please refer
f
to Note 6. Stockholders'
Equity and Stock-Based Compensation of the Notes to Consolidated Financial Statements included in Part II, Item 8, of this
Annual Report on Form 10-K.
Total Number
of Shares
Purchased
Average Price
Paid Per
Share(2)
Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs(1)
Approximate Dollar
Value of Shares That May Yet
Be Purchased Under the
Publicly Announced Plans
or Programs
October 1, 2025 - October 31, 2025
—
$
—
—
$
1,438.0
November 1, 2025 - November 30,
2025
4.8
127.84
4.8
817.9
December 1, 2025 - December 31,
2025
—
—
—
817.9
Total
4.8
4.8
____________
_
__
_
__
_
__
_
__
_
___
_
___
_
___
_
_____
_
__
_
___
_
__
_
__
_
__
_
__
_
__
_
___
_
__
_
__
_
__
_
__
_
__
_
__
_
__
_
_
_
(1) On May 7, 2024, we announced that on May 3, 2024, our board of directors authorized the Prior Repurchase Program allowing up to $1.2 billion stock
repurchases, which was set to expire in May, 2027. In May 2025, we completed repurchases under the Prior Repurchase Program. On May 6, 2025, we
announced that on May 2, 2025 our board of directors authorized the New Repurchase Program allowing up to $1.5 billion stock repurchases. The New
Repurchase Program expires on the earlier of the repurchase by the Company of $1.5 billion pursuant to the New Repurchase Program or our Board of
Directors’ termination of the New Repurchase Program.
(2) Aggregate purchase price and average price paid per share for
f
the year of 2025 include costs associated with the repurchases but exclude the 1% excise tax
accrue
r
d on our share repurchases as a result of the Inflation Reduc
d
tion Act of 2022.
50
Item 6. [Reserved]
51
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
You should r
l
ead the
t
following disc
i
ussion and analys
l
is of our financial condition and results o
t
f o
o
pe
o
rations together
with the consolidat
d ed financial statements a
t
nd related notes that are included elsewhere in this Annual Repor
e
t on For
F
m 10-K.
This disc
i
ussion contains forward-looking statements b
t
ased upon current plans, exp
e
ectations and beliefs
e
that involve risks and
uncertainties. Our actual results may d
a
iffe
f r materially from those anticipated in these for
f
ward-l
d ooking statements a
t
s a result of
various factors,
r
including those set forth u
t
nder “Ri
“
sk
i
Factors”
r
and else
l
where in thi
t s A
i
nnual Repor
e
t on For
F
m 10-K.
Overview
In a world where data is increasingly a precious commodity and competitive diffe
f rentiator, Arista was founde
f
d to
enable our customers to access all their centers of data in the quickest, most reliabl
a e, and secure manner. Over the last two
decades, we have emerged as an industry l
r
eader, delivering data-driven, client-to-cloud networking-as-a-service. Our “Centers
of Data” strategy is a fundamental pivot from legacy networking approaches that create incongrue
r
nt silos to a unifie
f d, data-
driven approach in which the network is a service that interconnects four
f
primary d
r
omains: AI Centers, Data Centers, Campus
Centers, and WAN Centers. Anchored by Arista’s state-oriented Extensible Operating System (EOS) and Network Data Lake
(NetDL), our network-as-a-service platform delivers a seamless, consolidated networking experience regardless of data location
Our solutions are diffe
f rentiated because they:
•
offe
f r uncompromising reliabi
a lity derived fro
f
m the foundation of robust quality assurance capabilities, and a suite of
automated diagnostics;
•
are based on advanced open and standards-based technology that avoids what is ofte
f n expensive vendor lock-in, and
•
provide consistent real-time telemetry a
r
nd intelligent automation to decrease the manual workload on the operator.
This strategy and diffe
f rentiation have also allowed us to deliver our comprehensive suite of products, services, and
technologies to a global customer base segmented into three primary categories: Cloud and AI Titans, AI and Specialty
Providers, and Enterprise. Market research confir
f ms that we continue to be a leader in high-speed Ethernet switching. The
percentage of revenue derived fro
f
m these customers dur
d
ing the current fiscal year was appr
a
oximately 48% from Cloud and AI
Titans, 32% from Enterpr
r
ise and 20% from AI and Specialty Providers.
Arista establ
a ished itself as a market leader with platforms, products, and people to enabl
a e some of these hyperscalers’
most consequential networks. Our network-as-a-service appr
a
oach now empowers customers of all sizes to seamlessly leverage
their data through offer
f ings spanning three key categories: Core (AI, Cloud, and Data Center Networking), Cognitive
Adja
d cencies (Campus and Routing), and Cognitive Networks (Softw
f
are and Services). The percentage of revenue derived fro
f
m
these product categories dur
d
ing the current fiscal year was appr
a
oximately 65% from Core, 18% from Cognitive Adja
d cencies,
and 17% from Softw
f
are and Services. With world-class engineering expertise and platform innovation, our customers gain the
predictabl
a e performance and operational simplicity required to tur
t
n data into a sustainabl
a e competitive advantage in a modern,
AI-driven world.
The market for
f
cloud networking is characterized by rapi
a d technological evolution, intensifyi
f ng competition, and the
expansion of generative and agentic AI. To sustain our success and adapt
a
to the market, we must increase sales in cloud, AI and
enterprise data center Ethernet switching/routing markets, and campus workspace markets by leveraging our ability to rapi
a dly
develop new featur
t
es and softw
f
are appl
a
ications. Our growth strategy relies on maintaining our agility and increasing our
investment in research and development to deliver market-leading feat
f
ur
t
es to enhance the functionality of our existing cloud
networking platform, expand our produc
d
t offer
f ings and build upon our technology leadership. In addition, we must continue to
expand our global sales force and deepen our channel partnerships to reach new customers more effectively and increase sales
to existing customers.
Historically, a limited number of customers have accounted for a significant portion of our revenue. Two of our
customers accounted for more than 10% of our total revenue in each of the last three years. Sales to one end customer
represented 16%, 15%, and 21% of our total revenue, and sales to the other end customer represented 26%, 20%, and 18% of
our total revenue for the years ended December 31, 2025, 2024, and 2023, respectively. We have experienced unpredictabi
a lity
in the timing of orders fro
f
m our high-volume customers, primarily due to the inherent complexity of large-scale orders and
fluctuations in their specific demand. This includes reduc
d
tions or shifts
f
in their capital expenditure budgets, as well as the
impact of their internal cost-reduction and effic
f iency initiatives. Furthermore, variabi
a lity in customer concentration is driven by
the timing of new produc
d
t deployments, customer spending cycles, and the extensive periods required for
f
evaluation, testing,
and qualific
f ation. We expect this variability in concentration and sales timing to continue on both a quarterly and annual basis.
52
Additionally, the pricing discounts typically required for
f
these large-scale orders often reduce gross margins in the periods
when the sales occur.
We believe an increased focus on the deployment of AI-enabl
a ed solutions by our large customers has accelerated the
need for advanced technology offe
f rings, including some offe
f rings fro
f
m potential new market entrants. This prioritization and
acceleration of AI related infrastructur
t
e investment has, at times, come in conjunction with a reduction or changes in the mix of
previously planned purchases and various cost reduction measures by these customers, including optimization and increased
effi
f ciency in non-AI related capital expenditures. In addition, although the foc
f
us on deployment of AI-enabl
a ed solutions has
driven increased demand for networking, the long-term trajectory i
r
s unknown. As such, demand estimates for
f
our new products
are diffi
f cult to forecast and can create volatility in our revenue. We remain in a period of new product introductions and
expanded use cases, particularly in the AI Ethernet market. This has resulted in increased customer trials and contracts with
acceptance periods, and an increase in the volatility and magnitude of our product defer
f red revenue balances, which in turn may
create variability in our revenue results on a quarterly and annual basis. In addition, if we are not able to satisfy the
requirements under customer trials or contracts with acceptance periods, we may be required to accept product retur
t
ns from our
customers, which would prevent us from recognizing revenue on such transactions and may result in the write-down of
inventory.
r
Macroeconomic Update
Global economic and business activities continue to face widespread macroeconomic uncertainties, including the
effe
f cts of, among other things, infla
f tion, monetary policy shifts, recession risks, potential suppl
u
y chain disrupt
r
ions, changes in
government administration policy positions, and geopolitical pressures, including escalating international trade measures and
tariff uncertainty.
Management is actively working with contract manufact
f
ur
t
ers and suppl
u
iers to optimize our suppl
u
y chain in response to
evolving international trade policies and tariff uncertainties. While we have not yet experienced significant disrupt
r
ions, the
potential for
f
future trade measures remains a risk to our suppl
u
y chain continuity and product costs. We are maintaining a
disciplined ful
f fillment cadence to ensure reliabl
a e inventory d
r
eployment. As we build capacity to meet escalating demand, we
are shipping products against previously committed demand/deployment plans and accelerating some deployments as needed.
Simultaneously, we are balancing customers’ requirements and lead times against the availabi
a lity and lead times of key
components and produ
d cts fro
f
m our suppl
u
iers and contract manufact
f
ur
t
ers. Given the timing and prioritization of customer orders
and shipment patterns, as well as the timing and outcome of customer trials and contracts with acceptance periods, near term
revenue trends may not be reflective of current demand levels and may benefit fro
f
m demand/deployment plans that have been
previously committed.
In addition, we anticipate continued volatility in our inventory a
r
nd purchase commitments as a result of new product
introductions, shifts in customer demand, and flu
f ctua
t
tions in suppl
u
ier lead times. This volatility creates a heightened risk of
excess or obsolete inventory a
r
nd suppl
u
ier liabi
a lity charges. Simultaneously, supply chain inflation and material scarcity, such as
the recent tightening of supply conditions in the memory m
r
arket, have continued to put pressure on our gross margin. If tariff or
non-tariff measures escalate, and/or if suppl
u
y conditions worsen and we are unabl
a e to pass on these costs to customers, our
gross margins could be fur
f
ther impacted. Additionally, broader macroeconomic instability could negatively affect demand,
particularly within the enterpr
r
ise market. Given these unpredictabl
a e fact
f
ors, current financial conditions discussed herein may
not be indicative of fut
f ur
t
e operating results and trends.
Results of Operations
Year Ended December 31, 2025 Compared to Year Ended December 31, 2024
Revenue, C
e
os
C
t of R
o
evenue and Gro
G
ss Margin (in m
i
illio
l
ns, e
s
xc
e
ept percentage
a
s)
53
Year Ended December 31,
2025
2024
Change in
$
% of
Revenue
$
% of
Revenue
$
%
Revenue
Product
$
7,576.9
84.1 % $
5,884.0
84.0 % $ 1,692.9
28.8 %
Service
1,428.8
15.9
1,119.1
16.0
309.7
27.7
Total revenue
9,005.7
100.0
7,003.1
100.0
2,002.6
28.6
Cost of revenue
Product
2,978.7
33.1
2,299.0
32.8
679.7
29.6
Service
258.3
2.8
212.8
3.1
45.5
21.4
Total cost of revenue
3,237.0
35.9
2,511.8
35.9
725.2
28.9
Gross profit
$
5,768.7
64.1 % $
4,491.3
64.1 % $ 1,277.4
28.4 %
Gross margin
64.1 %
64.1 %
Revenue by Geography (
h
in
(
millions, except
e
percentage
a
s)
2025
% of
Total
2024
% of
Total
Americas
$
7,122.1
79.1 % $
5,729.0
81.8 %
Europe, Middle East and Afri
f ca
1,070.3
11.9
713.2
10.2
Asia-Pacific
813.3
9.0
560.9
8.0
Total revenue
$
9,005.7
100.0 % $
7,003.1
100.0 %
Year Ended December 31,
Revenue
Product revenue primarily consists of sales of our switching and routing products, and related network applications.
Service revenue is primarily derived from sales of PCS contracts, which are typically purchased in conjunction with our
products, and subs
u
equent renewals of those contracts. We expect our revenue may vary f
r
ro
f
m period to period based on, among
other things, industry a
r
nd customer cyclicality, the timing, size, and complexity of orders, especially with respect to our large
customers, and the itime it takes for
f
customers to evaluate, test, qualili y
fy and accept our pr d
oducts and ser ivices.
Product revenue increased by $1.7 billion, or 28.8%, for
f
the year ended December 31, 2025 compared to 2024. This
increase reflflect
h
s heal h
lthy custome
d
r demand a d
nd hihighe
gher shihipments of our swit h
ching a d
nd routing platfor
f
ms, wi h
ith stro g
ng
cont iributions across our customer base. In addition, service revenue increased by $309.7 million, or 27.7%, for
f
the year ended
December 31, 2025 compared to 2024, as a result of continued growth in initial and renewal suppor
u
t contracts as our customer
installed base has continued to expand. Non - Americas revenues as a percentage of our total revenue i
s i c
n reased fro
1
m 8.2% in
2024 to 20.9% in 2025, which was primarily driven by changes in the geographic mix of sales to our large global customers.
Cost of Revenue and Gross Mar
M
gi
r n
Cost of product revenue primarily consists of amounts paid for
f
inventory t
r
o our third-party contract manufac
f
turers and
merchant silicon vendors, overhead costs of our manufact
f
ur
t
ing operations, including freight, and other costs associated with
manufact
f
ur
t
ing our produc
d
ts and managing our inventory a
r
nd suppl
u
y chain. Cost of service revenue primarily consists of
personnel and other costs associated with our global customer support and services organizations.
Cost of revenue increased by $725.2 million, or 28.9% for the year ended December 31, 2025 compared to 2024.
These increases were driven by a corresponding increase in product and service revenues.
Gross margin, or gross profit as a percentage of revenue, has been and will continue to be affe
f cted by a variety of
factors, including pricing pressure on our produc
d
ts and services due
d
to competition, the mix of sales to large customers who
generally receive lower pricing, the mix of products sold, manufact
f
ur
t
ing-related costs, including costs associated with our
manufact
f
ur
t
ing operations personnel, inflationary pressure and scarcity of materials in our suppl
u
y chain, merchant silicon costs,
54
and excess/obsolete inventory a
r
nd suppl
u
ier liabi
a lity charges. We expect our gross margin to flu
f ctua
t
te over time, depending on
the fact
f
ors described above.
Gross margin remained constant at 64.1% for the years ended December 31, 2025 and 2024.
Operatin
t
g Expe
E
nses (in m
i
illions, e
s
xc
e
ept percentage
a
s)
Our operating expenses consist of research and development, sales and marketing, and general and administrative
expenses. The largest component of our operating expenses is personnel costs and new product introduction costs. Personnel
costs consist of wages, benefits
f
, bonuses and, with respect to sales and marketing expenses, sales incentive compensation.
Personnel costs also include stock-based compensation and travel-related expenses. New product introduction costs are
primarily comprised of third-party engineering and prototype expenses.
Year Ended December 31,
2025
2024
Change in
$
% of
Revenue
$
% of
Revenue
$
%
Operating expenses:
Research and development
$
1,237.3
13.8 % $
996.7
14.2 % $
240.6
24.1 %
Sales and marketing
533.4
5.9
427.3
6.1
106.1
24.8
General and administrative
141.9
1.6
122.7
1.8
19.2
15.6
Total operating expenses
$
1,912.6
21.3 % $
1,546.7
22.1 % $
365.9
23.7 %
Research and development.
Research and development expenses consist primarily of personnel costs, new product introduction costs and an
allocated portion of faci
f
lity and IT costs. Our research and development efforts are focused on new product development and
maintaining and developing additional fun
f
ctionality for our existing products, including new releases and upgrades to our EOS
software and appl
a
ications. We expect our research and development expenses to increase in abs
a
olute dollars as we continue to
invest in research and development in order to expand the capabilities of our cloud networking platform, introduce new
products and fea
f
tures, and continue to invest in our technology.
Research and development expenses increased by $240.6 million, or 24.1%, for
f
the year ended December 31, 2025
compared to 2024. The increase was primarily due
d
to a $95.6 million increase in personnel costs driven by an increase in
headcount, and a $78.6 million increase in new product introduction costs, including third-party engineering costs and
prototype expenses as we expand our product portfol
f io.
Sales and market
k ing.
Sales and marketing expenses consist primarily of personnel costs, marketing, trade shows, and other promotional
activities, and an allocated portion of facility and IT costs. We expect our sales and marketing expenses to increase in absolute
dollars as we continue to expand our sales and marketing efforts worldwide.
Sales and marketing expenses increased by $106.1 million, or 24.8%, for
f
the year ended December 31, 2025 compared
to 2024 primarily due to an increase in personnel costs driven by an increase in headcount.
General and administrative.
General and administrative expenses consist primarily of personnel costs and professional services costs for our
finance, human resources, legal and certain executive func
f
tions. Our profes
f
sional services costs are primarily related to external
legal, accounting, and tax services.
General and administrative expenses increased by $19.2 million, or 15.6%, for
f
the year ended December 31, 2025
compared to 2024 primarily due to an increase in profes
f
sional fee
f
s.
Othe
t
r Inc
I
ome, Net (in
(
millions, e
s
xc
e
ept percentage
a
s)
Other income (expense), net consists primarily of interest income from our cash, cash equivalents and marketable
securities. We expect other income (expense), net may flu
f ctua
t
te in the fut
f ur
t
e as a result of changes in interest rates, changes in
our cash, cash equivalents and marketabl
a e securities balances.
55
Year Ended December 31,
2025
2024
Change in
$
% of
Revenue
$
% of
Revenue
$
%
Other income (expense), net:
Interest income
$
383.4
4.3 % $
311.0
4.4 % $
72.4
23.3 %
Other income (expense), net
10.2
0.1
9.5
0.1
0.7
7.4
Total other income, net
$
393.6
4.4 % $
320.5
4.6 % $
73.1
22.8 %
The fav
f
orable movement in other income (expense), net, dur
d
ing the year ended December 31, 2025 as compared to
2024 was driven by an increase in interest income of $72.4 million due
d
to an increase in our cash and marketable securities
balances.
