Arista Networks Inc. (NYSE:ANET)

The financial data reveals several notable trends in intangible assets over the five-year period ending December 31, 2024. The analysis focuses on goodwill, developed technology, customer relationships, trade name, other intangible assets, acquisition-related intangible assets (gross and net), and accumulated amortization.

Goodwill

Goodwill remained relatively stable from 2020 to 2021, with a slight decrease from 189,696 to 188,397 thousand US dollars. It then increased significantly in 2022 to 265,924 thousand US dollars and remained essentially steady through 2023 and 2024, ending at 268,532 thousand US dollars. This indicates acquisitions or revaluations occurred primarily in 2022, contributing to a notable rise in goodwill assets.

Developed Technology

The value of developed technology was unchanged at 124,730 thousand US dollars during 2020 and 2021. A marked increase to 154,930 thousand US dollars occurred by the end of 2022, where it then stabilized through 2023 and 2024. This pattern suggests capital investment or acquisition of technological assets around 2022.

Customer Relationships

Customer relationships intangible assets showed a similar trajectory: stable at 25,920 thousand US dollars for 2020 and 2021, then rising sharply to 54,620 thousand US dollars by the end of 2022 and remaining constant thereafter. The increase aligns temporally with that observed in developed technology and goodwill, possibly from the same business activities.

Trade Name

Trade name assets experienced growth from 8,990 thousand US dollars in 2020 and 2021 to 12,390 thousand US dollars in 2022, holding steady in subsequent years. This increase in trade name valuation is consistent with trends in other acquisition-related intangible assets.

Others

The category labeled “Others” remained fixed at 5,720 thousand US dollars from 2020 to 2022 before data for 2023 and 2024 is missing. The absence of this data for recent years limits full assessment but suggests possible divestitures or reclassification of these assets.

Acquisition-Related Intangible Assets, Gross

Gross acquisition-related intangible assets rose considerably from 165,360 thousand US dollars in 2020 and 2021 to 227,660 thousand US dollars in 2022. However, by the end of 2023 and 2024, the value decreased slightly to 221,940 thousand US dollars, indicating either asset disposals, impairments, or amortization effects.

Accumulated Amortization

Accumulated amortization steadily increased each year, from -42,570 thousand US dollars in 2020 to -159,932 thousand US dollars in 2024. This consistent rise reflects the ongoing systematic expensing of acquisition-related intangible assets, which impacts net book values.

Acquisition-Related Intangible Assets, Net

Net acquisition-related intangible assets decreased from 122,790 thousand US dollars in 2020 to 62,008 thousand US dollars in 2024, with fluctuations in between. The drop is primarily due to the rising accumulated amortization that offsets gross asset growth, leading to a reduced net carrying amount over time.

Goodwill and Acquisition-Related Intangible Assets Combined

The combined total showed growth from 312,486 thousand US dollars in 2020 to a peak of 388,129 thousand US dollars in 2022, before declining to 330,540 thousand US dollars in 2024. This pattern correlates with acquisition activity in 2022, followed by amortization and possible impairment or disposals reducing the asset base subsequently.

In summary, the data indicates significant acquisition activities early in the analyzed period, particularly in 2022, which increased goodwill and various acquisition-related intangible assets. Following this peak, increases in accumulated amortization and a slight decline in gross intangible assets suggest systematic expensing and potential asset adjustments. The net carrying values reflect these dynamics, showing a decline in acquisition-related intangible assets despite the initial growth in gross asset values.

The data over the five-year period reflects notable growth trends in both reported and goodwill adjusted financial metrics. There is a consistent increase in total assets and stockholders' equity, indicating an expansion in the company's asset base as well as its net worth.

Total Assets

Reported total assets have shown steady growth each year, rising from approximately $4.7 billion at the end of 2020 to about $14.0 billion by the end of 2024. This represents nearly a threefold increase over the five-year period. Similarly, adjusted total assets, which exclude goodwill, follow the same upward trend, increasing from around $4.5 billion in 2020 to roughly $13.8 billion in 2024. The relatively close values between reported and adjusted assets suggest that goodwill comprises a small portion of total assets, although the absolute difference grows as the asset base expands.

