Goodwill and Intangible Asset Disclosure
Adjustments to Financial Statements: Removal of Goodwill
Adjusted Financial Ratios: Removal of Goodwill (Summary)
Adjusted Total Asset Turnover
Adjusted Financial Leverage
Adjusted Return on Equity (ROE)
Adjusted Return on Assets (ROA)

Arista Networks Inc., balance sheet: goodwill and intangible assets

US$ in thousands

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Goodwill	268,531)	265,924)	188,397)	189,696)	54,855)
Developed technology	154,930)	154,930)	124,730)	124,730)	52,510)
Customer relationships	54,620)	54,620)	25,920)	25,920)	7,080)
Trade name	12,390)	12,390)	8,990)	8,990)	2,470)
Others	—)	5,720)	5,720)	5,720)	1,660)
Acquisition-related intangible assets, gross	221,940)	227,660)	165,360)	165,360)	63,720)
Accumulated amortization	(133,172)	(105,455)	(71,805)	(42,570)	(18,485)
Acquisition-related intangible assets, net	88,768)	122,205)	93,555)	122,790)	45,235)
Goodwill and acquisition-related intangible assets	357,299)	388,129)	281,952)	312,486)	100,090)

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

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Item	Description	The company
Goodwill	Amount after accumulated impairment loss of an asset representing future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized.	Arista Networks Inc. goodwill increased from 2021 to 2022 and from 2022 to 2023.
Acquisition-related intangible assets, net	Sum of the carrying amounts of all intangible assets, excluding goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges.	Arista Networks Inc. acquisition-related intangible assets, net increased from 2021 to 2022 but then decreased significantly from 2022 to 2023.
Goodwill and acquisition-related intangible assets	Sum of the carrying amounts of all intangible assets, including goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges.	Arista Networks Inc. goodwill and acquisition-related intangible assets increased from 2021 to 2022 but then slightly decreased from 2022 to 2023.

Arista Networks Inc., adjustments to financial statements

US$ in thousands

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Adjustment to Total Assets
Total assets (as reported)	9,946,806)	6,775,410)	5,734,429)	4,738,919)	4,185,290)
Less: Goodwill	268,531)	265,924)	188,397)	189,696)	54,855)
Total assets (adjusted)	9,678,275)	6,509,486)	5,546,032)	4,549,223)	4,130,435)
Adjustment to Stockholders’ Equity
Stockholders’ equity (as reported)	7,219,059)	4,885,820)	3,978,600)	3,320,291)	2,894,686)
Less: Goodwill	268,531)	265,924)	188,397)	189,696)	54,855)
Stockholders’ equity (adjusted)	6,950,528)	4,619,896)	3,790,203)	3,130,595)	2,839,831)

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

Arista Networks Inc., Financial Data: Reported vs. Adjusted

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Arista Networks Inc., adjusted financial ratios

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Total Asset Turnover
Reported total asset turnover	0.59	0.65	0.51	0.49	0.58
Adjusted total asset turnover	0.61	0.67	0.53	0.51	0.58
Financial Leverage
Reported financial leverage	1.38	1.39	1.44	1.43	1.45
Adjusted financial leverage	1.39	1.41	1.46	1.45	1.45
Return on Equity (ROE)
Reported ROE	28.91%	27.68%	21.13%	19.11%	29.71%
Adjusted ROE	30.03%	29.27%	22.18%	20.27%	30.28%
Return on Assets (ROA)
Reported ROA	20.98%	19.96%	14.66%	13.39%	20.54%
Adjusted ROA	21.57%	20.78%	15.16%	13.95%	20.82%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

Financial ratio	Description	The company
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Arista Networks Inc. adjusted total asset turnover ratio improved from 2021 to 2022 but then slightly deteriorated from 2022 to 2023.
Adjusted financial leverage	A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity. Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.	Arista Networks Inc. adjusted financial leverage ratio decreased from 2021 to 2022 and from 2022 to 2023.
Adjusted ROE	A profitability ratio calculated as net income divided by adjusted shareholders’ equity.	Arista Networks Inc. adjusted ROE improved from 2021 to 2022 and from 2022 to 2023.
Adjusted ROA	A profitability ratio calculated as net income divided by adjusted total assets.	Arista Networks Inc. adjusted ROA improved from 2021 to 2022 and from 2022 to 2023.

Arista Networks Inc., Financial Ratios: Reported vs. Adjusted

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	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
As Reported
Selected Financial Data (US$ in thousands)
Revenue	5,860,168)	4,381,310)	2,948,037)	2,317,512)	2,410,706)
Total assets	9,946,806)	6,775,410)	5,734,429)	4,738,919)	4,185,290)
Activity Ratio
Total asset turnover¹	0.59	0.65	0.51	0.49	0.58
Adjusted for Goodwill
Selected Financial Data (US$ in thousands)
Revenue	5,860,168)	4,381,310)	2,948,037)	2,317,512)	2,410,706)
Adjusted total assets	9,678,275)	6,509,486)	5,546,032)	4,549,223)	4,130,435)
Activity Ratio
Adjusted total asset turnover²	0.61	0.67	0.53	0.51	0.58

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 Calculations

¹ Total asset turnover = Revenue ÷ Total assets
= 5,860,168 ÷ 9,946,806 = 0.59

² Adjusted total asset turnover = Revenue ÷ Adjusted total assets
= 5,860,168 ÷ 9,678,275 = 0.61

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Activity ratio	Description	The company
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Arista Networks Inc. adjusted total asset turnover ratio improved from 2021 to 2022 but then slightly deteriorated from 2022 to 2023.