Provision for
f
Income Taxe
a
s (in
(
milli
l ons, except
e
percentage
a
s)
We operate in a number of tax jurisdictions and are subj
u ect to taxes in each country or jurisdiction in which we
conduct business. Earnings from our non-U.S. activities are subje
b ct to local country income tax and may also be subject to U.S.
income tax. Generally, our U.S. tax obligations are reduc
d
ed by a credit for
f
foreign income taxes paid on these for
f
eign earnings,
which avoids double taxation. Our tax expense to date consists of federal, state and foreign current and defer
f red income taxes.
Year Ended December 31,
2025
2024
Change in
$
% of
Revenue
$
% of
Revenue
$
%
Provision for income taxes
$
738.3
8.2 % $
413.0
5.9 % $
325.3
78.8 %
Effe
f ctive tax rate
17.4 %
12.6 %
On July 4, 2025, the OBBB Act was signed into law in the U.S. This legislation contains a broad range of tax refor
f
m
provisions affe
f cting businesses, which are reflected in our twelve months ended December 31, 2025 period results.
Our provision for income taxes and effect
f
ive tax rate increased for the year ended December 31, 2025, as compared to
2024. The increase in our income taxes was primarily associated with a decrease in tax benefits attributable to equity-based
compensation. For fur
f
ther information regarding income taxes and the impact on our results of operations and fin
f ancial
position, refer to Note 8. Income Taxes of the Notes to Consolidated Financial Statements included in Part II, Item 8, of this
Annual Report on Form 10-K.
Year Ended December 31, 2024 Compared to Year Ended December 31, 2023
Revenue C
, C
e
os
C
t of R
f R
o
evenue and G
d Gro
G
ss Ma g
rgin (i(in m
i
ilillilio
l
ns, e
s
xc
e
ept percentage
a
s)
Year Ended December 31,
2024
2023
Change in
$
% of
Revenue
$
% of
Revenue
$
%
Revenue
Product
$ 5,884.0
84.0 % $ 5,029.5
85.8 % $
854.5
17.0 %
Servic
1
e
,119.1
16.0
830.7
14.2
288.4
34.7
Total revenue
7,003.1
100.0
5,860.2
100.0
1,142.9
19.5
Cost of revenue
Product
2,299.0
32.8
2,061.2
35.2
237.8
11.5
Service
212.8
3.1
168.7
2.9
44.1
26.1
Total cost of revenue
2,511.8
35.9
2,229.9
38.1
281.9
12.6
Gross profit
$ 4,491.3
64.1 % $ 3,630.3
61.9 % $
861.0
23.7 %
Gross margin
64.1 %
61.9 %
56
Revenue by
by Ge g
ogr
h
aphy (
h
in
(
i
millll
i io
l ns, e
s
xc
e
ept percentage
a
s)
2024
% of
Total
2023
% of
Total
Americas
$
5,729.0
81.8 % $
4,651.2
79.3 %
Europe, Middle East and Afri
f ca
713.2
10.2
671.0
11.5
Asia-Pacific
560.9
8.0
538.0
9.2
Total revenue
$
7,003.1
100.0 % $
5,860.2
100.0 %
Year Ended December 31,
Revenue
Product revenue increased by $854.5 million, or 17.0%, for
f
the year ended December 31, 2024 compared to 2023. This
increase refle
f cts healthy customer demand and higher shipments of our switching and routing platfor
f
ms, with strong
contributions across our customer base. In addition, service revenue increased by $288.5 million, or 34.7%, for
f
the year ended
December 31, 2024 compared to 2023, as a result of continued growth in initial and renewal support contracts as our customer
installed base has continued to expand. Non - Americas revenues as a percentage of our total revenues decreased fro
f
m 20.6% in
2023 to 18.2% in 2024, which was primarily driven by changes in the geographic mix of sales to our large global customers.
Cost ofof Revenue
d
and Gross Mar
M
gi
r n
Cost of revenue increased by $282.0 million, or 12.6% for the year ended December 31, 2024 compared to 2023.
These increases were driven by a corresponding increase in product and service revenues, partially offset by reductions of
$180.4 million in net excess/obsolete inventory a
r
nd suppl
u
ier liabi
a lity charges for
f
the year ended December 31, 2024 compared
to 2023.
Gross margin increased from 61.9% for the year ended December 31, 2023 to 64.1% for the year ended December 31,
2024. These changes refle
f ct an improvement in product margins of 60.9% in 2024 compared to 59.0% in 2023, driven by a
reduction of $180.4 million in net excess/obsolete inventory-
r
related charges.
Operatin
t
g Expe
E
nses (i(in m
i
illi
illions, e
s
xc
e
ept percentage
a
s)
ar Ended December 31,
2024
2023
Change in
$
% of
Revenue
$
% of
Revenue
$
%
Operating expenses:
Research and development
$
996.7
14.2 % $
854.9
14.6 % $
141.8
16.6 %
Sales and marketing
427.3
6.1
399.0
6.8
28.3
7.1
General and administrative
122.7
1.8
119.1
2.0
3.6
3.0
Total operating expenses
$
1,546.7
22.1 % $
1,373.0
23.4 % $
173.7
12.7 %
Resear h
ch
d
and de
l
velopment
Research and development expenses increased by $141.8 million, or 16.6%, for
f
the year ended December 31, 2024
compared to 2023. The increase was primarily due to a $64.9 million increase in personnel costs driven by an increase in
headcount, and a $52.3 million increase in new product introduction costs, including third-party engineering costs and
prototype expenses as we expand our product portfol
f io.
l
Sales
d
and ma k
rket
k ing
Sales and marketing expenses increased by $28.3 million, or 7.1%, for
f
the year ended December 31, 2024 compared to
2023 primarily due to an increase in personnel costs.
General a d
nd d
administrative
General and administrative expenses increased by $3.6 million, or 3.0%, for
f
the year ended December 31, 2024
compared to 2023.
57
Othe
t
r Inc
I
ome, Net (in
(
illi
millions, e
s
xc
e
ept percentage
a
s)
Year Ended December 31,
2024
2023
Change in
$
% of
Revenue
$
% of
Revenue
$
%
Other income, net:
Interest income
$
311.0
4.5 % $
152.4
2.6 % $
158.6
104.0 %
Other income (expense), net
9.5
0.1
12.3
0.2
(2.8)
(23.8)
Total other income, net
$
320.5
4.6 % $
164.7
2.8 % $
155.8
94.5 %
The fav
f
orable movement in other income (expense), net, dur
d
ing the year ended December 31, 2024 as compared to
2023 was driven by an increase in interest income of $158.6 million due
d
to an increase in our cash and marketabl
a e securities
balances, coupl
u ed with higher investment yields.
Provision f
n for
f
Income Taxe
a
s (in
(
il
millili
l ons, except
e
percentage
a
s)
Year Ended December 31,
2024
2023
Change in
$
% of
Revenue
$
% of
Revenue
$
%
Provision for income taxes
$
413.0
5.9 % $ 334.7
5.7 % $
78.3
23.4 %
Effe
f ctive tax rate
12.6 %
13.8 %
Our provision for income taxes increased for the year ended December 31, 2024, as compared to 2023, while our
effe
f ctive tax rate decreased for the year ended December 31, 2024, as compared to 2023. The increase in our income taxes was
largely due
d
to an increase in pre-tax income, partly offs
f et by a decrease in our effe
f ctive tax rate due to favorable changes in
state taxes and tax benefits attributable to stock-based compensation. For fur
f
ther information regarding income taxes and the
impact on our results of operations and fin
f ancial position, refer to Note 8. Income Taxes of the Notes to Consolidated Financial
Statements included in Part II, Item 8, of this Annual Report on Form 10-K.
Liquidity and Capital Resources
Our principal sources of liquidity are cash, cash equivalents, marketable securities, and cash generated from
operations. As of December 31, 2025, our total balance of cash, cash equivalents and marketable securities was $10.7 billion, of
which appr
a
oximately $1.0 billion was held outside the U.S. in our foreign subsidiaries.
Our cash, cash equivalents and marketable securities are held for general business purpos
r
es, including the fundi
f
ng of
working capital. Our marketabl
a e securities investment portfol
f io is primarily invested in highly-rated securities, with the primary
objective of minimizing the potential risk of principal loss. We plan to continue to invest for long-term growth. We believe that
our existing balances of cash, cash equivalents and marketable securities, together with cash generated fro
f
m operations, will be
sufficient to meet our working capital requirements and our growth strategies for at least the next 12 months. Our future capi
a tal
requirements will depend on many factors, including our growth rate, the timing and extent of our spending to suppor
u
t research
and development activities, the timing and cost of establ
a ishing additional sales and marketing capabilities, the introduction of
new and enhanced produc
d
t and service offer
f ings, our costs associated with suppl
u
y chain activities, including access to
outsourced manufact
f
ur
t
ing, our costs related to investing in or acquiring complementary o
r
r strategic businesses and
technologies, the continued market acceptance of our products, stock repurchases, and capi
a tal expenditures, including the
construc
r
tion of a new building in Santa Clara, California. In addition, although the global supply chain has shown
improvement, we have had to invest in inventory a
r
nd increase our purchase commitments to address for
f
ecast uncertainty and
we anticipate continued volatility in our inventory a
r
nd purchase commitments. This variability is driven by new product
introduc
d
tions, flu
f ctua
t
ting customer demand and varying supplier lead times. In particular, we have increased our purchase
commitments to respond to the rapid deployment of AI networks and reduce overall lead times which will increase our working
capital requirements. If we require or elect to seek additional capital through debt or equity financing in the future, we may not
be able to raise capital on terms acceptabl
a e to us or at all. If we are required and unabl
a e to raise additional capital when desired,
our business, operating results and fin
f ancial condition may be adversely affected.
58
Cash Flow
l
s
Year Ended December 31,
2025
2024
2023
(in millions)
Cash provided by operating activities
$
4,371.9
$
3,708.2
$
2,034.0
Cash (used in) investing activities
(3,576.2)
(2,457.3)
(687.5)
Cash (used in) financing activities
(1,595.9)
(421.8)
(83.8)
Effe
f ct of exchange rate changes
1.7
(4.8)
0.8
Net increase in cash, cash equivalents and restricted cash
$
(798.5) $
824.3
$
1,263.5
Cash Flow
l
s fro
f
m Ope
O
rating Activ
t itie
t s
Our operating activities consist of net income, adjusted for
f
certain non-cash items, and changes in operating assets and
liabilities.
During the year ended December 31, 2025, cash provided by operating activities was $4.4 billion, primarily from net
income of $3.5 billion, a net decrease in working capital requirements of $687.8 million, and net non-cash adjustments to net
income of $172.7 million. Operating cash inflo
f ws consisted of an increase in defer
f red revenue of $2.5 billion resulting fro
f
m an
increase in product defer
f red revenue related to customer contracts with acceptance terms and increased customer PCS contracts,
and
a $379.9 million increase in accounts payable and other liabilities related to growing business volume and timing of
payments to our large vendors. These cash inflo
f ws were partially offset by a $412.5 million increase in inventory i
r
n response to
an increase in business volume, a $937.4 million increase in other assets driven by increased defer
f red cost of goods sold
associated with higher product revenue deferrals, and an increase in accounts receivable of $746.4 million due
d
to increased
product and service billings. Net non-cash adjustments primarily consisted of $439.2 million of stock-based compensation
expenses, which was largely offs
f et by an increase in deferred income taxes of $312.0 million primarily resulting from increased
deferred tax assets associated with the increase in defer
f red revenue.
During the year ended December 31, 2024, cash provided by operating activities was $3.7 billion, primarily from net
income of $2.9 billion along with a net decrease in working capi
a tal requirements of $985.2 million, offs
f et by net non-cash
adju
d stments to net income of $129.0 million. Cash inflows consisted of an increase in defer
f red revenue of $1.3 billion resulting
from increased customer PCS contracts and an increase in product defer
f red revenue related to customer contracts with
acceptance terms, and a $110.6 million decrease in inventory r
r
esulting fro
f
m strong product shipments. These cash inflows were
partially offset by a $234.2 million increase in other assets driven by increased defer
f red cost of goods sold associated with
higher produc
d
t revenue deferrals, an increase in accounts receivabl
a e of $106.1 million due
d
to increased product and service
billings and a $66.5 million increase in income tax payments due to timing. Net non-cash adjustments primarily consisted of an
increase in defer
f red income taxes of $492.9 million primarily resulting fro
f
m increased deferred tax assets associated with the
increase in defer
f red revenue and capitalization of research and development costs under IRC Section 174, which were largely
offs
f et by $355.4 million of stock-based compensation expenses.
Cash Flow
l
s fro
f
m Inv
I
esting
i
Activitie
t s
Our investing activities primarily consist of our marketable securities investments, business combinations, and capital
expenditures.
During the year ended December 31, 2025, cash used in investing activities was $3.6 billion, consisting of purchases
of availabl
a e-for-sale securities of $6.7 billion, $300.0 million for
f
the business acquisition of VeloCloud. and purchases of
property, equipment and intangible assets of $119.5 million, partially offset by proceeds of $3.6 billion from maturities and
sales of marketabl
a e securities.
During the year ended December 31, 2024, cash used in investing activities was $2.5 billion, consisting of purchases
of availabl
a e-for-sale securities of $4.5 billion, partially offs
f et by proceeds of $2.1 billion fro
f
m matur
t
ities and sales of
marketable securities.
Cash Flow
l
s fro
f
m Fin
F
ancing
i
Activiti
i es
59
Our fin
f ancing activities consist of proceeds from the issuance of our common stock under employee equity incentive
plans, offs
f et by repurchases of our common stock.
During the year ended December 31, 2025, cash used in fin
f ancing activities was $1.6 billion, consisting of payments
for repurchases of our common stock from the open market of $1.6 billion.
During the year ended December 31, 2024, cash used in financing activities was $421.8 million, consisting of
payments for repurchases of our common stock fro
f
m the open market of $423.6 million and employee taxes withheld and paid
of $58.4 million upon
u
vesting of restricted stock units, partially offs
f et by proceeds from the issuance of common stock under
employee equity incentive plans of $60.2 million.
Stoc
t
k Repurchase Pro
P
gr
o
ams
From time to time, we repurchase shares of our common stock pursuant to repurchase programs that are funded fro
f
m
working capital. In May 2025, we completed repurchases under the $1.2 billion Prior Repurchase Program, and our board of
directors authorized the $1.5 billion New Repurchase Program. The New Repurchase Program does not oblige us to acquire any
of our common stock and may be suspended or discontinued by the Company at any time without prior notice. During the year
ended December 31, 2025, we repurchased a total of $921.0 million of our common stock under our Prior Repurchase Program
and $682.1 million of our common stock under our New Repurchase Program. As of December 31, 2025, the remaining
authorized amount for stock repurchases under the New Repurchase Program was appr
a
oximately $817.9 million. Refer to Note
6. Stockholders' Equity and Stock-Based Compensation of the Notes to Consolidated Financial Statements included in Part II,
Item 8, of this Annual Report on Form 10-K for
f
further discussion.
Material Cash Requirements
Our material cash requirements will have an impact on our future liquidity. Our material cash requirements represent
material expected or contractua
t
lly committed future payment obligations. We believe that we will be able to fund these
obligations through cash generated fro
f
m operations and fro
f
m our existing balances of cash, cash equivalents and marketable
securities.
Our material cash requirements include the fol
f lowing contractua
t
l and other obligations:
Purchase Obligations
We outsource most of our manufact
f
ur
t
ing and suppl
u
y chain management operations to third-party contract
manufact
f
ur
t
ers, who procure components and assemble products on our behalf. A
f
significant portion of our purchase orders for
f
finished goods and strategic components, including integrated circuits consigned to contract manufact
f
ur
t
ers, consists of non-
cancellabl
a e commitments. Our purchase obligations also encompass softw
f
are and technology licenses, property and equipment,
and other corporate goods and services. As of December 31, 2025, we had $6.8 billion of such purchase obligations, of which
$6.3 bibilli
llion are expected t
b
o be r
i
eceived withihin 12 months, a d
nd $0.5 billion are expected to be received after one year. These
open purchase orders are considered enforceable and legally binding, and while we may have some limited ability to reschedule
and adjust our requirements based on our business needs prior to the delivery o
r
f goods or performance of services, this can only
occur with the agreement of the related supplier.
Leases
We have operating lease arrangements for
f
offi
f ce space, data center, equipment and other corpor
r
ate assets. As of
December 31, 2025, we had lease payment obligations, net of immaterial subl
u ease income of $90.5 million, with $22.1 million
payabl
a e within 12 months.
Property P
t
roje
o ct
During the year ended December 31, 2021, we purchased land and the improvements thereon in Santa Clara,
Califor
f
nia to construc
r
t a building for
f
offi
f ce, lab and data center space. The estimated capital expenditures related to this project
is expected to be approximately $170.0 million to $195.0 million through the end of fiscal 2026 when construc
r
tion is expected
to be completed.
Off-
f balance She
S
et Arrangementst
60
As of December 31, 2025, we did not have any relationships with any unconsolidated entities or financial partnerships,
such as entities often referred to as struc
r
tured fin
f ance or special purpos
r
e entities, that would have been established for the
purpose of faci
f
litating off-b
f
alance sheet arrangements or other contractua
t
lly narrow or limited purpos
r
es.
Critical Accounting Estimates
We have prepared our consolidated financial statements in accordance with accounting principles generally accepted
in the United States ("GAAP" or "U.S. GAAP") and include our accounts and the accounts of our wholly owned subsidiaries.
The preparation of these consolidated financial statements requires our management to make estimates, assumptions and
judgments that affe
f ct the reported amounts of assets and liabi
a lities at the date of the fin
f ancial statements, disclosure of
contingent assets and liabi
a lities at the date of the fin
f ancial statements and the reported amounts of revenue and expenses during
the appl
a
icable periods. Note 1, “Organization and Summary of Significant Accounting Policies,” of the Notes to Consolidated
Financial Statements in Part II, Item 8 of this Form 10-K describes the significant accounting policies and methods used in the
preparation of the Company’s consolidated financial statements. We base our estimates, assumptions and judgments on
historical experience and on various other fact
f
ors that we believe to be reasonabl
a e under the circumstances. Diffe
f rent
assumptions and judgments would change the estimates used in the preparation of our consolidated financial statements, which,
in turn, could change the results from those reported. We evaluate our estimates, assumptions and judgments on an ongoing
basis. Actual results may diffe
f r fro
f
m these estimates. To the extent that there are material diffe
f rences between these estimates
and our actual results, our future financial statements will be affe
f cted.