Stockholders’ Equity

Reported stockholders’ equity also exhibits a strong upward trend, climbing from approximately $3.3 billion in 2020 to nearly $10 billion in 2024. The adjusted stockholders’ equity follows the same pattern and amounts to around $9.7 billion by 2024. This reflects a significant strengthening of the company's equity position. The increasing equity base is consistent with the rise in total assets, indicating sustained profitability, retained earnings growth, or successful capital raising activities over time.

Overall Trends and Insights

The parallel growth in reported and goodwill adjusted figures indicates a solid foundation of tangible asset growth and equity build-up, with goodwill adjustments having a relatively small but increasing impact. The substantial increases in both total assets and stockholders’ equity may point to expansion initiatives, acquisitions, or organic growth fueling the company’s balance sheet strength. The data suggests the company has managed to enhance its financial position consistently over the five years under review, supporting potential future strategic investments or shareholder returns.

Asset Turnover

The reported total asset turnover ratio shows an upward trend from 0.49 in 2020 to a peak of 0.65 in 2022, followed by a decline to 0.50 in 2024. The adjusted total asset turnover follows a similar pattern, increasing from 0.51 in 2020 to 0.67 in 2022 and subsequently decreasing to 0.51 in 2024. This indicates improved efficiency in asset utilization up to 2022, with a reduction thereafter.

Financial Leverage

Both reported and adjusted financial leverage ratios remain relatively stable throughout the period, fluctuating slightly around 1.4. The reported financial leverage moves from 1.43 in 2020 to 1.41 in 2024, showing minimal variation. Adjusted financial leverage follows the same trend, suggesting consistent capital structure and modest use of debt over the years.

Return on Equity (ROE)

The reported ROE has a strong upward trajectory, increasing from 19.11% in 2020 to a peak of 28.91% in 2023, with a slight decrease to 28.54% in 2024. The adjusted ROE exceeds reported figures consistently, ranging from 20.27% in 2020 to 29.32% in 2024. This demonstrates an overall increase in profitability relative to shareholders' equity, with minor fluctuations toward the end of the period.

Return on Assets (ROA)

The reported ROA shows improvement from 13.39% in 2020 to 20.98% in 2023, slightly dropping to 20.31% in 2024. Adjusted ROA follows a similar pattern, increasing from 13.95% to 21.57% in 2023 then decreasing marginally to 20.7% in 2024. These trends imply enhanced efficiency in asset profit generation, stabilizing in recent years.

General Insights

The data indicates a period of increasing operational efficiency and profitability up to 2022 or 2023, followed by slight declines or stabilization in turnover and profitability ratios in 2024. Financial leverage has been maintained consistently, suggesting a stable financial policy. Adjusted figures generally report marginally better performance than reported ones, reflecting the impact of goodwill adjustments on profitability and efficiency measurements.

Total Assets

The reported total assets exhibited a consistent upward trend over the five-year period, increasing from approximately $4.74 billion at the end of 2020 to $14.04 billion by the end of 2024. This represents nearly a threefold increase, indicating significant asset growth. The adjusted total assets, which account for goodwill adjustments, followed a very similar pattern, increasing from about $4.55 billion in 2020 to roughly $13.78 billion in 2024, also reflecting robust asset expansion with a slightly lower base compared to reported figures.

Total Asset Turnover

The reported total asset turnover ratio, which measures the efficiency of asset use in generating revenue, showed some variability. It increased from 0.49 in 2020 to a peak of 0.65 in 2022, indicating improved asset utilization during this period. However, it then declined to 0.59 in 2023 and further to 0.50 in 2024, suggesting a reduction in efficiency or slower revenue growth relative to asset base expansions in the latter years. The adjusted total asset turnover mirrored this trend closely, rising from 0.51 in 2020 to 0.67 in 2022 before decreasing to 0.61 in 2023 and 0.51 in 2024.

Insights

The continuous increase in total assets, both reported and adjusted, highlights aggressive growth or increased investments. The asset turnover peaking in 2022 followed by a decline suggests that while the company was able to improve asset utilization initially, the pace of revenue generation slowed relative to asset growth in subsequent years. This may indicate challenges in maintaining operational efficiency or could reflect strategic expansion with assets not yet fully optimized for revenue production.

Total Assets

The reported total assets show a consistent and substantial increase over the five-year period, growing from approximately $4.74 billion in 2020 to about $14.04 billion in 2024. This indicates a strong expansion in the asset base. The adjusted total assets, which exclude goodwill, follow a similar upward trend but remain slightly lower in absolute terms compared to the reported figures. This suggests that goodwill represents a notable but relatively stable proportion of total assets across the years.