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
As Reported
Selected Financial Data (US$ in thousands)
Total assets	9,946,806)	6,775,410)	5,734,429)	4,738,919)	4,185,290)
Stockholders’ equity	7,219,059)	4,885,820)	3,978,600)	3,320,291)	2,894,686)
Solvency Ratio
Financial leverage¹	1.38	1.39	1.44	1.43	1.45
Adjusted for Goodwill
Selected Financial Data (US$ in thousands)
Adjusted total assets	9,678,275)	6,509,486)	5,546,032)	4,549,223)	4,130,435)
Adjusted stockholders’ equity	6,950,528)	4,619,896)	3,790,203)	3,130,595)	2,839,831)
Solvency Ratio
Adjusted financial leverage²	1.39	1.41	1.46	1.45	1.45

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 Calculations

¹ Financial leverage = Total assets ÷ Stockholders’ equity
= 9,946,806 ÷ 7,219,059 = 1.38

² Adjusted financial leverage = Adjusted total assets ÷ Adjusted stockholders’ equity
= 9,678,275 ÷ 6,950,528 = 1.39

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Solvency ratio	Description	The company
Adjusted financial leverage	A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity. Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.	Arista Networks Inc. adjusted financial leverage ratio decreased from 2021 to 2022 and from 2022 to 2023.

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
As Reported
Selected Financial Data (US$ in thousands)
Net income	2,087,321)	1,352,446)	840,854)	634,557)	859,867)
Stockholders’ equity	7,219,059)	4,885,820)	3,978,600)	3,320,291)	2,894,686)
Profitability Ratio
ROE¹	28.91%	27.68%	21.13%	19.11%	29.71%
Adjusted for Goodwill
Selected Financial Data (US$ in thousands)
Net income	2,087,321)	1,352,446)	840,854)	634,557)	859,867)
Adjusted stockholders’ equity	6,950,528)	4,619,896)	3,790,203)	3,130,595)	2,839,831)
Profitability Ratio
Adjusted ROE²	30.03%	29.27%	22.18%	20.27%	30.28%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 Calculations

¹ ROE = 100 × Net income ÷ Stockholders’ equity
= 100 × 2,087,321 ÷ 7,219,059 = 28.91%

² Adjusted ROE = 100 × Net income ÷ Adjusted stockholders’ equity
= 100 × 2,087,321 ÷ 6,950,528 = 30.03%

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Profitability ratio	Description	The company
Adjusted ROE	A profitability ratio calculated as net income divided by adjusted shareholders’ equity.	Arista Networks Inc. adjusted ROE improved from 2021 to 2022 and from 2022 to 2023.

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
As Reported
Selected Financial Data (US$ in thousands)
Net income	2,087,321)	1,352,446)	840,854)	634,557)	859,867)
Total assets	9,946,806)	6,775,410)	5,734,429)	4,738,919)	4,185,290)
Profitability Ratio
ROA¹	20.98%	19.96%	14.66%	13.39%	20.54%
Adjusted for Goodwill
Selected Financial Data (US$ in thousands)
Net income	2,087,321)	1,352,446)	840,854)	634,557)	859,867)
Adjusted total assets	9,678,275)	6,509,486)	5,546,032)	4,549,223)	4,130,435)
Profitability Ratio
Adjusted ROA²	21.57%	20.78%	15.16%	13.95%	20.82%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 Calculations

¹ ROA = 100 × Net income ÷ Total assets
= 100 × 2,087,321 ÷ 9,946,806 = 20.98%

² Adjusted ROA = 100 × Net income ÷ Adjusted total assets
= 100 × 2,087,321 ÷ 9,678,275 = 21.57%

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Profitability ratio	Description	The company
Adjusted ROA	A profitability ratio calculated as net income divided by adjusted total assets.	Arista Networks Inc. adjusted ROA improved from 2021 to 2022 and from 2022 to 2023.

Arista Networks Inc. (NYSE:ANET)

Analysis of Goodwill and Intangible Assets

Goodwill and Intangible Asset Disclosure

Adjustments to Financial Statements: Removal of Goodwill

Arista Networks Inc., Financial Data: Reported vs. Adjusted

Adjusted Financial Ratios: Removal of Goodwill (Summary)

Arista Networks Inc., Financial Ratios: Reported vs. Adjusted

Adjusted Total Asset Turnover

Adjusted Financial Leverage

Adjusted Return on Equity (ROE)

Adjusted Return on Assets (ROA)