Revenue Recogn
o
itio
t n
We generate revenue from sales of our products, which incorporate our EOS softw
f
are and accessories such as cabl
a es
and optics, to direct customers and channel partners together with PCS. We typically sell products and PCS in a single contract.
We recognize revenue upon transfer
f
of control of promised products or services to customers in an amount that reflects the
consideration we expect to be entitled to receive in exchange for those products or services. Most of our contracts with
customers, other than renewals of PCS, contain multiple performance obligations with a combination of products and PCS.
Products and PCS generally qualify a
f
s distinct performance obligations. Our hardware includes EOS software, which together
deliver the essential fun
f
ctionality of our produc
d
ts. For contracts which contain multiple performance obligations, we allocate
revenue to each distinct perfor
f
mance obligation based on the standalone selling price (“SSP”). Judgment is required to
determine the SSP for each distinct perfor
f
mance obligation. We use a range of amounts to estimate SSP for products and PCS
sold together in a contract to determine whether there is a discount to be allocated based on the relative SSP of the various
products and PCS.
If we do not have an observabl
a e SSP, such as when we do not sell a product or service separately, then SSP is
estimated using judgment and considering all reasonabl
a y available information, such as gross margin objectives, market
conditions and infor
f
mation about
a
the size and/or purchase volume of the customer. We generally use a range of amounts to
estimate SSP for individual products and services based on multiple fac
f
tors including, but not limited to, product category,
r
actua
t
l and expected volume, discounting policies, and customer vertical and size.
Inventor
t
y V
r
al
V uation and Suppl
p ie
l r Liabili
i ti
i es
Inventories primarily consist of fin
f ished goods, including evaluation inventory h
r
eld at customers or partners, and
strategic components, primarily integrated circuits. Inventories are stated at the lower of cost or net realizable value. Cost is
computed using standard cost, which approximates actua
t
l cost, on a fir
f st-in, first-out basis. Evaluation inventory c
r
onsists of
new products and/or use cases at customer or partner sites for trial purpos
r
es. Title to the inventory r
r
emains with Arista during
the trial period and invoicing occurs only upon
u
completion of the trial period and when/if the products have been accepted by
the customer. Manufact
f
ur
t
ing overhead costs and inbound shipping costs are included in the cost of inventory.
r
We record a
provision when inventory i
r
s determined to be in excess of anticipated demand, or obsolete, to adju
d st inventory t
r
o its estimated
realizable value.
We record a liabi
a lity and a corresponding charge for non-cancellable, non-returnable purchase commitments with our
suppl
u
iers for quantities in excess of our demand forecasts or that are considered obsolete.
We use significant judgment in establishing our forecasts of future demand and obsolete material exposures. These
estimates depend on our assessment of current and expected orders from our customers, product development plans and current
sales levels. Despite general improvements in the supply environment, fluctuations in suppl
u
ier lead times and the persistence of
some long-lead components require us to maintain elevated inventory l
r
evels and purchase commitments. To manage this
61
continued volatility, we maintain extended demand-planning horizons and strategic inventory b
r
uffe
f rs to ensure continuity of
suppl
u
y and address for
f
ecast uncertainty. We expect inventory a
r
nd purchase commitments to remain volatile due to new product
introductions, flu
f ctua
t
ting customer demand, and varyi
r ng suppl
u
ier lead times. There is, however, no guarantee that all suppliers
will meet their commitments in the time frame committed or that actua
t
l customer demand will directly match our demand
forecasts. If actua
t
l market demand conditions or suppl
u
ier execution on commitments are less favorable than those proje
o cted by
management, which may be caused by fact
f
ors within and/or outside of our control, we may be required to increase our
inventory w
r
rite-downs and liabi
a lities to our suppl
u
iers, which could have an adverse impact on our gross margins and
profita
f
bi
a lity. We regularly evaluate our exposure for
f
inventory w
r
rite-downs and adequacy of our contract manufac
f
turer and
suppl
u
ier liabi
a lities.
Income Taxe
a
s
Significant management judgment is required in developing our provision for or benefit
f
from income taxes, including
the determination of defer
f red tax assets and liabi
a lities and any valuation allowances that might be required against the defer
f red
tax assets. In assessing the need for a valuation allowance, we consider all available evidence, including past operating results
and estimates of our ability to generate suffic
f ient future taxabl
a e income in certain foreign and state tax jurisdictions, fut
f ur
t
e
reversals of taxable temporary d
r
iffe
f rences, and potential tax planning strategies. An adjustment to the valuation allowance will
either increase or decrease our provision for
f
or benefit fro
f
m income taxes in the period such determination is made.
We are subject to income taxes in the U.S. and numerous foreign jurisdictions, which involves significant judgment in
the interpr
r
etation of complex domestic and international tax laws and may give rise to uncertain tax positions. We recognize
potential liabi
a lities for
f
anticipated tax audit issues in the U.S. and other tax jurisdictions based on our estimate of whether it is
more likely than not that additional taxes, interest, and penalties will be due. Although management believes our unrecognized
tax benefits
f
are reasonabl
a e, no assurance can be given that the final tax outcome of these matters will not be different from that
which is refle
f cted in our unrecognized tax benefits
f
. Our unrecognized tax benefits are adjusted considering changing facts and
circumstances, such as the closing of a tax examination or the refinement of an estimate. Resolution of these uncertainties in a
manner inconsistent with management’s expectations could have a material impact on our financial condition and operating
results.
Recent Accounting Pronouncements
Refer to the subhe
u
ading titled “Recently Adopt
d
ed Accounting Pronouncements” in Note 1. Organization and Summary
of Significant Accounting Policies of the Notes to Consolidated Financial Statements included in Part II, Item 8, of this Annual
Report on Form 10-K.
62
Item 7A Q
. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to market risk in the ordinary c
r
ourse of our business. Market risk represents the risk of loss that may
impact our financial position due
d
to adverse changes in financial market prices and rates. Our market risk exposure is primarily
a result of flu
f ctua
t
tions in foreign currency exchange rates, interest rates, and strategic equity investments. Global economic and
business activities continue to face widespread macroeconomic uncertainties, including the effects of, among other things,
inflation, monetary policy shifts, recession risks, potential suppl
u
y chain disrupt
r
ions, geopolitical pressures, and escalating
international trade measures, which may increase our foreign currency exchange risk and interest rate risk. For fur
f
ther
discussion of the potential impacts on our business, operating results, and financial condition, see Risk Factors included in Part
I, Item 1A of this Form 10-K.
Foreign C
g
ur
C
rency E
c
xc
E
hange Risk
Our results of operations and cash flo
f ws are subject to fluctuations due to changes in for
f
eign currency exchange rates.
Subs
u
tantially all of our revenue is denominated in U.S. dollars, and therefor
f
e, our revenue is not directly subj
u ect to for
f
eign
currency risk. However, we are indirectly exposed to foreign currency risk. A stronger U.S. dollar could make our products and
services more expensive in for
f
eign countries and therefore reduce demand. A weaker U.S. dollar could have the opposite effect.
Such economic exposure to currency flu
f ctua
t
tions is difficult to measure or predict because our sales are also influenced by
many other fact
f
ors.
Our expenses are generally denominated in the currencies in which our operations are located, which is primarily in
the U.S. and to a lesser extent in Europe and Asia. Our results of operations and cash flo
f ws are, therefor
f
e, subj
u ect to
fluctuations due to changes in for
f
eign currency exchange rates and may be adversely affected in the fut
f ur
t
e due
d
to changes in
foreign exchange rates. To date, foreign currency transaction gains and losses and exchange rate fluctuations have not been
material to our fin
f ancial statements. While we have not engaged in the hedging of our foreign currency transactions to date and
do not enter into any hedging contracts for
f
trading or speculative purpos
r
es, we may in the fut
f ur
t
e hedge selected significant
transactions denominated in currencies other than the U.S. dollar.
Interest Rate Sensitivityt
As of December 31, 2025, and 2024, we had cash, cash equivalents and availabl
a e-for-sale marketabl
a e securities
totaling $10.7 billion and $8.3 billion, respectively. Cash equivalents and marketable securities were invested primarily in
money market funds
f
, corpo
r
rate bonds, U.S. agency mortgage-backed securities, U.S. treasury s
r
ecurities and commercial pape
a
r.
Our primary investment objectives are to preserve capital and maintain liquidity requirements. In addition, our policy limits the
amount of credit exposure to any single issuer. We do not enter into investments for
f
trading or speculative purpos
r
es and have
not used any derivative fin
f ancial instruments to manage our interest rate risk exposure. Our primary exposure to market risk is
interest income sensitivity, which is affe
f cted by changes in the general level of the interest rates in the U.S. A decline in interest
rates would reduc
d
e our interest income on our cash, cash equivalents and marketable securities. Conversely, an increase in
interest rates could have a material impact to the fair market value of our investments in fix
f ed income securities. We would
incur unrealized losses on fixed income securities if there is an increase in interest rates compared to interest rates at the time of
purchase. A hypothetical 100 basis point increase in market interest rates would have resulted in a decrease of appr
a
oximately
$100 million and $70 million in the market value of our availabl
a e-for-sale debt securities and cash equivalents as of
December 31, 2025 and 2024. In the unlikely event we are for
f
ced to sell our marketable securities prior to matur
t
ity, we may
incur realized losses in such investments. However, because of the conservative and short-term nature of the investments in our
portfolio, a change in interest rates is not expected to have a material impact on our consolidated financial statements.
63
64
Item 8. Financial Statements and Supplementary Data
INDEX TO CONSOLIDATE
A
D FINANCIAL STAT
T
EMENTS
Page
Reports of Independent Registered Public Accounting Firm (PCAOB ID: 42)
p
p
g
g
(
)
65
Consolidated Balance Sheets
68
Consolidated Statements of Income
69
Consolidated Statements of Comprehensive Income
p
70
Consolidated Statements of Stockholders' Equity
q
y
71
Consolidated Statements of Cash Flows
72
Notes to the Consolidated Financial Statements
73
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Arista Networks, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Arista Networks, Inc. (the Company) as of December 31,
2025 and 2024, the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flo
f ws for
each of the three years in the period ended December 31, 2025, and the related notes (collectively refer
f red to as the
“consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects,
the fin
f ancial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flo
f ws for
each of the three years in the period ended December 31, 2025, in confor
f
mity with U.S. generally accepted accounting
principles.
We also have audited, in accordance with the standards of the Publ
u ic Company Accounting Oversight Board (United States)
(PCAOB), the Company's internal control over fin
f ancial reporting as of December 31, 2025, based on criteria established in
Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(2013 framework), and our report dated Februa
r
ry 13, 2026 expressed an unqualified opinion thereon.
Basis for
f
Opinion
These fin
f ancial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on
the Company’s fin
f ancial statements based on our audits. We are a public accounting fir
f m registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the appl
a
icable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonabl
a e assurance about whether the financial statements are free of material misstatement, whether due
d
to
error or fra
f ud. Our audits included performing procedur
d
es to assess the risks of material misstatement of the financial
statements, whether due to error or fra
f ud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our audits provide a reasonabl
a e basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising fro
f
m the current period audit of the financial statements that
was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that
are material to the financial statements and (2) involved our especially challenging, subj
u ective or complex judgments. The
communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken
as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit
matter or on the accounts or disclosures to which it relates.
65
Inventory Valuatio
t n and Suppl
p ie
l r Liabilit
i
ie
t s
Description of the
Matter
As discussed in Note 1 of the consolidated financial statements, the Company’s inventories are stated at
the lower of cost or net realizable value. Cost is computed using standard cost, which approximates
actua
t
l cost, on a fir
f st-in, first-out basis. The Company’s inventory b
r
alance totaled $2.2 billion on
December 31, 2025. The Company records a provision when inventory i
r
s determined to be in excess of
anticipated demand, or obsolete, to adju
d st inventory t
r
o its estimated realizable value. The Company
records a suppl
u
ier liabi
a lity and a corresponding charge for non-cancellabl
a e, non-returnable purchase
commitments with suppl
u
iers for quantities in excess of the Company’s demand for
f
ecasts, or that are
considered obsolete.
Auditing management’s assessment of net realizable value for
f
inventory a
r
nd suppl
u
ier liabi
a lity was
complex and highly judgmental due
d
to the assessment of management’s estimates of forecasted product
demand, which can be impacted by changes in current and expected orders from customers, product
development plans, and current sales levels.
How We Addressed
the Matter in Our
Audit
We obtained an understanding, evaluated the design, and tested the operating effe
f ctiveness of controls
over the Company’s determination of the net realizable value of inventory a
r
nd suppl
u
ier liabi
a lity. This
included controls over the preparation of the demand and production for
f
ecasts, and the evaluation of the
accuracy and completeness of the inventory p
r
rovision and supplier liabi
a lity.
To test the inventory p
r
rovision and supplier liabi
a lity, we performed audit procedur
d
es that included,
among others, assessing the Company’s methodology over the computation of the provision and
suppl
u
ier liabi
a lity and testing the significant assumptions and underlying inputs used by the Company in
its analysis, including current and expected orders from customers, product development plans and
current sales levels.
/s/ Ernst & Young LLP
We have served as the Company's auditor since 2008.
San Jose, California
Februa
r
ry 13, 2026
66
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Arista Networks, Inc.
Opinion on Internal Control Over Financial Reporting
We have audited Arista Networks, Inc.’s internal control over fin
f ancial reporting as of December 31, 2025, based on criteria
establ
a ished in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (2013 framework) (the COSO criteria). In our opinion, Arista Networks, Inc. (the Company) maintained, in all
material respects, effe
f ctive internal control over fin
f ancial reporting as of December 31, 2025, based on the COSO criteria.
We also have audited, in accordance with the standards of the Publ
u ic Company Accounting Oversight Board (United States)
(PCAOB), the consolidated balance sheets of the Company as of December 31, 2025 and 2024, the related consolidated
statements of income, comprehensive income, stockholders’ equity and cash flo
f ws for each of the three years in the period
ended December 31, 2025, and the related notes and our report dated Februa
r
ry 13, 2026 expressed an unqualified opinion
thereon.
Basis for
f
Opinion
The Company's management is responsible for maintaining effe
f ctive internal control over fin
f ancial reporting and for its
assessment of the effe
f ctiveness of internal control over fin
f ancial reporting included in the accompanying Management’s Report
on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control
over financial reporting based on our audit. We are a public accounting fir
f m registered with the PCAOB and are required to be
independent with respect to the Company in accordance with the U.S. fed
f
eral securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conduc
d
ted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonabl
a e assurance about whether effective internal control over fin
f ancial reporting was maintained in all
material respects.
Our audit included obtaining an understanding of internal control over fin
f ancial reporting, assessing the risk that a material
weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and
performing such other procedur
d
es as we considered necessary in the circumstances. We believe that our audit provides a
reasonabl
a e basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over fin
f ancial reporting is a process designed to provide reasonabl
a e assurance regarding the
reliability of financial reporting and the preparation of financial statements for
f
external purpos
r
es in accordance with generally
accepted accounting principles. A company’s internal control over fin
f ancial reporting includes those policies and procedur
d
es
that (1) pertain to the maintenance of records that, in reasonabl
a e detail, accurately and fai
f rly refle
f ct the transactions and
dispositions of the assets of the company; (2) provide reasonabl
a e assurance that transactions are recorded as necessary to permit
preparation of fin
f ancial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonabl
a e assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effe
f ct on the fin
f ancial statements.
Because of its inherent limitations, internal control over fin
f ancial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to fut
f ur
t
e periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedur
d
es may deteriorate.
/s/ Ernst & Young LLP
San Jose, California
Februa
r
ry 13, 2026
67
2025
2024
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$
1,963.9
$
2,762.4
Marketable securities
8,779.1
5,541.1
Accounts receivabl
a e, net
1,886.9
1,140.5
Inventories
2,247.1
1,834.6
Prepaid expenses and other current assets
1,510.0
632.3
Total current assets
16,387.0
11,910.9
Property and equipment, net
203.1
98.8
Goodwill
416.1
268.5
Deferred tax assets
1,773.6
1,440.4
Other assets
668.8
325.3
TOTAL ASSETS
$
19,448.6
$
14,043.9
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable
$
651.7
$
381.1
Accrue
r
d liabi
a lities
475.4
435.3
Deferred revenue
4,002.6
1,727.3
Other current liabi
a lities
246.8
188.5
Total current liabi
a lities
5,376.5
2,732.2
Deferred revenue, non-current
1,369.8
1,064.1
Other long-term liabilities
331.8
252.8
TOTAL LIABILITIES
7,078.1
4,049.1
Commitments and contingencies (Note 5)
STOCKHOLDERS’ EQUITY:
Prefer
f red stock, $0.0001 par value—100 shares authorized and no shares issued and
outstanding as of December 31, 2025 and 2024
—
—
Common stock, $0.0001 par value—4,000 shares authorized as of December 31,
2025 and 2024; 1,256.5 and 1,261.3 shares issued and outstanding as of December
31, 2025 and 2024
0.1
0.1
Additional paid-in capital
2,911.8
2,465.4
Retained earnings
9,446.6
7,542.5
Accumulated other comprehensive income (loss)
12.0
(13.2)
TOTAL STOCKHOLDERS’ EQUITY
12,370.5
9,994.8
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
$
19,448.6
$
14,043.9
December 31,
The accompany
m
ing notes are an integra
g
l part of t
o
he
t
se consolidat
d ed financial statements.
t
ARISTA NETWORKS, INC.