Stockholders’ Equity

Reported stockholders’ equity also exhibits steady growth, rising from approximately $3.32 billion in 2020 to nearly $10.0 billion in 2024. The adjusted stockholders’ equity, which accounts for goodwill adjustments, trends similarly, indicating that the company's net asset value, excluding goodwill, is increasing consistently. The persistence of a gap between reported and adjusted equity values suggests that goodwill remains a relevant component of the equity base but does not dominate the capital structure.

Financial Leverage

The reported financial leverage ratio has mostly remained stable and relatively low, fluctuating slightly between 1.38 and 1.44 during the period. This implies that the company maintains a conservative approach to financing, with equity forming a significant portion of the capital structure. The adjusted financial leverage, which excludes goodwill effects, presents a marginally higher ratio but follows the same stable pattern. The consistency in leverage ratios, despite rapid asset and equity growth, highlights prudent management of debt relative to equity over time.

Overall Trends

The data reflects a company experiencing significant growth in assets and equity, suggesting robust operational performance and capital accumulation. The adjustments for goodwill do not materially alter the overall trends but provide a more conservative view of the asset and equity base. The stable financial leverage ratios indicate that growth has been supported primarily through equity rather than disproportionate increases in debt, pointing to a balanced and sustainable financial strategy.

Stockholders’ Equity

The reported stockholders’ equity has shown a consistent and significant upward trend from 3,320,291 thousand US dollars in 2020 to 9,994,807 thousand US dollars in 2024. This represents more than a threefold increase over the five-year period. Similarly, the adjusted stockholders’ equity, which presumably excludes goodwill impacts, has also increased steadily from 3,130,595 thousand US dollars in 2020 to 9,726,275 thousand US dollars in 2024. The adjusted figures remain slightly lower than the reported ones, reflecting the effect of goodwill adjustments, but both metrics exhibit parallel growth trajectories.

Return on Equity (ROE)

The reported ROE has improved consistently, rising from 19.11% in 2020 to a peak of 28.91% in 2023, with a minor decline to 28.54% in 2024. This trend indicates increasing profitability relative to the reported equity base over time. The adjusted ROE, which accounts for equity adjustments likely excluding goodwill, has also trended upward from 20.27% in 2020 to 29.32% in 2024, peaking at 30.03% in 2023 before a slight reduction. The adjusted ROE remains higher than the reported ROE across all periods, suggesting that the exclusion of goodwill enhances the measure of profitability on equity.

General Insights

Overall, the financial data reveal robust equity growth coupled with improving returns on equity over the five years. The adjustments for goodwill do not materially alter the growth trends but tend to yield slightly more conservative equity values and higher profitability ratios. The small decline in ROE in the final year for both reported and adjusted metrics may warrant further examination to understand underlying operational or market factors impacting profitability efficiency despite the growth in equity.

Total Assets

There is a clear and consistent upward trend in total assets over the five-year period. Reported total assets increased significantly from approximately 4.74 billion US dollars in 2020 to over 14 billion US dollars in 2024, showing robust asset growth. Adjusted total assets, which exclude goodwill, follow a similar upward pattern, rising from about 4.55 billion US dollars in 2020 to nearly 13.78 billion US dollars in 2024. The close proximity between reported and adjusted totals indicates that goodwill comprises a relatively stable and small portion of total assets during this time frame.

Return on Assets (ROA)

The return on assets, both reported and adjusted for goodwill, demonstrates a notable improvement over the observed periods. Reported ROA increased steadily from 13.39% in 2020 to a peak of 20.98% in 2023, followed by a slight decline to 20.31% in 2024. Adjusted ROA, which removes the impact of goodwill, exhibits a similar trend, increasing from 13.95% in 2020 to 21.57% in 2023 before moderating to 20.7% in 2024. The adjusted ROA remains consistently higher than the reported ROA, suggesting that excluding goodwill provides a more favorable view of asset profitability.

Overall Insights

The data reveal consistent growth in both asset base and asset efficiency. The sharp increase in total assets is accompanied by improved returns, indicating effective utilization of the asset base. Although there is a slight decline in ROA in 2024, the values remain significantly higher than those at the start of the period. Adjusting for goodwill moderately enhances the return metrics but does not alter the overall positive trend in profitability. This suggests steady operational performance and successful asset management throughout the period.