Consolidated Balance Sheets
(In millions, except par value)
68
Year Ended December 31,
2025
2024
2023
Revenue:
Product
$
7,576.9
$
5,884.0
$
5,029.5
Service
1,428.8
1,119.1
830.7
Total revenue
9,005.7
7,003.1
5,860.2
Cost of revenue:
Product
2,978.7
2,299.0
2,061.2
Service
258.3
212.8
168.7
Total cost of revenue
3,237.0
2,511.8
2,229.9
Gross profit
5,768.7
4,491.3
3,630.3
Operating expenses:
Research and development
1,237.3
996.7
854.9
Sales and marketing
533.4
427.3
399.0
General and administrative
141.9
122.7
119.1
Total operating expenses
1,912.6
1,546.7
1,373.0
Income from operations
3,856.1
2,944.6
2,257.3
Other income, net
393.6
320.5
164.7
Income before income taxes
4,249.7
3,265.1
2,422.0
Provision for income taxes
738.3
413.0
334.7
Net income
$
3,511.4
$
2,852.1
$
2,087.3
Earnings per share:
Basic
$
2.79
$
2.27
$
1.69
Dilute
$
d
2.75
$
2.23
$
1.65
Weighted-average common shares outstanding:
Basic
1,258.0
1,256.3
1,237.4
Diluted
1,275.7
1,281.1
1,268.5
The accompany
m
ing notes are an integra
g
l part of t
o
he
t
se consolidat
d ed financial statements.
t
ARISTA NETWORKS, INC.
Consolidated Statements of Income
(In millions, except per share amounts)
69
2025
2024
2023
Net income
$
3,511.4
$
2,852.1
$
2,087.3
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments
1.6
(4.2)
0.9
Availabl
a e-for-sale investments:
Changes in net unrealized gains (losses) on available-for-sale
securities
23.8
(5.7)
25.9
Less: reclassification adjustment for net (gains) losses included in
net income
(0.2)
—
3.8
Other comprehensive income (loss)
25.2
(9.9)
30.6
Comprehensive income
$
3,536.6
$
2,842.2
$
2,117.9
Year Ended December 31,
The accompany
m
ing notes are an integra
g
l part of t
o
he
t
se consolidat
d ed financial statements.
t
ARISTA NETWORKS, INC.
Consolidated Statements of Comprehensive Income
(In millions)
70
Shares
Amount
In Capital
Earnings
Comprehensive
Income (Loss)
Equity
Balance—December 31, 2022
1,227.6
$
0.1
$
1,780.6
$
3,139.0
$
(33.9)
$
4,885.8
Net income
—
—
—
2,087.3
—
2,087.3
Other comprehensive income, net of tax
—
—
—
—
30.6
30.6
Stock-based compensation
—
—
296.8
—
—
296.8
Issuance of common stock in connection
with employee equity incentive plans
25.9
—
62.1
—
—
62.1
Repurchase of common stock
(3.8)
—
—
(112.3)
—
(112.3)
Tax withholding paid for net share
settlement of equity awards
(0.8)
—
(33.6)
—
—
(33.6)
Common stock issued for business
combinations
0.1
—
2.3
—
—
2.3
Balance—December 31, 2023
1,249.0
0.1
2,108.2
5,114.0
(3.3)
7,219.0
Net income
—
—
—
2,852.1
—
2,852.1
Other comprehensive loss, net of tax
—
—
—
—
(9.9)
(9.9)
Stock-based compensation
—
—
355.4
—
—
355.4
Issuance of common stock in connection
with employee equity incentive plans
18.6
—
60.2
—
—
60.2
Repurchase of common stock
(5.5)
—
—
(423.6)
—
(423.6)
Tax withholding paid for net share
settlement of equity awards
(0.8)
—
(58.4)
—
—
(58.4)
Balance—December 31, 2024
1,261.3
0.1
2,465.4
7,542.5
(13.2)
9,994.8
Net income
—
—
—
3,511.4
—
3,511.4
Other comprehensive income, net of tax
—
—
—
—
25.2
25.2
Stock-based compensation
—
—
439.2
—
—
439.2
Issuance of common stock in connection
with employee equity incentive plans
11.6
—
57.7
—
—
57.7
Repurchase of common stock
(15.9)
—
—
(1,607.3)
—
(1,607.3)
Tax withholding paid for net share
settlement of equity awards
(0.5)
—
(50.5)
—
—
(50.5)
Balance—December 31, 2025
1,256.5
$
0.1
$
2,911.8
$
9,446.6
$
12.0
$
12,370.5
_______________
_
__
_
___
_
__
_
___
_
___
_
___
_
_____
_
__
_
__
_
_
_
Common Stock
Additional
Paid-
Retained
Accumulated
Other
Total
Stockholders’
.
The accompany
m
ing notes are an integra
g
l part of t
o
he
t
se consolidat
d ed financial statements.
t
ARISTA NETWORKS, INC.
Consolidated Statements of Stockholders’ Equity
(In millions)
71
CASH FLOWS FROM OPERAT
R
ING ACTIVITIES:
Net income
$
3,511.4
$
2,852.1
$
2,087.3
Adju
d stments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization
72.6
62.0
70.6
Stock-based compensation
439.2
355.4
296.8
Deferred income taxes
(312.0)
(492.9)
(370.8)
Other
(27.1)
(53.6)
(34.0)
Changes in operating assets and liabi
a lities:
Accounts receivabl
a e, net
(746.4)
(106.1)
(105.9)
Inventories
(412.5)
110.6
(655.5)
Other assets
(937.4)
(234.2)
(66.4)
Accounts payable
260.5
(51.6)
198.6
Other liabi
a lities
119.4
47.8
128.1
Deferred revenue
2,452.0
1,285.2
465.0
Income taxes, net
(47.8)
(66.5)
20.2
Net cash provided by operating activities
4,371.9
3,708.2
2,034.0
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds fro
f
m matur
t
ities of marketabl
a e securities
3,432.5
2,058.6
1,887.9
Proceeds from sale of marketabl
a e securities
144.3
48.8
67.3
Purchases of marketabl
a e securities
(6,748.4)
(4,526.1)
(2,606.9)
Purchases of property, equipment and intangible assets
(119.5)
(32.0)
(34.4)
Cash paid for business combination, net of cash acquired
(300.0)
—
1.8
Other
14.9
(6.6)
(3.2)
Net cash used in investing activities
(3,576.2)
(2,457.3)
(687.5)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds fro
f
m issuance of common stock under equity plans
57.7
60.2
62.1
Tax withholding paid on behalf of employees for net share settlement
(50.5)
(58.4)
(33.6)
Repurchase of common stock
(1,603.1)
(423.6)
(112.3)
Net cash used in fin
f ancing activities
(1,595.9)
(421.8)
(83.8)
Effe
f ct of exchange rate changes
1.7
(4.8)
0.8
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND
RESTRICTED CASH
(798.5)
824.3
1,263.5
CASH, CASH EQUIVALENTS AND RESTRICTED CASH —Beginning
of period
2,763.8
1,939.5
676.0
CASH, CASH EQUIVALENTS AND RESTRICTED CASH —End of
period
$
1,965.3
$
2,763.8
$
1,939.5
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid for income taxes, net of refunds
$
1,095.9
$
970.6
$
686.2
Year Ended December 31,
2025
2024
2023
ARISTA NETWORKS, INC.
Consolidated Statements of Cash Flows
(In millions)
72
ARISTA NETWORKS, INC.
Notes to Consolidated Financial Statements
1.
Organization and Summary of Signific
f ant Accounting Policies
Organ
r
izatio
t n
Arista Networks, Inc. (together with our subs
u
idiaries, “we,” “our,” "Arista," "Company" or “us”) is an industry l
r
eader
in data-driven, client-to-cloud networking for large AI, data center, campus and routing environments. Our cloud networking
solutions consist of our EOS, a set of network appl
a
ications and our Ethernet switching and routing platfor
f
ms. We are
incorporated in the state of Delaware. Our corporate headquarters are located in Santa Clara, California, and we have wholly-
owned subsidiaries throughout the world, including North America, Europe, Asia and Australia.
Basis o
i
f P
o
re
P
sentat
t io
t n and Principl
i es
l
of Consolid
l at
d io
t n
The accompanying consolidated financial statements include the accounts of Arista Networks, Inc. and its wholly-
owned subsidiaries and are prepared in accordance with accounting principles generally accepted in the United States
("GAAP"). All significant intercompany accounts and transactions have been eliminated.
On November 7, 2024, the Company announced a four
f
-for-one forward stock split ("Stock Split") of the Company’s
common stock that was effe
f cted through the filin
f
g of an amendment to the Company's Amended and Restated Certific
f ate of
Incorporation ("Amendment") on December 3, 2024. The Stock Split proportionately increased the authorized shares of
common stock, and all share and per share amounts presented herein have been retroactively adjusted to refle
f ct the impact of
the Stock Split.
Cert iain r
l
eclas isififications of prior period amounts were m d
ad
i
e in the current year to confor
f
m to the current period
presenta ition.
Use of E
o
st
E im
t
ates
t
The preparation of the accompanying consolidated financial statements in confor
f
mity with GAAP requires us to make
estimates and assumptions that affe
f ct the amounts reported and disclosed in the consolidated financial statements and
accompanying notes. Those estimates and assumptions include, but are not limited to, valuation of inventory a
r
nd contract
manufact
f
ur
t
er/s
r upplier liabi
a lities, accounting for
f
income taxes, including the recognition of deferred tax assets and liabi
a lities,
valuation allowance on defer
f red tax assets and reserves for
f
uncertain tax positions, revenue recognition and defer
f red revenue,
valuation of goodwill and acquisition-related intangible assets, estimate of useful lives of long-lived assets including intangible
assets, and the recognition and measurement of contingent liabi
a lities. We evaluate our estimates and assumptions based on
historical experience and other factors and adju
d st these estimates and assumptions when facts and circumstances dictate. Actua
t
l
results could diffe
f r materially from these estimates.
Concentratio
t ns of Busine
i
ss and Cre
C
dit R
i
isk
We work closely with third-party contract manufact
f
ur
t
ers to manufact
f
ur
t
e our products. As of December 31, 2025, we
had three primary contract manufac
f
turing partners, who provided the vast majo
a rity of our electronic manufact
f
ur
t
ing services.
Our contract manufact
f
ur
t
ing partners deliver our products to our third-party direct fulfil
f lment facilities. We and our fulfill
f
ment
partners then perfor
f
m labeling, final config
f uration, quality assurance testing and shipment to our customers. Our products rely
on key components, including certain integrated circuit components and power suppl
u
ies, some of which our contract
manufact
f
ur
t
ing partners purchase on our behalf from a limited number of suppliers, including certain sole-source providers. In
addition, we rely heavily on a single merchant silicon suppl
u
ier for
f
our switching chips. We generally do not have guaranteed
suppl
u
y contracts with our component suppl
u
iers, and our manufac
f
turing partners could delay shipments or cease manufac
f
turing
such products or selling them to us at any time. If we are unabl
a e to obtain a sufficient quantity of these components on
commercially reasonabl
a e terms or in a timely manner, or if we are unabl
a e to obtain alternative sources for these components,
sales of our products could be delayed or halted entirely, or we may be required to redesign our products. Quality or
performance failures of our produc
d
ts or changes in our contractors’ or vendors’ financial or business condition could disrupt
u
our
ability to suppl
u
y quality produc
d
ts to our customers. Any of these events could result in lost sales and damage to our end-
customer relationships, which would adversely impact our business, financial condition and results of operations.
Financial instrum
r
ents that potentially subj
u ect us to concentrations of credit risk consist primarily of cash, cash
equivalents, marketable securities, and accounts receivabl
a e. Our cash equivalents and marketable securities are invested in high
73
quality fin
f ancial instruments with banks and fin
f ancial institutions. Such deposits may be in excess of insured limits provided on
such deposits.
Our accounts receivabl
a e are unsecured and represent amounts due
d
to us based on contractua
t
l obligations of our
customers. We mitigate credit risk with respect to accounts receivable by performing ongoing credit evaluations of our
customers to assess the probabi
a lity of collection based on a number of fact
f
ors, including past transaction experience with the
customer, evaluation of their credit history,
r
the credit limits extended, review of the invoicing terms of the arrangement, and
current economic conditions that may affec
f
t a customer’s ability to pay. In situa
t
tions where a customer may be thinly
capitalized and we have limited payment history w
r
ith it, we will either establ
a ish a small credit limit or require it to prepay its
purchases. We generally do not require our customers to provide collateral to support accounts receivable. We have recorded an
allowance for
f
doubtful accounts for
f
accounts receivabl
a es that we have determined to be uncollectible. We mitigate credit risk
with respect to accounts receivabl
a es by performing ongoing credit evaluations of the borrower to assess the probabi
a lity of
collecting all amounts due
d
to us under the existing contractua
t
l terms.
We market and sell our produc
d
ts through both our direct sales for
f
ce and our channel partners, including distributors,
value-added resellers, system integrators and OEM partners, and in conjunction with various technology partners. Significant
customers are those that represent more than 10% of our total revenue during the period. There were two end customers who
represented more than 10% of our total revenue for the years ended 2025, 2024 and 2023. Sales to one end customer
represented 16%, 15% and 21% of our total revenue, and sales to the other end customer represented 26%, 20% and 18% of our
total revenue for the years ended December 31, 2025, 2024 and 2023, respectively. As of December 31, 2025, and 2024, our top
two resellers accounted for 52% and 50% of total accounts receivabl
a e, respectively.
Cash and Cas
C
h Equivalen
l
ts
We consider all highly liquid investments with original or remaining maturities of three months or less at the time of
purchase to be cash equivalents. Cash and cash equivalents consist of cash on deposit with various financial institutions and
highly liquid investments in money market fun
f
ds. Interest is accrued as earned.
Marketabl
t
e S
l
ecu
S
ritie
i
s
We classify all highly liquid investments in debt securities with maturities of greater than three months at the date of
purchase as marketable securities. We have classified and accounted for our marketable debt securities as availabl
a e-for-sale. We
determine the appropriate classification of these investments at the time of purchase and reevaluate such designation at each
balance sheet date. After consideration of our risk versus reward objectives, as well as our liquidity requirements, we may hold
or sell these securities prior to their stated matur
t
ities. As we view these securities as availabl
a e to support current operations, we
classify securities with maturities beyond 12 months as current assets under the capt
a ion marketabl
a e securities in the
accompanying consolidated balance sheets. We carry these securities at fair value. For marketabl
a e debt securities, we report the
unrealized gains and losses, net of taxes, as a component of stockholders’ equity. We determine any realized gains or losses on
the sale of marketabl
a e securities using the specific identific
f ation method, and record such gains and losses in other income, net
in the accompanying consolidated statements of income.
For our debt securities in an unrealized loss position, we determine whether a credit loss exists by considering, among
other fact
f
ors, current market conditions, credit quality of debt issuers, any changes to the rating of the security by a rating
agency, and the extent to which fair value is less than cost. We would recognize an allowance for
f
credit losses, up to the amount
of the unrealized loss when appropriate, and write down the amortized cost basis of the investment if it is more likely than not
we will be required to sell or we intend to sell the investment before recovery of its amortized cost basis.
Accounts R
t
eceivablel
Accounts receivabl
a e are recorded at the invoiced amount, net of allowances for doubtful accounts. We estimate our
allowance for
f
doubtful accounts based upon the collectability of the receivables in light of historical trends, reasonabl
a e and
suppor
u
tabl
a e infor
f
mation of our customers' economic conditions that may affect our customers’ ability to pay, and prevailing
economic conditions. This evaluation is done in order to identify i
f
ssues that may impact the collectabi
a lity of receivabl
a es and
related estimated required allowance. Revisions to the allowance are recorded as an adjustment to bad debt expense. Afte
f r
appropriate collection effor
f
ts are exhausted, specific accounts receivable deemed to be uncollectible are charged against the
allowance in the period they are deemed uncollectible. Recoveries of accounts receivable previously written-off a
f
re recorded as
credits to bad debt expense.
74
Fair Value Mea
M
surementst
Fair value is defin
f ed as the exchange price that would be received for
f
an asset or an exit price that would be paid to
transfer
f
a liabi
a lity in the principal or most advantageous market for the asset or liabi
a lity in an orderly transaction between
market participants on the measurement date. We appl
a
y fai
f r value accounting for
f
all fin
f ancial assets and liabi
a lities that are
recognized or disclosed at fai
f r value in the fin
f ancial statements on a recurring basis. These assets and liabi
a lities include cash and
cash equivalents, marketable securities, accounts receivabl
a e, accounts payable, and accrue
r
d liabi
a lities. Cash equivalents,
accounts receivabl
a e, accounts payable and accrue
r
d liabi
a lities are stated at carrying values in our consolidated financial
statements, which approximate their fai
f r value due to the short-term nature of these instrum
r
ents.
Assets and liabi
a lities recorded at fai
f r value on a recurring basis in the accompanying consolidated balance sheets are
categorized based upon
u
the level of judgment associated with the inputs used to measure their fair value. We use a fai
f r value
hierarchy to measure fair value, maximizing the use of observabl
a e inputs and minimizing the use of unobservabl
a e inputs. The
three-tiers of the fai
f r value hierarchy are as follows:
Level I—I
I
nputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement
date;
Level II—I
I
nputs are observabl
a e, unadjusted quoted prices in active markets for
f
similar assets or liabilities, unadjusted
quoted prices for identical or similar assets or liabi
a lities in markets that are not active, or other inputs that are observabl
a e or can
be corroborated by observabl
a e market data for
f
subs
u
tantially the ful
f l term of the related assets or liabilities; and
Level III—U
I
nobservabl
a e inputs that are suppor
u
ted by little or no market data for the related assets or liabi
a lities and
typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liabi
a lity.
Foreign C
g
ur
C
rency
c
The func
f
tional currency of our foreign subsidiaries is either the U.S. dollar or their local currency depending on the
nature of the subsidiaries’ activities.
Transaction re-measurement - Assets and liabi
a lities denominated in a currency other than a subsidiary’s functional
currency are re-measured into the subsidiary'
r s func
f
tional currency using exchange rates in effect at the end of the reporting
period, with gains and losses recorded in other income, net in the consolidated statements of income. To date, foreign currency
transaction gains and losses and exchange rate fluctuations have not been material to our consolidated financial statements.
Translation - Assets and liabi
a lities of subsidiaries denominated in foreign func
f
tional currencies are translated into U.S.
dollars at the closing exchange rate on the balance sheet date and equity-related balances are translated at historical exchange
rates. Revenues, costs and expenses in foreign func
f
tional currencies are translated using average exchange rates that
approximate those in effect during the period. Translation adjustments are recorded within accumulated other comprehensive
income, a separate component of total stockholders’ equity.
Inventory Valuatio
t n and Contra
t
ct Manufac
f
turer/Sup
/
pl
p ie
l r Liabilitie
i
s
Inventories primarily consist of fin
f ished goods, including evaluation inventory h
r
eld at customers or partners, and
strategic components, primarily integrated circuits. Inventories are stated at the lower of cost or net realizable value. Cost is
computed using standard cost, which approximates actua
t
l cost, on a fir
f st-in, first-out basis. Evaluation inventory c
r
onsists of
new products and/or use cases at customer or partner sites for trial purpos
r
es. Title to the inventory r
r
emains with Arista during
the trial period and invoicing occurs only upon
u
completion of the trial period and when/if the products have been accepted by
the customer. Manufact
f
ur
t
ing overhead costs and inbound shipping costs are included in the cost of inventory.
r
We record a
provision when inventory i
r
s determined to be in excess of anticipated demand, or obsolete, to adju
d st inventory t
r
o its estimated
realizable value. For the years ended December 31, 2025, 2024 and 2023, we recorded charges of $131.6 million, $267.2
million and $234.4 million, respectively, within cost of product revenue for inventory w
r
rite-downs.
Our contract manufac
f
turers procure components and assemble products on our behalf and we procure strategic
components fro
f
m suppliers based on our forecasts. We record a liabi
a lity and a corresponding charge for non-cancellabl
a e, non-
returnable purchase commitments with our contract manufac
f
turers and suppliers for quantities in excess of our demand
forecasts or that are considered obsolete. For the year ended 2023, we recorded a charge of $113.0 million within cost of
product revenue for such liabi
a lities with our contract manufact
f
ur
t
ers and suppl
u
iers. Such charges were not material for the years
ended December 31, 2025 and 2024.
75
We use significant judgment in establishing our forecasts of future demand and obsolete material exposures. These
estimates depend on our assessment of current and expected orders from our customers, product development plans and current
sales levels. Despite general improvements in the supply environment, fluctuations in suppl
u
ier lead times and the persistence of
some long-lead components require us to maintain elevated inventory l
r
evels and purchase commitments. To manage this
continued volatility, we maintain extended demand-planning horizons and strategic inventory b
r
uffe
f rs to ensure continuity of
suppl
u
y and address for
f
ecast uncertainty. We expect inventory a
r
nd purchase commitments to remain volatile due to new product
introductions, flu
f ctua
t
ting customer demand, and varyi
r ng suppl
u
ier lead times. There is, however, no guarantee that all suppliers
will meet their commitments in the time frame committed or that actua
t
l customer demand will directly match our demand
forecasts. If actua
t
l market conditions are less fav
f
orable than those proje
o cted by management, which may be caused by fac
f
tors
within and/or outside of our control, we may be required to increase our inventory w
r
rite-downs and liabi
a lities to our contract
manufact
f
ur
t
ers and suppl
u
iers, which could have an adverse impact on our gross margins and profitabi
a lity. We regularly evaluate
our exposure for
f
inventory w
r
rite-downs and adequacy of our contract manufac
f
turer and suppl
u
ier liabi
a lities.
Property a
t
nd Equipm
i
ent
Property and equipment are stated at cost, less accumulated depreciation, except for land which is not depreciated. We
capitalize any additions and improvements and expense maintenance and repairs as incurred. Depreciation is calculated using
the straight-line method over the estimated useful
f
lives of the related assets, generally three years. Our leasehold improvements
are depreciated over the shorter of the estimated useful lives of the improvements or the remaining lease term.
Busine
i
ss Combinatio
t ns
We use the acquisition method to account for our business combinations in accordance with Accounting Standards
Codification ("ASC") 805 - Business Combinations. We allocate the total fai
f r value of purchase consideration to the tangible
and intangible assets acquired and liabilities assumed based on their estimated fair values. The excess of the consideration
transfer
f red over the fair values of the assets acquired and liabilities assumed is recorded as goodwill. The results of operations
of the acquired businesses are included in our consolidated financial statements fro
f
m the date of acquisition. Acquisition-related
transaction and restructur
t
ing costs are expensed as incurred.
During the measurement period, which is not to exceed one year from the acquisition date, we may record adju
d stments
to the acquired assets and liabi
a lities assumed, with a corresponding offs
f et to goodwill or the preliminary p
r
urchase price, to
reflect new infor
f
mation obtained about
a
facts and circumstances that existed as of the acquisition date. Upon the conclusion of
the measurement period, any subsequent adju
d stments are recorded to earnings.
Goodwill and Acquire
i
d Int
I
an
t
gible A
l
ssetst
Goodwill represents the excess of the purchase price over the fair value of net assets acquired in a business
combination. The Company has one reporting unit and tests goodwill for
f
impairment at least annually in the fourth quarter or
more frequently if indicators of potential impairment exist. We fir
f st perform a qualitative assessment to determine whether it is
more likely than not that the fai
f r value of our reporting unit is less than its carrying amount. If the reporting unit does not pass
the qualitative assessment, a quantitative test is performed by comparing the fair value of our reporting unit with its carrying
amount. We would recognize an impairment loss for
f
the amount by which the carrying amount exceeds the fair value. There
were no impairment charges in any of the periods presented in the consolidated financial statements. See Note 4. Acquisition,
Goodwill and Acquisition-Related Intangible Assets for additional information.
Acquired intangible assets are carried at cost less accumulated amortization. All acquired intangible assets have been
determined to have definite lives and are amortized on a straight-line basis over their estimated useful lives, ranging
from three to eight years. Acquired intangible assets are reviewed for
f
impairment under the long-lived asset model described
below. There were no impairment charges in any of the periods presented in the consolidated financial statements. See Note 4.
Acquisition, Goodwill and Acquisition-Related Intangible Assets for additional infor
f
mation.
Impai
m
rm
i
ent of L
o
ong-Li
-
ved Assets and Inv
I
estments in Privatel
t y-
l He
-
ld Companies
The carrying amounts of our long-lived assets, including property and equipment, intangible assets, ROU assets and
investments in privately-held companies, are periodically reviewed for impairment whenever events or changes in
circumstances indicate that the carryi
r ng value of these assets may not be recoverabl
a e. Recoverabi
a lity of these assets is measured
by comparison of the carrying amount of each asset to the future undiscounted cash flows the asset is expected to generate over
its remaining life.
f
If the asset is considered to be impaired, the amount of any impairment is measured as the difference between
76
the carrying value and the fair value of the impaired asset. No impairment of any long-lived assets was identifie
f d for
f
any of the
periods presented in the consolidated financial statements.
Loss Contin
t
gencies
In the ordinary c
r
ourse of business, we are a party to claims and legal proceedings including matters relating to
commercial, employee relations, business practices and intellectua
t
l property. In assessing loss contingencies, we use significant
judgments and assumptions to estimate the likelihood of loss, impairment of an asset or the incurrence of a liabi
a lity, as well as
our ability to reasonabl
a y estimate the amount of loss. We record a provision for contingent losses when it is both probabl
a e that
an asset has been impaired or a liability has been incurred and the amount of the loss can be reasonabl
a y estimated. We record a
charge equal to the minimum estimated liabi
a lity for litigation costs or a loss contingency only when both of the following
conditions are met: (i) information availabl
a e prior to issuance of our consolidated financial statements indicates that it is
probabl
a e that a liabi
a lity had been incurred at the date of the fin
f ancial statements, and (ii) the range of loss can be reasonabl
a y
estimated. We regularly evaluate current information availabl
a e to us to determine whether such accruals should be adjusted and
whether new accrua
r
ls are required.
Revenue Recogn
o
itio
t n
We generate revenue from sales of our products, which incorporate our EOS softw
f
are and accessories such as cabl
a es
and optics, to direct customers and channel partners together with post-contract customer suppor
u
t (“PCS”). We typically sell
products and PCS in a single contract. We recognize revenue upon transfer
f
of control of promised products or services to
customers in an amount that reflects the consideration we expect to be entitled to receive in exchange for those products or
services. We appl
a
y the following five-step revenue recognition model:
•
Identific
f ation of the contract, or contracts, with a customer
•
Identific
f ation of the performance obligations in the contract
•
Determination of the transaction price
•
Allocation of the transaction price to the performance obligations in the contract
•
Recognition of revenue when (or as) we satisfy the performance obligation
Post-Cont
C
ra
t
ct Customer Support ("PCS")
PCS, which includes technical suppor
u
t, hardware repair and replacement parts beyond standard warranty, bug fixes,
patches and unspecified upgrades on a when-and-if-a
f vailabl
a e basis, is offered under renewable, fee-
f
based contracts. We initially
defer PCS revenue and recognize it ratabl
a y over the life of the PCS contract as there is no discernible pattern of delivery related
to these promises. We do not provide unspecified upgrades on a set schedule and address customer requests for
f
technical
suppor
u
t if and when they arise, with the related expenses recognized as incurred. PCS contracts generally have a term of one to
three years.
Contra
t
cts w
t
ith M
t
ul
M tiple Perfor
f
mance Obligations
Most of our contracts with customers, other than renewals of PCS, contain multiple performance obligations with a
combination of products and PCS. Products and PCS generally qualify as distinct performance obligations. Our hardware
includes EOS software, which together deliver the essential fun
f
ctionality of our products. For contracts that contain multiple
performance obligations, we allocate revenue to each distinct performance obligation based on the standalone selling price
("SSP"). Judgment is required to determine the SSP for each distinct performance obligation. We use a range of amounts to
estimate SSP for
f
produ
d cts and PCS sold together in a contract to determine whether there is a discount to be allocated based on
the relative SSP of the various products and PCS.
If we do not have an observabl
a e SSP, such as when we do not sell a product or service separately, then SSP is
estimated using judgment and considering all reasonabl
a y availabl
a e infor
f
mation such as gross margin, market conditions and
information abo
a
ut the size and/or purchase volume of the customer. We generally use a range of amounts to estimate SSP for
individual products and services based on multiple fact
f
ors including, but not limited to product category,
r
actua
t
l and expected
volume, discounting policies, and customer vertical and size.
In determining if control has transfer
f red, we consider whether certain indicators of the transfer
f
of control are present,
such as the transfer of title, present right to payment, significant risks and rewards of ownership, and customer acceptance when
77
acceptance is not a for
f
mality. Revenue from sales of hardware is recognized when control transfers to the customer, which is
generally when the product is shipped. We defer revenue recognition on customer contracts for
f
new products or use cases,
which contain customer-specified requirements that must be met prior to acceptance.
We limit the amount of revenue recognition for contracts containing forms of variabl
a e consideration, such as future
performance obligations, customer-specific retur
t
ns, and refund obligations. We include some or all of an estimate of the related
at-risk consideration in the transaction price only to the extent that it is probabl
a e that a significant reversal in the amount of
cumulative revenue recorded under each contract will not occur when the uncertainties surrounding the variabl
a e consideration
are resolved.
Most of our contracts with customers have standard payment terms of 30 to 90 days. We have determined our
contracts generally do not include a significant financing component because the Company and the customer have specific
business reasons other than fin
f ancing for entering into such contracts. Specifically, both we and our customers seek to ensure
the customer has a simplifie
f d way of purchasing Arista products and services.
We account for multiple contracts with a single partner as one arrangement if the contractua
t
l terms and/or subs
u
tance of
those agreements indicate that they may be so closely related that they are, in effe
f ct, parts of a single contract.
We may occasionally accept returns to address customer satisfaction issues even though there is generally no
contractua
t
l provision for such retur
t
ns. We estimate retur
t
ns for sales to customers based on historical return rates app
a
lied against
current-period shipments. Specific customer retur
t
ns and allowances are considered when determining our sales retur
t
n reserve
estimate.
Our policy appl
a
ies to the accounting for
f
individual contracts. However, we have elected a practical expedient to appl
a
y
the guidance to a portfol
f io of contracts or performance obligations with similar characteristics so long as such application
would not differ materially from applying the guidance to the individual contracts (or performance obligations) within that
portfolio. Consequently, we have chosen to apply the portfol
f io approach when possible, which we do not believe will happen
frequently. Additionally, we will evaluate a portfol
f io of data, when possible, in various situations, including accounting for
f
commissions, rights of retur
t
n and transactions with variable consideration.
We report revenue net of sales taxes. We include shipping charges billed to customers in revenue and the related
shipping costs are included in cost of product revenue.
Contra
t
ct Balances
A contract asset is recognized when we have a contractua
t
l right to consideration for
f
both completed and partially
completed performance obligations that have not yet been invoiced. Contract assets are included in other current assets in the
accompanying consolidated balance sheets.
A contract liability is recognized when we have received customer payments in advance of our satisfaction of a
performance obligation under a contract that is cancellable. Contract liabi
a lities are included in other current liabilities and other
long-term liabilities in the accompanying consolidated balance sheets
Deferred revenue is comprised mainly of unearned revenue related to product defer
f rals from contracts with acceptance
clauses and, annual and multi-year PCS contracts.
Research and Developm
l
ent Exp
E
enses
Costs related to the research, design and development of our products are charged to research and development
expenses as incurred.
Segm
e
ent Reporting
We develop, ma k
rket and s lell clo d
ud networkiki g
ng solu itions, whihi h
ch primarily
ily consist of our swit h
ching a d
nd routing
plplatforms a d
nd related netwo k
rk ap lplications, a d
nd hthere are no segment man g
agers who ar
h
e h leld account b
able for opera itions or
opera iting res lults below the Company l
y lev lel. Our h
chief opera iting d
g decision m k
aker is our Presidident,
h
Chief Execu itive Offi
fficer a d
nd
h
Ch iairperson of the Board,
h
who reviews fifinancial i
l infor
f
ma ition present d
ed on a cons lolididat d
ed ba isis for
f
purpos
r
es of
lalloca iti g
ng
resources and evaluating fin
f an ici lal performance. Acco d
rdinglgly, we have determin d
ed hthat we operate as one reportablbl
a e s g
egment.
78
Stoc
t
k-Ba
-
sed Com
C
pe
m
nsatio
t n
Stock-based compensation cost for
f
equity awards is measured at the grant-date fai
f r value using appr
a
opriate valuation
techniques and recognized as expense over the requisite service or performance period. We account for for
f
feitures when they
occur.
Stock-based compensation costs for stock options and restricted stock units ("RSUs") are recognized on a straight-line
basis over the requisite service period, which is generally two to fiv
f e years. The Company has granted RSUs that vest upon
u
the
satisfaction of both service-based and performance-based conditions ("PRSUs"). The service-based condition for these awards
is generally satisfie
f d over one to four years. The performance-based conditions are satisfied upon achieving specified
performance targets, such as financial or operating metrics. We record stock-based compensation expense for
f
performance-
based equity awards on an accelerated attribution method over the requisite service period, and only if performance-based
conditions are considered probabl
a e to be satisfied.
See Note 6. Stockholders' Equity and Stock-Based Compensation for
f
a detailed discussion of the Company’s stock
plans, assumptions to the valuation techniques, and stock-based compensation expense.
Income Taxe
a
s
Income tax expense is an estimate of current income taxes payable in the current fiscal year based on reported income
before income taxes. Deferred income taxes refle
f ct the effect of temporary d
r
iffe
f rences and carryforwards that we recognize for
financial reporting and income tax purpos
r
es.
We account for income taxes under the liabi
a lity appr
a
oach for defer
f red income taxes, which requires recognition of
deferred income tax assets and liabi
a lities for
f
the expected future tax consequences of events that have been recognized in our
consolidated financial statements, but have not been reflected in our taxabl
a e income. Estimates and judgments occur in the
calculation of certain tax liabi
a lities and in the determination of the recoverabi
a lity of certain deferred income tax assets, which
arise fro
f
m temporary d
r
iffe
f rences and carryforwards. Defer
f red income tax assets and liabi
a lities are measured using the currently
enacted tax rates that apply to taxable income in effe
f ct for the years in which those tax assets are expected to be realized or
settled. We regularly assess the likelihood that our deferred income tax assets will be realized based on the positive and
negative evidence availabl
a e. We record a valuation allowance to reduce the deferred tax assets to the amount that we are more
likely than not to realize.
We believe that we have adequately reserved for our uncertain tax positions, although we can provide no assurance
that the fin
f al tax outcome of these matters will not be materially different. To the extent that the fin
f al tax outcome of these
matters is different than the amounts recorded, such diffe
f rences will affe
f ct the provision for income taxes in the period in which
such determination is made and could have a material impact on our financial condition and results of operations. The provision
for income taxes includes the effe
f cts of any reserves that we believe are appropriate, as well as the related net interest and
penalties.
We regularly review our tax positions and benefit
f s to be realized. We recognize tax liabi
a lities based upon our estimate
of whether, and to the extent to which, additional taxes will be due when such estimates are more likely than not to be
sustained. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. We
recognize interest and penalties related to income tax matters as income tax expense.
The U.S. tax rules require U.S. tax on for
f
eign earnings, known as global intangible low taxed income (“GILTI”).
Under U.S. GAAP, we are allowed to make an accounting policy choice of either (1) treating taxes due on future U.S.
inclusions in taxabl
a e income related to GILTI as a current-period expense when incurred (the “period cost method”) or (2)
factoring such amounts into a company’s measurement of its deferred taxes (the “defer
f red method”). We selected the defer
f red
method of accounting and recorded the associated basis diffe
f rences anticipated to influence prospective GILTI calculations.
Recently Adopt
d
ed
t
Accountin
t
g Pro
P
nouncements
In December 2023,
hthe FAS
i
B issu d
ed ASU 2023-09, Income Taxe
(
s (To ipic 7
)
40)-Improvements to Income Tax
i
Disclosures.
h
The ASU re
i
quires that an entity d
y dis lclose spe icifific cat g
egorie
i
s in the effe
f ctive tax rate reconcililia ition as wellll as
pr
i
ovide
d
addidi itional i
l infor
f
ma ition for
f
reconcililing i
g items hthat meet a quantitative thresh l
hold. Further, hthe ASU requires cert iain
didisclosures of state versus federal i
l income tax expense a d
nd taxes p iaid.
h
The ame d
ndments in hthis ASU are re
i
quired t b
o be adopt d
ed
79
for fis
f cal y
l year b
s b g
egin ini g
ng afte
f r December 15, 2024. We have adopted ASU 2023-09 for the year ended December 31, 2025 on a
prospective basis. See Note 8, Income Taxes for
f
the inclusion of the new required disclosure.
Recent Accountin
t
g Pro
P
nouncements Not Yet
Y
Effe
f ctiv
t e
In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses (Subtopic 220-40).
The ASU requires the disaggregated disclosure of specific
f
expense categories, including purchases of inventory,
r
employee
compensation, depreciation, and amortization, within relevant income statement captions, and also requires disclosure of the
total amount of selling expenses along with the defin
f ition of selling expenses. The ASU is effective for
f
annual periods
beginning afte
f r December 15, 2026, and interim periods within fiscal years beginning afte
f r December 15, 2027. Adoption of
this ASU can either be applied prospectively to consolidated financial statements issued for reporting periods afte
f r the effe
f ctive
date of this ASU or retrospectively to any or all prior periods presented in the consolidated financial statements. Early adoption
is also permitted. This ASU will result in the required additional disclosures being included in our consolidated financial
statements, once adopted. We are currently evaluating the provisions of this ASU.
On December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270) which is intended to streamline
the guidance in ASC 270, Interim Reporting, and clarify when it applies. Under the amendments, an entity is subject to ASC
270 if it provides interim financial statements and notes in accordance with GAAP. ASU 2025-11 also addresses the form and
content of such fin
f ancial statements, interim disclosures requirements, and establishes a principle under which an entity must
disclose events since the end of the last annual reporting period that have a material impact on the entity. ASU 2025-11 is
effe
f ctive for
f
interim reporting periods within annual reporting periods beginning afte
f r December 15, 2027, and early adoption is
permitted. We are currently evaluating the provisions of this ASU.
80
2.
Fair Value Measurements
Assets measured at fair values on a recurring
i
basis
We measure and report our cash equivalents, restricted cash, and availabl
a e-for-sale marketabl
a e securities at fai
f r value
on a recurring basis. The fol
f lowing tabl
a es summarize the fai
f r value of these fin
f ancial assets by significant investment category
r
and their levels within the fai
f r value hierarchy (in millions):
vel I
Level II
Level III
Total
Level I
Level II
Level III
Total
Financial Assets:
Cash Equivalents:
t
Money market funds
f
$ 1,174.8
$
—
$
—
$
1,174.8
$ 1,707.5
$
—
$
—
$
1,707.5
Commercial paper
—
29.8
—
29.8
—
—
—
—
Corporate bonds
—
6.6
—
6.6
—
—
—
—
Agency securities
—
—
—
—
—
3.0
—
3.0
U.S. government notes
124.9
—
—
124.9
31.4
—
—
31.4
1,299.7
36.4
—
1,336.1
1,738.9
3.0
—
1,741.9
Market
k able Secu
S
rities:
Commercial paper
—
83.0
—
83.0
—
48.8
—
48.8
U.S. government notes
2,854.3
—
—
2,854.3
1,921.5
—
—
1,921.5
Corporate bonds
—
4,329.7
—
4,329.7
—
2,593.6
—
2,593.6
Municipal bonds
—
14.5
14.5
—
—
—
—
Agency securities
—
1,497.6
—
1,497.6
—
977.2
—
977.2
2,854.3
5,924.8
—
8,779.1
1,921.5
3,619.6
—
5,541.1
Othe
t
r Assets:
Money market funds
f
-
restricted cash
1.4
—
—
1.4
1.4
—
—
1.4
Total Financial Assets
$ 4,155.4
$ 5,961.2
$
—
$ 10,116.6
$ 3,661.8
$ 3,622.6
$
—
$
7,284.4
December 31, 2025
December 31, 2024
Du iri g
ng hth y
e year e d
nded on Dece b
mber 31, 2025, the Company d
y didid not make any transfers between the levels of hthe f iai
f r
valu h
e hierarchy
hy.
The fol
f lowing tabl
a e summarizes the amortized cost, unrealized gains and losses, and fai
f r value of our debt securities
measured at fair value on a recurring basis (in millions):
December 31, 2025
December 31, 2024
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Fair Value
Amortized
Cost
Unrealized
Gains
Unrealized
Losse
F
s
air Value
Commercial pape
a
r
$
112.8
$
—
$
—
$
112.8
$
48.8
$
—
$
—
$
48.8
U.S. government
2,970.4
8.8
—
2,979.2
1,954.8
2.7
(4.6)
1,952.9
Corporate bonds
4,321.2
16.0
(0.9)
4,336.3
2,595.7
4.4
(6.5)
2,593.6
Municipal bonds
14.5
—
—
14.5
—
—
—
—
Agency securities
1,495.5
2.7
(0.6)
1,497.6
981.0
1.6
(2.4)
980.2
Total
$
8,914.4
$
27.5
$
(1.5) $
8,940.4
$
5,580.3
$
8.7
$
(13.5) $ 5,575.5
81
For debt securities in unrealized loss positions, it is not likely that we will be required to sell such securities before
recovery of their amortized cost basis nor do we have the intent to sell such securities befor
f
e matur
t
ity; we invest in debt
securities that have maximum maturities of three years and are generally deemed to be low risk based on their credit ratings
from the major rating agencies. The longer the duration of these marketable securities, the more susceptible they are to changes
in market interest rates and bond yields. Given the short-term and conservative natur
t
e of our portfol
f io, our debt securities are
exposed to minimal credit risk; therefor
f
e, we did not recognize any credit losses or non-credit-related impairments related to our
availabl
a e-for-sale marketabl
a e debt securities for
f
the years ended 2025, 2024 and 2023. All unrealized losses were recognized in
other comprehensive income (loss). Realized gains or losses were immaterial for the years ended 2025, 2024 and 2023.
The fol
f lowing tabl
a e is an analysis of our debt securities in unrealized loss positions (in millions):
December 31, 2025
Unrealized Losses within 12
months
Unrealized Losses 12 months or
greater
Total
Fair Value
Unrealized
Losses
Fair Value
Unrealized
Losses
Fair Value
Unrealized
Losses
Commercial paper
$
9.9
$
—
$
—
$
—
$
9.9
$
—
U.S. government notes
260.8
$
—
15.0
—
275.8
—
Corporate bonds
857.7
(0.9)
29.9
—
887.6
(0.9)
Municipal bonds
4.7
—
—
—
4.7
—
Agency securities
473.1
(0.6)
—
—
473.1
(0.6)
Total
$
1,606.2
$
(1.5) $
44.9
$
—
$
1,651.1
$
(1.5)
As of December 31, 2025, we h d
ad no ma k
rket b
able debt secu iri ities
i
wi hth contractua
t
l matur
t
ities that exc
d
eed 36 months.
h
The f iai
f r v lalues of marketablbl
a
d
e d b
ebt securities, by
by remaining contractua
t
l matur
t
ities, are as f lol
f lows (i(in millions):
December 31, 2025
Due in 1 year or less
$
3,267.4
Due in 1 year through 3 years
5,511.7
Total marketabl
a e securities
$
8,779.1
The weighted-average remaining dur
d
ation of our marketable debt securities is appr
a
oximately 1.4 years as of December
31, 2025.
82
3.
Financial Statements Details
Inventories
Inventories consist of the following (in millions):
2025
2024
Raw materials
$
611.2
$
565.4
Finished goods(1)
1,635.9
1,269.2
Total inventories
$
2,247.1
$
1,834.6
December 31,
(1) The balance includes evaluation inventory totaling $403.7 million and $422.1 million as of December 31, 2025 and December 31, 2024, respectively.
Prepaid Expe
E
nses and Other Current Assets
Prepaid expenses and other current assets consist of the following (in millions):
2025
2024
Deferred cost of goods sold(1)
$
1,197.0
$
291.3
Other prepaid expenses and deposits
313.0
341.0
Total prepaid expenses and other current assets
$
1,510.0
$
632.3
December 31,
(1) The increase in 2025 was driven by a corresponding increase in defer
f red product revenue.
Property a
t
nd Equipm
i
ent, net
Property and equipment, net consists of the following (in millions):
2025
2024
Land
$
47.3
$
47.2
Equipment and machinery
1
r
88.3
160.7
Computer hardware and softw
f
are
66.2
63.9
Furniture and fix
f tures
3.7
3.5
Leasehold improvements
38.4
34.7
Construc
r
tion-in-process
107.9
8.2
Property and equipment, gross
451.8
318.2
Less: accumulated depreciation
(248.7)
(219.4)
Property and equipment, net
$
203.1
$
98.8
December 31,
Depreciation expense was $30.9 million, $34.0 million and $31.7 million for
f
the years ended December 31, 2025,
2024 and 2023, respectively.
83
Contra
t
ct Liabilities, Defe
e rred Revenue and Other Perfor
f
ma
r
nce Oblig
l atio
t ns
Contra
t
ct Liabilities
A contract liabi
a lity is recognized when we have received customer payments in advance of our satisfaction of a
performance obligation under a cancellabl
a e contract. The following tabl
a e summarizes the activity related to our contract
liabilities (in millions):
Year Ended December 31,
2025
2024
Contract liabi
a lities, beginning balance
$
160.8
$
133.2
Less: Revenue recognized from beginning balance
(63.1)
(58.3)
Add: Contract liabilities recognized
152.4
85.9
Contract liabi
a lities, ending balance
$
250.1
$
160.8
As of December 31, 2025 and 2024, $114.0 million and $65.7 million, respectively, of our contract liabilities were
recorded within other current liabilities with the remaining balance recorded within other long-term liabilities in the
accompanying consolidated balance sheets.
Defe
e rred Revenue
Deferred revenue is comprised mainly of unearned revenue related to product defer
f rals from contracts with acceptance
clauses and, annual and multi-year PCS contracts. The fol
f lowing tabl
a e summarizes the activity related to our deferred revenue
(in millions):
Year Ended December 31,
2025
2024
Deferred revenue, beginning balance
$
2,791.4
$
1,506.2
Less: Revenue recognized from beginning balance
(1,691.5)
(860.2)
Add: Deferral of revenue in current period, excluding amounts recognized during the
period
4,272.5
2,145.4
Deferred revenue, ending balance
$
5,372.4
$
2,791.4
Othe
t
r Perfo
r rmance Obligations
Other performance obligations totaling $503.1 million as of December 31, 2025 include unbilled multi-year PCS and
service contract amounts of $275.5 million and $227.6 million of binding contractua
t
l agreements with certain customers that
are primarily related to fut
f ur
t
e product shipments.
Revenue from Total Remaining Perfor
f
mance Obligations
Total revenue from our contract liabilities, deferred revenue and other performance obligations that is expected to be
recognized in future periods was $6.1 billion as of December 31, 2025. Approximately 90% of this future revenue is expected
to be recognized over the next two years and the remaining 10% is expected to be recognized dur
d
ing the third to the fifth year.
Other Income, Net
Other income, net consists of the fol
f lowing (in millions):
Year Ended December 31,
2025
2024
2023
Other income (expense), net:
Interest income
$
383.4
$
311.0
$
152.4
Other income (expense)
10.2
9.5
12.3
Total other income, net
$
393.6
$
320.5
$
164.7
84
4.
Acquisition, Goodwill and Acquisition-Related Intangible Assets
Ac
i
qui isi ition an
G
d Goodwill
On June 30, 2025, we completed the acquisi i
ition of hthe V leloClo d
ud busines (
s ("V leloClo d
ud") f
) fro
f
m Bro d
adcom f r
o
f
total cash
consideration of $300.0 million. VeloCloud's secure, AI-optimized cloud WAN p
A
ortfol
f io provides seamless connectivity to
customer sites of any type, complementing Arista's leading data center and campus wired/wireless portfol
f io. The preliminary
r
purchase price allocation based on the estimated fair values of the assets acquired and liabilities assumed as of the acquisition date,
included $268.4 million of intangible assets, $148.0 million of goodwill and $116.4 million of net tangible liabi
a lities assumed as of
June 30, 2025. A portion of the goodwill is deductible for
f
tax purpos
r
es. The rest of the changes in the carrying value of goodwill for
f
the year ended December 31, 2025 were not material.
Acquisition-Related Intangible Assets
Acquisition-related intangible assets, included in other assets, are subj
u ect to amortization on a straight-line basis over their
estimated useful
f
lives, as we believe this method most closely refle
f cts the pattern in which the economic benefits of the assets will
be consumed. The following tabl
a e presents details of our acquisition-related intangible assets as of December 31, 2025 and 2024 (in
millions, except for
f
years):
December 31, 2025
December 31, 2024
Weighted
Average
Remaining
Useful
f
Life
(in years)
Gross
Carrying
Amount
Accumulated
Amortization
Net Carrying
Amount
Gross
Carrying
Amount
Accumulated
Amortization
Net Carrying
Amount
Developed technology
4.0
$
241.1
$
(139.0) $
102.1
$
154.9
$
(119.2) $
35.7
Customer relationships
6.2
224.3
(48.9)
175.4
54.6
(29.5)
25.1
Trade name
4.5
24.9
(13.6)
11.3
12.4
(11.2)
1.2
Total
5.3
$
490.3
$
(201.5) $
288.8
$
221.9
$
(159.9) $
62.0
Amortization expense related to acquisition-related intangible assets was $41.6 million, $26.8 million and $33.4 million for
f
the years ended December 31, 2025, 2024 and 2023, respectively.
As of December 31, 2025, future estimated amortization expense related to the acquired-related intangible assets is as
follows (in millions):
Years Ending December 31,
Future
Amortization
Expense
2026
$
61.3
2027
57.4
2028
54.0
2029 and thereafte
f r
116.1
Total
$
288.8
85
5.
Commitments and Contingencies
Purchase Commitments
We outsource most of our manufact
f
ur
t
ing and suppl
u
y chain management operations to third-party contract
manufact
f
ur
t
ers, who procure components and assemble products on our behalf. A
f
significant portion of our purchase orders for
f
finished goods and strategic components, including integrated circuits consigned to contract manufact
f
ur
t
ers, consists of non-
cancellabl
a e commitments. Our purchase obligations also encompass softw
f
are and technology licenses, property and equipment,
and other corporate goods and services. As of December 31, 2025, we had non-cancellable purchase commitments not recorded
on our balance sheet of $6.8 billion, of which $6.3 bibillllion have confir
f med rec ieipt date w
s
ithin 12 months, and $0.5 bibillllion h
n ave
confir
f med r
i
eceipt date g
s greater hthan 12 months.
h
These open pur h
chase o d
rders are considider d
ed enforc
b
eable and l
d l g
eg lallyly bibi di
ndi g
ng, and
h
whilile we may h
y have som l
e li i
imited a
d bi
a lity to reschedule, and adjust our requirements based on our business needs prior to the
delivery o
r
f goods or performance of services, this can only occur with the agreement of the related supplier.
We also had deposits to our contract manufact
f
ur
t
ers to secure our purchase commitments in the amount of $53.0
million and $95.8 million as of December 31, 2025 and 2024, respectively, which were recorded within prepaid expenses and
other current assets, as well as other assets in the consolidated balance sheets.
Leases
We have operating lease arrangements for
f
offi
f ce space, data center, equipment and other corpor
r
ate assets. As of
December 31, 2025, we had lease payment obligations, net of immaterial subl
u ease income, of $90.5 million, with $22.1 million
payabl
a e within 12 months.
Property project
During the year ended December 31, 2021, we purchased land and the improvements thereon in Santa Clara,
Califor
f
nia to construct a building for
f
offi
f ce, lab and data center space. The estimated capital expenditures related to this project
is expected to be approximately $170.0 million to $195.0 million through December 31, 2026 at which time construc
r
tion is
expected to be completed.
Guarantees
We have entered into agreements with some of our direct customers and channel partners that contain indemnific
f ation
provisions relating to potential situations where claims could be alleged that our products infringe the intellectua
t
l property
rights of a third-party. We have, at our option and expense, the abi
a lity to repair any infri
f ngement, replace product with a non-
infringing equivalent-in-function product or refund
f
our customers all or a portion of the value of the product. Other guarantees
or indemnific
f ation agreements include guarantees of product and service performance and standby letters of credit for
f
leased
facilities and corporate credit cards. We have not recorded a liabi
a lity related to these indemnific
f ation and guarantee provisions,
and our guarantee and indemnific
f ation arrangements have not had any material impact on our consolidated financial statements
to date.
Legal Proceedings
In the ordinary c
r
ourse of business, we are a party to other claims and legal proceedings including matters relating to
commercial, employee relations, business practices and intellectua
t
l property.
We record a provision for contingent losses when it is both probabl
a e that a liability has been incurred and the amount
of the loss can be reasonabl
a y estimated. As of December 31, 2025, provisions recorded for contingent losses related to other
claims and matters have not been significant. Based on currently-availabl
a e infor
f
mation, management does not believe that any
additional liabi
a lities relating to other unresolved matters are probabl
a e or that the amount of any resulting loss is estimable, and
believes these other matters are not likely, individually and in the aggregate, to have a material adverse effect on our financial
position, results of operations or cash flo
f ws; however, litigation is subject to inherent uncertainties and our view of these
matters may change in the fut
f ur
t
e. Were an unfav
f
orable outcome to occur, there exists the possibility of a material adverse
impact on our fin
f ancial position, results of operations or cash flo
f ws for the period in which the unfav
f
orable outcome occurs,
and potentially in future periods.
6.
Stockholders' Equity and Stock-Based Compensation
Stock Repurchase Program
86
In May 2025, we completed repurchases under the $1.2 billion Prior Repurchase Program and our board of directors
authorized the $1.5 billion New Repurchase Program. This authorization allows us to repurchase shares of our common stock
that will be funded fro
f
m working capital. Repurchases may be made at management's discretion fro
f
m time to time on the open
market, through privately negotiated transactions, transactions structur
t
ed through investment banking institut
t ions, block
purchases, trading plans under Rul
R e 10b5-1 of the Exchange Act, or a combination of the for
f
egoing. The New Repurchase
Program does not obligate us to acquire any of our common stock and may be suspended or discontinued by the Company at
any time without prior notice. During the year ended December 31, 2025, we repurchased a total of $921.0 million of our
common stock under our Prior Repurchase Program and $682.1 million of our common stock under our New Repurchase
Program. As of December 31, 2025, the remaining authorized amount for stock repurchases under the New Repurchase
Program was appr
a
oximately $817.9 million.
A summary of the stock repurchase activities for the years ended December 31, 2025 and 2024 is as follows (in
millions, except per share amounts):
Year Ended December 31,
2025
2024
Aggregate purchase price(1)
$
1,603.1
$
423.6
Shares repurchased
15.9
5.5
Average price paid per share(1)
$
100.63
$
77.13
(1) Aggregate purchase price and average price paid per share for
f
the year of 2025 include costs associated with the repurchases but exclude the 1% excise tax
accrue
r
d on our share repurchases as a result of the Inflation Reduc
d
tion Act of 2022.
The aggregate purchase price of repurchased shares of our common stock is recorded as a reduc
d
tion to retained
earnings in our consolidated statements of stockholders' equity. All shares repurchased have been retired.
Equity
i
Award Plan
l
Activities
2014 Empl
m oyee Stock Purchase Plan
In April 2014, the board of directors and stockholders approved the 2014 Employee Stock Purchase Plan (“ESPP”).
The ESPP became effect
f
ive on the first day that our common stock was publicly traded. The number of shares reserved for
f
issuance under the ESPP increases automatically on January 1 of each year by the number of shares equal to 1% of our shares
outstanding as of the preceding December 31. This annual increase is subject to a maximum of 40 million shares and may be
reduced or waived at the discretion of the board of directors. As of December 31, 2025, there remained 104.1 million shares
availabl
a e for
f
issuance under the ESPP.
Under our ESPP, eligible employees are permitted to acquire shares of our common stock at 85% of the lower of the
fair market value of our common stock on the first trading day of each offe
f ring period or on the exercise date. Each offe
f ring
period lasts appr
a
oximately two years starting on the first trading date afte
f r February 1
r
5 and August 15 of each year, and
includes purchase dates every s
r
ix months on or afte
f r February 1
r
5 and August 15 of each year. Participants may purchase shares
of common stock through payroll deduc
d
tions up to 15% of their eligible compensation, subj
u ect to Internal Revenue Service
mandated purchase limits.
During the year ended December 31, 2025, we issued 0.7 million shares at an average purchase price of $67.27 per
share under our ESPP.
2014 Equity Incentive Plan
On April 16, 2024, our board of directors d
adopt d
ed an amended a d
nd restat d
ed Arista Networks, Inc. 2014 Eq iui yty
l
Plan
("Restat d
ed
l
Plan )"), effective Aprilil 17, 2024 ("Effe
f ctive Date") s
) ubject to the appr
a
oval of our stockholders,
h
which w s
a approved
at the 2024 Annual Meeting of Stockholders on June 7, 2024.
The Restated Plan provides for
f
the grant of equity-based awards, including stock options, restricted stock units,
restricted stock, stock appr
a
eciation rights, and performance awards. The share pool availabl
a e under the prior version of the
Company's 2014 Equity Incentive Plan ("Prior Plan") was extinguished, and the Restated Plan provides for
f
a new share pool not
to exceed (i) 52.8 million shares of our Common Stock (“Shares”), plus (ii) any Shares subj
u ect to awards under the Prior Plan
that, on or after the Effective Date, expired or otherwise terminated without having been exercised in ful
f l, or that were forfeited
to or repurchased by us, including net settlement of Shares subj
u ect to restricted stock units, with the maximum number of
87
Shares to be added to the Restated Plan as a result of clause (ii) equal to 40.2 million Shares. The Restated Plan’s terms are
subs
u
tantially similar to the Prior Plan’s terms, including with respect to treatment of equity awards in the event of a “change in
control” as defined under the Restated Plan, but with certain modifications, including the elimination of the automatic
“evergreen” share reserve increase provided for
f
under the Prior Plan. As of December 31, 2025, there remained appr
a
oximately
45.0 million shares availabl
a e for
f
grant under the Restated Plan.
Stock Opt
O ion Activities
The fol
f lowing tabl
a e summarizes the option activity under our stock plans and related information (in millions, except
years and per share amounts):
Balance—December 31, 2024
3.1
$
6.71
1.5
$
320.9
Options granted
—
—
Options exercised
(2.2)
4.10
Options canceled
(0.1)
14.70
Balance—December 31, 2025
0.8
$
12.93
2.7
$
93.3
Vested and exercisable—December 31, 2025
0.8
$
12.93
2.7
$
93.3
Number of
Shares
Underlying
Outstanding
Options
Weighted-
Average
Exercise
Price per
Share
Weighted-
Average
Remaining
Contractual
Term (In Years)
Aggregate
Intrinsic
Value
We did not grant any stock options during the years ended December 31, 2025, 2024 and 2023. The aggregate intrinsic
value of options exercised dur
d
ing the years ended December 31, 2025, 2024 and 2023 was $211.0 million, $495.1 million and
$525.3 million, respectively. The total fair value of options vested for the year ended December 31, 2025 was not material. The
total fai
f r value of options vested for the years ended December 31, 2024 and 2023 was appr
a
oximately $5.6 million and $8.7
million, respectively.
Restri
t cted Stock Uni
U t (RS
(
U) Activities
A summary of the RSU activity is presented below (in millions, except years and per share amounts):
Number of
Shares
Weighted-
Average Grant
Date Fair Value Per
Share
Balance—December 31, 2024
28.6
$
45.46
RSUs granted
10.7
103.34
RSUs vested
(8.6)
37.98
RSUs forfei
f ted/canceled
(2.6)
51.48
Unvested balance—December 31, 2025
28.1
$
69.81
The weighted-average grant-date fair value of RSUs granted during the years ended December 31, 2025, 2024 and
2023 was $103.34, $72.61 and $39.49 per share, respectively. The total fair value of RSUs vested for
f
the years ended
December 31, 2025, 2024 and 2023 was appr
a
oximately $310.1 million, $251.8 million, and $225.5 million, respectively.
88
Stoc
t
k-Ba
-
sed Com
C
pe
m
nsatio
t n Exp
E
ense
The fol
f lowing tabl
a e summarizes the stock-based compensation expense related to our equity awards (in millions):
2025
2024
2023
Cost of revenue
$
26.9
$
15.8
$
12.8
Research and development
260.7
211.8
172.2
Sales and marketing
104.1
78.8
71.1
General and administrative
47.5
49.0
40.7
Total stock-based compensation
$
439.2
$
355.4
$
296.8
Year Ended December 31,
Determinatio
t n of F
o
ai
F r V
i
al
V ue
We record stock-based compensation on equity awards based on their fair value as of the grant date. We value RSUs at
the closing market price of our common stock on the grant date. For option awards and ESPP offe
f rings, we use the Black-
Scholes option pricing model to determine fair value. We recognize such costs as compensation expense generally on a straight-
line basis over the requisite service period of the award.
As of December 31, 2025, there were $1.5 billion of unrecognized compensation costs related to all unvested awards.
The unamortized compensation costs are expected to be recognized over a weighted-average period of approximately 4.3 years.
7.
Net Income Per Share
Basic net income per share is computed using the weighted-average number of shares of common stock outstanding
during the period. Diluted net income per share is computed using the weighted-average number of shares of common stock
outstanding during the period, including potential common shares assuming the dilutive effe
f ct of outstanding stock options,
restricted stock units, and the employee stock purchase plan using the treasury s
r
tock method. Potential common shares whose
effe
f ct would have been antidilutive are excluded fro
f
m the computation of diluted net income per share. The fol
f lowing tabl
a e sets
forth the computation of our basic and diluted net income per share attributable to common stockholders, as adjusted to give
effe
f ct to the Stock Split (in millions, except per share amounts):
2025
2024
2023
Net income
$
3,511.4
$
2,852.1
$
2,087.3
Basic weighted-average shares outstanding
1,258.0
1,256.3
1,237.4
Add weighted-average effe
f cts of dilutive securities:
Employee equity awards
17.7
24.8
31.1
Diluted weighted-average shares outstanding
1,275.7
1,281.1
1,268.5
Net income per share:
Basic
$
2.79
$
2.27
$
1.69
Diluted
$
2.75
$
2.23
$
1.65
Year Ended December 31,
The fol
f lowing weighted-average outstanding shares of common stock equivalents were excluded fro
f
m the computation
of diluted net income per share attributable to common stockholders because their effe
f cts would have been anti-dilutive for the
periods presented, as adju
d sted to give effe
f ct to the Stock Split (in millions):
2025
2024
2023
Employee equity awards
1.2
0.3
1.0
Year Ended December 31,
89
8.
Income Taxes
The components of income befor
f
e provision for income taxes are as fol
f lows (in millions):
2025
2024
2023
Domestic
$
3,369.6
$
2,635.6
$
1,977.7
Foreign
880.1
629.5
444.3
Income before income taxes
$
4,249.7
$
3,265.1
$
2,422.0
Year Ended December 31,
The components of the provision for income taxes are as fol
f lows (in millions):
2025
2024
2023
Current provision for income taxes:
Federal
$
785.3
$
751.3
$
574.4
State
142.9
114.7
106.9
Foreign
122.1
39.8
24.2
Total current
1,050.3
905.8
705.5
Deferred tax expense (benefit):
Federal
(294.1)
(504.7)
(372.3)
State
(46.8)
(42.8)
(41.1)
Foreign
28.9
54.7
42.6
Total defer
f red tax expense (benefit)
(312.0)
(492.8)
(370.8)
Total provision for income taxes
$
738.3
$
413.0
$
334.7
Year Ended December 31,
We adopted ASU 2023-09 "Income Taxes (Topic 740): Improvements to Income Tax Disclosures" on a prospective
basis beginning with the year ended December 31, 2025. The fol
f lowing tabl
a e presents required disclosure pursuant to ASU
90
2023-09 and reconciles the U.S. federal statutory income tax amount and rate to our total provision for income taxes amount
and rate for
f
the year ended December 31, 2025 (in millions except for percentages):
Amount
Percent
U.S. federal statutory income tax rate
$
892.4
21.00 %
State tax, net of federal benefit
f
1
76.3
1.80
Foreign Tax Effe
f cts
Ireland
Statut
t ory t
r
ax rate difference between Ireland and US
(45.4)
(1.07)
Othe
1
r
2.6
0.30
Other jurisdictions
(1.4)
(0.03)
Enactment of New Tax Laws
22.6
0.53
Effe
f ct of Cross Border Tax Laws
Net Controlled Foreign Corporation Tested Incom
(
e
32.6)
(0.77)
Other
2.3
0.05
Tax Credits
Research and Development Tax Credit
(54.8)
(1.29)
Nontaxable or Nondeductible Items
Stock-Based Compensation
(123.9)
(2.91)
Other
1.2
0.02
Changes in Unrecognized Tax Benefits
(11.0)
(0.26)
Total Provision for Income Taxes
$
738.3
17.37 %
Year Ended December 31, 2025
(1) State taxes in Georgia, Kentucky a
k
nd Missouri for
f
2025 made up the majority (greater than 50 percent) of the tax effe
f ct in the state tax category.
r
The fol
f lowing tabl
a e presents the required disclosures prior to our adoption of ASU 2023-09 and reconciles the U.S. federal
statut
t ory i
r
ncome tax rate and our effe
f ctive tax rate for the years ended December 31, 2024 and December 31, 2023 (in
percentages):
Year Ended December 31,
2024
2023
U.S. federal statutory income tax rat
2
e
1.00
2
%
1.00 %
State tax, net of federal benefit
f
1.75
2.13
Taxes on for
f
eign earnings differential
(2.38)
(1.96)
Tax credits
(2.79)
(2.74)
Stock-based compensatio
(
n
4.96)
(4.59)
Other, net
0.03
(0.03)
Effe
f ctive tax rate
12.65 %
13.81 %
On July 4, 2025, the OBBB Act was signed into law in the U.S. This legislation contains a broad range of tax refor
f
m
provisions affe
f cting businesses. The ful
f l effec
f
ts of the legislation on our annual effective tax rate and cash tax position are
reflected in our twelve months ended December 31, 2025 period results.
Our provision for income taxes and effec
f
tive tax rate increased for the year ended December 31, 2025, as compared to
2024. The increase in our income taxes was primarily associated with a decrease in tax benefits
f
attributable to equity-based
compensation. Excess tax benefits resulting fro
f
m stock awards were $159.2 million, $212.3 million and $151.2 million for
f
the
years ended December 31, 2025, 2024 and 2023, respectively.
91
The tax effe
f cts of temporary d
r
iffe
f rences that give rise to significant portions of deferred tax assets (liabi
a lities) are as
follows (in millions) :
2025
2024
Deferred tax assets:
Intangible assets
$
244.9
$
273.9
Reserves and accruals not currently deduc
d
tible
146.4
135.2
Deferred revenue
1,130.8
566.3
Tax credits
134.0
130.2
Lease fin
f ancing obligation
17.7
13.7
Capi
a talized research and development expenses
417.0
634.5
Stock-based compensation
53.4
38.6
Net operating losses
19.7
25.9
Other
2.8
3.6
Gross defer
f red tax assets
2,166.7
1,821.9
Valuation allowance
(195.8)
(179.8)
Total defer
f red tax assets
1,970.9
1,642.1
Deferred tax liabi
a lities:
US tax on for
f
eign earnings
(167.5)
(189.8)
Right of use asset
(15.7)
(11.6)
Other
(14.1)
(0.3)
Total defer
f red tax liabi
a lities
(197.3)
(201.7)
Net defer
f red tax assets
$
1,773.6
$
1,440.4
December 31,
The change in valuation allowance fro
f
m December 31, 2024 to December 31, 2025 is subs
u
tantially attributable to the
uncertainty regarding the realizability of state deferred tax assets,
As of December 31, 2025, we had $210.1 million and $120.5 million of net operating loss carryforwards for fed
f
eral
and state income tax purpos
r
es, respectively, from acquisitions. These federal and state losses will begin to expire in 2028 and
2029, respectively. We do not have any material for
f
eign net operating losses.
As of December 31, 2025, our state tax credit carryforwards for income tax purpos
r
es before valuation allowances were
approximately $257.2 million, which can be carried over indefinitely. We have provided a valuation allowance of
$195.8 million for
f
deferred tax assets, primarily related to state carryforwards that we do not believe are more likely than not to
be realized.
Utilization of the net operating losses and tax credit carryforwards may be subject to limitations due to ownership
change limitations provided in the Internal Revenue Code and similar state or foreign provisions.
U.S. tax law generally requires U.S. shareholders of a controlled for
f
eign corporation (“CFC”) to include the annual
earnings of foreign subsidiaries into U.S. taxable income each year. Correspondingly, most of the undistributed earnings are
deemed to be previously taxed for
f
U.S. tax purpos
r
es and distributions of the unremitted earnings do not have any significant
U.S. federal income tax impact. The determination of the fut
f ur
t
e tax consequences of the remittance of these earnings is not
practicable.
92
Income Taxes Paid
We have made tax payments and received refunds during the year ended December 31, 2025 as follows (in millions):
Year Ended December 31, 2025
U.S. Federa
$
l
808.0
State:
Othe
1
r
75.2
Foreign:
Ireland
90.3
Other
22.4
Foreign subtotal
1
:
12.7
Total cash paid for
f
income taxes (net of refunds
f
$
)
1,095.9
Uncertain Tax Positions
We recognize uncertain tax positions only to the extent that management believes that it is more likely than not that the
position will be sustained. The reconciliation of the beginning and ending amount of gross unrecognized tax benefits as of
December 31, 2025, 2024 and 2023 is as follows (in millions):
2025
2024
2023
Gross unrecognized tax benefits—beginning balance
$
181.5
$
163.3
$
137.4
Increases related to tax positions taken in a prior year
8.2
0.3
4.7
Increases related to tax positions taken dur
d
ing current year
20.0
52.7
39.9
Decreases related to tax positions taken in a prior year
(2.6)
(8.6)
(0.5)
Decreases related to lapse of statut
t e of limitations
(15.4)
(26.0)
(18.2)
Decreases related to settlements with taxing authorities
—
(0.2)
—
Gross unrecognized tax benefits—ending balance
$
191.7
$
181.5
$
163.3
Year Ended December 31,
As of December 31, 2025, 2024 and 2023, the total amount of gross unrecognized tax benefits was $191.7 million,
$181.5 million and $163.3 million, respectively, of which $100.7 million, $103.4 million and $90.0 million would affect our
effe
f ctive tax rate if recognized.
Our policy is to recognize interest and penalties accrued on any unrecognized tax benefits
f
as a component of income
tax expense. For the years ended December 31, 2025 and 2024, the net expense for
f
interest and penalties and the recognized
liability for interest and penalties were not material.
The statute of limitations for Federal and most states remains open for
f
2022 and for
f
ward. Some states have net
operating loss and tax credit carryforwards, and therefor
f
e remain open to examination. Our for
f
eign tax retur
t
ns, where the
statut
t e of limitations have not yet lapsed, are open to audit in the respective foreign countries where the subs
u
idiaries are located.
9.
Segment and Geographical Infor
f
mation
We operate as one reportabl
a e segment. The accounting policies of the reportabl
a e segment are the same as those
described in the summary of significant accounting policies. The fin
f ancial information reviewed by the CODM reflects
quarterly and year-to-date operating results, with a primary focus on revenue, gross margin, operating margin and net income as
reported on the consolidated statements of income. Consolidated financial infor
f
mation is used by the CODM to evaluate
performance and make decisions regarding resource allocation and other strategic initiatives. This consolidated financial
information is also what is used to establish and appr
a
ove operating budgets and for
f
ecasts. The measure of segment assets is
reported on the consolidated balance sheets in total. There was no change for each of the periods presented in the measurement
methods used to determine reported segment profit
f
and loss.
93
The CODM reviews the following significant segment expenses, which are presented separately on the Company’s
consolidated statements of income: cost of revenue and operating expenses. Other segment items that are included in the
calculation of the Company’s net income include other income (expense), net, which is further described in Note 3. Financial
Statements Details and income taxes, which is further described in Note 8. Income Taxes. Other segment disclosures such as
depreciation and amortization and stock-based compensation are disclosed in the Consolidated Statements of Cash Flows.
The fol
f lowing tabl
a e represents revenue based on customers' shipping addresses (in millions):
2025
2024
2023
Americas(1)
$
7,122.1
$
5,729.0
$
4,651.2
Europe, Middle East and Afri
f ca
1,070.3
713.2
671.0
Asia Pacific
813.3
560.9
538.0
Total revenue
$
9,005.7
$
7,003.1
$
5,860.2
Year Ended December 31,
(1) Includes $7,063.8 million, $5,663.0 million and $4,541.5 million revenue generated fro
f
m the U.S. for the three years ended December 31,
2025, 2024 and 2023, respectively
Long-lived assets, excluding intercompany receivabl
a es, investments in subsidiaries, investments in privately-held
companies and deferred tax assets, net by location are summarized as follows (in millions):
2025
2024
United States
$
184.8
$
83.5
International
18.3
15.3
Total
$
203.1
$
98.8
December 31,
94
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of D
o
isclos
l
ure Con
C
trols a
l
nd Procedures
Management, with the participation of our Chief Executive Officer (“CEO”) and our Chief Financial Offi
f cer (“CFO”),
evaluated the effe
f ctiveness of our disclosure controls and procedures as of December 31, 2025. The term “disclosure controls
and procedur
d
es,” as defined in Rul
R es 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedur
d
es of
a company that are designed to ensure that infor
f
mation required to be disclosed by a company in the reports that it files or
subm
u
its under the Exchange Act is recorded, processed, summarized and reported, within the time periods specifie
f d in the
Commission's rul
r es and for
f
ms. Disclosure controls and procedures include, without limitation, controls and procedures
designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the
Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal
financial officers, as appropriate to allow timely decisions regarding required disclosure.
Based on the evaluation of our disclosure controls and procedures as of December 31, 2025, our CEO and CFO
concluded that, as of such date, our disclosure controls and procedures are designed at a reasonabl
a e assurance level and are
effe
f ctive to provide reasonabl
a e assurance that information we are required to disclose in reports that we file or subm
u
it under the
Exchange Act is recorded, processed, summarized, and reported within the time periods specified in Commission rules and
forms, and that such infor
f
mation is accumulated and communicated to our management, including our CEO and CFO, as
appropriate, to allow timely decisions regarding required disclosure.
Changes in I
i
nt
I
er
t
nal Con
C
trol over Fina
i
ncial Reporting
i
There were no changes in our internal control over fin
f ancial reporting identifie
f d in connection with the evaluation
required by Rul
R e 13a-15(d) and 15d-15(d) of the Exchange Act, as amended, that occurred dur
d
ing the quarter ended
December 31, 2025 that materially affe
f cted, or are reasonabl
a y likely to materially affe
f ct, our internal control over fin
f ancial
reporting.
Inherent Limita
i
tions of Internal Contro
t
ls
Our management, including our CEO and CFO, does not expect that our disclosure controls and procedur
d
es or our
internal controls over fin
f ancial reporting will prevent or detect all errors and all fraud. A control system, no matter how well
designed and operated, can provide only reasonabl
a e, not absolute, assurance that the objectives of the control system are met.
Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all
control issues and instances of fra
f ud, if any, within the Company have been detected. These inherent limitations include the
realities that judgments in decision-making can be fau
f
lty, and that breakdowns can occur because of a simple error or mistake.
Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by
management override of the controls. The design of any system of controls also is based in part upon
u
certain assumptions about
the likelihood of fut
f ur
t
e events, and there can be no assurance that any design will succeed in achieving its stated goals under all
potential fut
f ur
t
e conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of
compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effe
f ctive control
system, misstatements due to error or fra
f ud may occur and not be detected.
Manage
a
ment's Repor
e
t on Int
I
er
t
nal Con
C
trol over Fina
i
ncial Reporting
i
Our management is responsible for establishing and maintaining adequate internal control over fin
f ancial reporting as
defined in Rul
R es 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over fin
f ancial reporting is a process
designed under the supervision of our principal executive and principal fin
f ancial offi
f cers to provide reasonabl
a e assurance
regarding the reliability of financial reporting and the preparation of our financial statements for
f
external purpos
r
es in
accordance with U.S. generally accepted accounting principles.
Our internal control over fin
f ancial reporting includes those policies and procedur
d
es that: (i) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (ii) provide
reasonabl
a e assurance that transactions are recorded as necessary to permit preparation of fin
f ancial statements in accordance
with U.S. generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance
with authorizations of our management and directors; and (iii) provide reasonabl
a e assurance regarding prevention or timely
95
detection of unauthorized acquisition, use, or disposition of our assets that could have a material effe
f ct on the Consolidated
Financial Statements.
Because of its inherent limitations, internal control over fin
f ancial reporting may not prevent or detect misstatements.
Also, proje
o ctions of any evaluation of effectiveness to fut
f ur
t
e periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedur
d
es may deteriorate.
Management assessed the effe
f ctiveness of our internal control over fin
f ancial reporting as of December 31, 2025, based on the
framework set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control -
Integrated Framework (2013 framework). Based on that assessment, management concluded that, as of December 31, 2025, its
internal control over fin
f ancial reporting was effective to provide reasonabl
a e assurance regarding the reliabi
a lity of financial
reporting and the preparation of fin
f ancial statements in accordance with U.S. GAAP.
The effectiveness of our internal control over fin
f ancial reporting, as of December 31, 2025, has been audited by Ernst
& Young LLP, the independent registered public accounting fir
f m that audits our Consolidated Financial Statements, as stated in
their report included in Item 8 of this Annual Report on Form 10-K, which expresses an unqualifie
f d opinion on the
effe
f ctiveness of our internal control over fin
f ancial reporting as of December 31, 2025.
Item 9B. Other Information
Securities Trading Plans of Directors and Executive Offi
f cers
During our last fiscal quarter, each of the fol
f lowing directors and offi
f cers, as defin
f ed in Rule 16a-1(f), adopted a “Rule
10b5-1 trading arrangement” as defin
f ed in Regulation S-K Item 408, as follows:
On November 14, 2025, Jayshree Ullal, our Chairperson and Chief Executive Offi
f cer, adopted a Rul
R e 10b5-1 trading
arrangement providing for
f
the sale fro
f
m time to time of an aggregate of: (i) up t
u
o 5,726,000 shares of our common stock; and
(ii) a number of shares of our common stock that may be earned in connection with grants of performance-based restricted
stock units, which cannot be determined at this time. The duration of the trading arrangement is until Februa
r
ry 20, 2027, or
earlier if all transactions under the trading arrangement are completed. The trading arrangement is intended to satisfy the
affi
f rmative defen
f
se in Rule 10b5-1(c).
On November 21, 2025, Yvonne Wassenaar, a member of our Board of Directors, adopted a Rul
R e 10b5-1 trading
arrangement providing for the sale from time to time of up t
u
o an aggregate of 5,576 shares of our common stock. The dur
d
ation
of the trading arrangement is until Februa
r
ry 26, 2027, or earlier if all transactions under the trading arrangement are completed.
The trading arrangement is intended to satisfy the affirmative defen
f
se in Rule 10b5-1(c).
On December 11, 2025, Chantelle Breithaupt
u , our Senior Vice President and Chief Financial Offi
f cer, adopted a Rul
R e
10b5-1 trading arrangement providing for
f
the sale fro
f
m time to time of a number of shares of our common stock that may be
earned in connection with grants of perfor
f
mance-based restricted stock units, which cannot be determined at this time. The
duration of the trading arrangement is until December 31, 2026, or earlier if all transactions under the trading arrangement are
completed. The trading arrangement is intended to satisfy the affir
f mative defen
f
se in Rule 10b5-1(c).
No other officers or directors, as defined in Rul
R e 16a-1(f), adopted or terminated a “Rule 10b5-1 trading arrangement”
or a “non-Rul
R e 10b5-1 trading arrangement,” as defined in Regulation S-K Item 408, during the last fiscal quarter.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not Applicable.
96
PART III
Item 10. Directors, Executive Offi
f cers, and Corporate Governance
Information required by this Item is incorpor
r
ated herein by reference to our definitive proxy statement with respect to
our 2026 Annual Meeting of Stockholders to be filed with the Commission within 120 days afte
f r the end of the fiscal year
covered by this Annual Report on Form 10-K.
97
Item 11. Executive Compensation
Information required by this Item is incorpor
r
ated herein by reference to our definitive proxy statement with respect to
our 2026 Annual Meeting of Stockholders to be filed with the Commission within 120 days afte
f r the end of the fiscal year
covered by this Annual Report on Form 10-K.
Item 12. Security Ownership of Certain Benefic
f ial Owners and Management and Related Stockholder Matters
Information required by this Item is incorpor
r
ated herein by reference to our definitive proxy statement with respect to
our 2026 Annual Meeting of Stockholders to be filed with the Commission within 120 days afte
f r the end of the fiscal year
covered by this Annual Report on Form 10-K.
Item 13. Certain Relationships and Related Transactions and Director Independence
Information required by this Item is incorpor
r
ated herein by reference to our definitive proxy statement with respect to
our 2026 Annual Meeting of Stockholders to be filed with the Commission within 120 days afte
f r the end of the fiscal year
covered by this Annual Report on Form 10-K.
Item 14. Principal Accountant Fees and Services
Information required by this Item is incorpor
r
ated herein by reference to our definitive proxy statement with respect to
our 2026 Annual Meeting of Stockholders to be filed with the Commission within 120 days afte
f r the end of the fiscal year
covered by this Annual Report on Form 10-K.
98
PART IV
Item 15. Exhibits and Financial Statement Schedules
Documents file
f
d as part of this Annual Report on Form 10-K are as follows:
1.
Consolidated Financial Statements
Our Consolidated Financial Statements are listed in the “Index to Consolidated Financial Statements” under Part II,
Item 8 of this Annual Report on Form 10-K.
2.
Financial Statement Schedules
Financial statement schedules have been omitted because they are not required, not applicable, not present in amounts
sufficient to require subm
u
ission of the schedul
d e, or the required infor
f
mation is shown in the Consolidated Financial Statements
or Notes thereto.
3.
Exhibits
The exhibits listed in the fol
f lowing Exhibit Index are filed or incorpor
r
ated by reference into this report:
99
100
EXHIBIT INDEX
Incorporated by Refere
f
nce
Exhibit
Number
Description
Form
File No.
Exhibit
Filing Date
Filed
Herewith
3.1
Amended and Restated Certifica
f
te of Incorpo
r
ration of the
p
Registrant.
g
10-Q
001-36468
3.1
8/8/2014
3.2
Certific
f ate of Amendment to the Amended and Restated
Certific
f ate of Incorpor
r
ation of the
t
Registrant
p
g
8-K
001-36468
3.1
12/3/2024
3.3
Amended and Restated Bylaws of Arista Networks, Inc. dated
y
,
Septembe
m
r 5, 2025
p
,
8-K
001-36468
3.1
9/8/2025
4.1
Form of the Registrant
a 's common stock certificate
a .
g
S-1/A
333-194899
4.1
4/21/2014
4.2
Description of Registrant’s securities registered under Section
p
g
g
12 of the Exchange Act
g
10.1
Form of Indemnification Agreement between the Registrant and
g
g
each of its directors and executive offi
f cers.
10-Q
001-36468
10.1
11/1/2019
10.2 †
2004 Equity Incentive Plan.
q
y
S-1
333-194899
10.2
3/31/2014
10.3 †
2011 Equity Incentive Plan.
q
y
S-1
333-194899
10.3
3/31/2014
10.4 †
2014 Equity Incentive Plan.
q
y
10-K
001-36468
10.4
2/19/2025
10.5 †
2014 Employee Stock Purchase Plan.
p y
10-K
001-36468
10.5
2/19/2025
10.6 **†
Offe
f r Letter, dated October 17, 2004, by and betwe
t
en the
,
,
, y
Registrant and Kenneth D
t
uda.
g
S-1
333-194899
10.6
3/31/2014
10.7 †
Offer
f
Letter, dated August 1, 2008, by and between the
,
g
,
, y
Registrant and Jayshree Ullal.
g
y
S-1
333-194899
10.8
3/31/2014
10.8** †
Offe
f r Letter, dated March 27, 2013, by and between the
,
,
, y
Registrant and Charles Giancarlo.
g
S-1
333-194899
10.9
3/31/2014
10.9 †
Employee Incentive Plan.
p y
S-1/A
333-194899
10.21
4/21/2014
10.10 †
2015 Global Sales Incentive Plan.
10-Q
001-36468
10.3
5/5/2016
10.11** †
Form of offe
f r letter, dated Februa
r
ry 14, 2017, by and between
,
y
,
, y
the Registrant and John McCool.
g
10-Q
001-36468
10.3
5/8/2017
10.12 †
Form of Severance Agreement by and between the Registrant
g
y
g
and John McCool.
10-Q
001-36468
10.4
5/8/2017
10.13 †
Awake Security, Inc. 2014 Equity Incentive Plan
y,
q
y
S-8
333-249591
99.1
10/22/2020
10.14**†
Letter Agreement by and between the Company and
a
Chantelle
g
y
p
y
Breithaupt, dated October 15, 2023
10.15**†
Severanc
a
e Agreement by and betwe
t
en the Compa
m
ny and
g
y
p
y
Chantelle Breithaupt
10.16**†
Letter Agreement by and between the Company and
a
Todd
g
y
p
y
Nightingale, dated June 12, 2025
g
g
,
,
8-K
001-36468
10.1
6/16/2025
10.17**†
Severanc
a
e Agreement by and betwe
t
en the Compa
m
ny and Tod
T
d
g
y
p
y
Nightingale
g
g
8-K
001-36468
10.2
6/16/2025
10.18**†
Consulting Agreement between the Company and Marc Taxay,
a
g
g
p
y
y,
dated May 6, 2025
y ,
10Q
001-36468
10.3
8/6/2025
19.0
Insider Trading Policy
g
y
10-K
001-36468
19.0
2/19/2025
21.1
List of Subs
u
idiaries of the Registrant.
g
10-K
001-36468
21.1
2/19/2025
23.1
Consent of Independent Registered Public Accounting Firm.
p
g
g
24.1
Power of Attorney (contained on signature page hereto)
y
31.1
Certific
f ation of the
t
Chief Executive Offi
f cer pursuant to Section
p
302 of the Sarba
r
nes-Oxley Act of 2002.
y
31.2
Certific
f ation of the
t
Chief Financial Offi
f cer pursuant to
p
Section 302(a) of the Sarbanes-Oxley Act of 2002.
( )
y
32.1*
Certific
f ations of Chief Executive Offic
f er and Chief Financial
Offi
f cer pursuant to 18 U.S.C. Section 1350, as adopted pursuant
p
,
p
p
to section 906 of the Sarba
r
ne
a
s-Oxley Act of 2002.
y
97.1
Compensation Recovery Policy
p
y
y
10-K
001-36468
97.1
2/13/2024
101.INS
XBRL Instance Document.
101.SCH
XBRL Taxonomy Extension Schema Document.
101.CAL
XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF
XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB
XBRL Taxonomy Extension Labe
a
l Linkbase Document.
101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document.
104.0
Cover Page Interactive File (formatted as Inline XBRL and
contained in Exhibit 101)
Incorporated by Reference
Exhibit
Number
Description
Form
File No.
Exhibit
Filing Date
Filed
Herewith
______________________
_
† Indicates a management contract or compensatory plan or arrangement.
‡ Confid
f ential treatment has been requested for portions of this exhibit. These portions have been omitted and have been filed separately with
the Securities and Exchange Commission.
* * Certain infor
f
mation contained in this exhibit has been redacted pursuant to Item 601(a)(6) of Regulation S-K.
* The certific
f ations attached as Exhibit 32.1 that accompany this Annual Report on Form 10-K are not deemed filed with the Securities and
Exchange Commission and are not to be incorporated by reference into any filing of Arista Networks, Inc. under the Securities Act of 1933,
as amended, or the Securities Exchange Act of 1934, as amended, whether made befor
f
e or after the date of this Annual Report on Form 10-K,
irrespective of any general incorpor
r
ation language contained in such filin
f
g.
101
Item 16. Form 10-K Summary
None.
102
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto dul
d y authorized.
ARISTA NETWORKS, INC.
(Registrant)
Dated:
Februa
r
ry 13, 2026
By:
/s/ JAYSHREE ULLAL
Jayshree Ullal
Chief Executive Officer and Chairpe
r
rson of the Board
(Principal Executive Offi
f cer)
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and
appoints Jayshree Ullal and Chantelle Breithaupt
u , jointly and severally, his or her attorney-in-fact, with the power of
subs
u
titution, for him or her in any and all capa
a
cities, to sign any amendments to this Annual Report on Form 10-K and to file
the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission,
hereby ratifyi
f ng and confir
f ming all that each of said attorneys-in-fact, or his or her substitute or subs
u
titutes, may do or cause to
be done by virtue
t
hereof.f
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the dates indicated:
Signature
g
Title
Date
/s/ JAYSHREE ULLAL
Chief Executive Officer and Chairpe
r
rson
of the Board (Principal Executive Offi
f cer)
Februa
r
ry 13, 2026
Jayshree Ullal
/s/ CHANTELLE BREITHAUPT
Senior Vice President, Chief Financial
Offi
f cer (Principal Financial Officer and
Principal Accounting Officer)
Februa
r
ry 13, 2026
Chantelle Breithaupt
/s/ KENNETH DUDA
President, Chief Technology Offi
f cer,
Director
Februa
r
ry 13, 2026
Kenneth Duda
/s/ KELLY BATTLES
Director
Februa
r
ry 13, 2026
Kelly Battles
/s/ LEWIS CHEW
Director
Februa
r
ry 13, 2026
Lewis Chew
/s/ CHARLES GIANCARLO
Director
Februa
r
ry 13, 2026
Charles Giancarlo
/s/ GREG LAVENDER
Director
Februa
r
ry 13, 2026
Greg Lavender
/s/ DAN SCHEINMAN
A
Director
Februa
r
ry 13, 2026
Dan Scheinman
/s/ MARK TEMPLETON
Director
Februa
r
ry 13, 2026
Mark Templeton
/s/ YVONNE WASSENAAR
Director
Februa
r
ry 13, 2026
Yvonne Wassenaar
103
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