Income Tax Expense (Benefit)
Effective Income Tax Rate (EITR)
Components of Deferred Tax Assets and Liabilities
Deferred Tax Assets and Liabilities, Classification
Adjustments to Financial Statements: Removal of Deferred Taxes
Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)
Adjusted Net Profit Margin
Adjusted Total Asset Turnover
Adjusted Financial Leverage
Adjusted Return on Equity (ROE)
Adjusted Return on Assets (ROA)

Arista Networks Inc., income tax expense (benefit), continuing operations

US$ in thousands

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Federal	574,449)	359,158)	137,203)	78,843)	58,187)
State	106,866)	76,321)	38,478)	21,135)	19,067)
Foreign	24,186)	38,250)	13,391)	12,891)	928)
Current provision for income taxes	705,501)	473,729)	189,072)	112,869)	78,182)
Federal	(372,270)	(219,568)	(98,534)	(17,592)	362,056)
State	(41,152)	(34,689)	(16,289)	(849)	(4,511)
Foreign	42,626)	9,878)	15,776)	9,878)	(433,324)
Deferred tax benefit	(370,796)	(244,379)	(99,047)	(8,563)	(75,779)
Provision for income taxes	334,705)	229,350)	90,025)	104,306)	2,403)

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
Current provision for income taxes	Amount of current income tax expense (benefit) pertaining to taxable income (loss) from continuing operations.	Arista Networks Inc. current provision for income taxes increased from 2021 to 2022 and from 2022 to 2023.
Deferred tax benefit	Amount of deferred income tax expense (benefit) pertaining to income (loss) from continuing operations.	Arista Networks Inc. deferred tax benefit decreased from 2021 to 2022 and from 2022 to 2023.
Provision for income taxes	Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.	Arista Networks Inc. provision for income taxes increased from 2021 to 2022 and from 2022 to 2023.

Arista Networks Inc., effective income tax rate (EITR) reconciliation

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
U.S. federal statutory income tax rate	21.00%	21.00%	21.00%	21.00%	21.00%
State tax, net of federal benefit	2.13%	2.09%	1.89%	2.23%	1.30%
Taxes on foreign earnings differential	-1.96%	-2.24%	-2.13%	-0.92%	-2.59%
Tax credits	-2.74%	-2.24%	-2.70%	-2.64%	-3.10%
Change in valuation allowance	0.00%	0.00%	0.01%	-0.18%	-0.10%
Intra-Entity Sale	0.00%	0.00%	0.00%	0.00%	-9.95%
Stock-based compensation	-4.59%	-4.07%	-8.32%	-5.65%	-6.56%
Acquisition and integration costs	0.01%	0.05%	0.03%	0.27%	0.04%
Other, net	-0.04%	-0.09%	-0.11%	0.01%	0.24%
Effective tax rate	13.81%	14.50%	9.67%	14.12%	0.28%

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).

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Item	Description	The company
Effective tax rate	Percentage of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.	Arista Networks Inc. effective tax rate increased from 2021 to 2022 but then slightly decreased from 2022 to 2023.

Arista Networks Inc., components of deferred tax assets and liabilities

US$ in thousands

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Intangible assets	322,325)	355,521)	385,291)	392,053)	419,911)
Reserves and accruals not currently deductible	120,973)	63,517)	34,648)	80,550)	71,945)
Deferred revenue	295,268)	182,594)	146,745)	—)	—)
Tax credits	118,123)	100,284)	85,390)	68,592)	54,867)
Lease financing obligation	15,485)	15,072)	17,845)	22,080)	22,547)
Capitalized research and development expenses	417,095)	228,946)	28,012)	23,656)	16,169)
Stock-based compensation	28,079)	25,480)	19,760)	18,548)	15,856)
Net operating losses	34,274)	29,469)	21,284)	23,998)	8,857)
Other	1,328)	8,721)	3,430)	3,873)	3,950)
Gross deferred tax assets	1,352,950)	1,009,604)	742,405)	633,350)	614,102)
Valuation allowance	(146,268)	(132,689)	(109,985)	(82,638)	(67,331)
Deferred tax assets	1,206,682)	876,915)	632,420)	550,712)	546,771)
US tax on foreign earnings	(245,074)	(286,625)	(302,746)	(317,970)	(326,967)
Right of use asset	(12,935)	(12,383)	(14,892)	(18,764)	(20,038)
Other	(2,881)	(3,037)	(1,561)	(383)	(2,451)
Deferred tax liabilities	(260,890)	(302,045)	(319,199)	(337,117)	(349,456)
Net deferred tax assets (liabilities)	945,792)	574,870)	313,221)	213,595)	197,315)

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
Gross deferred tax assets	Amount before allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards.	Arista Networks Inc. gross deferred tax assets increased from 2021 to 2022 and from 2022 to 2023.
Deferred tax assets	Amount after allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards.	Arista Networks Inc. deferred tax assets increased from 2021 to 2022 and from 2022 to 2023.
Net deferred tax assets (liabilities)	Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, without jurisdictional netting.	Arista Networks Inc. net deferred tax assets (liabilities) increased from 2021 to 2022 and from 2022 to 2023.

Arista Networks Inc., deferred tax assets and liabilities, classification

US$ in thousands

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
	Deferred tax assets, non-current	945,792)	574,912)	442,295)	441,531)	452,025)
	Deferred tax liabilities, non-current	—)	42)	129,074)	227,936)	254,710)

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
Deferred tax assets, non-current	Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, with jurisdictional netting and classified as noncurrent.	Arista Networks Inc. deferred tax assets, non-current increased from 2021 to 2022 and from 2022 to 2023.
Deferred tax liabilities, non-current	Amount, after deferred tax asset, of deferred tax liability attributable to taxable differences, with jurisdictional netting and classified as noncurrent.	Arista Networks Inc. deferred tax liabilities, non-current decreased from 2021 to 2022 and 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: Noncurrent deferred tax assets, net	945,792)	574,912)	442,295)	441,531)	452,025)
Total assets (adjusted)	9,001,014)	6,200,498)	5,292,134)	4,297,388)	3,733,265)
Adjustment to Total Liabilities
Total liabilities (as reported)	2,727,747)	1,889,590)	1,755,829)	1,418,628)	1,290,604)
Less: Noncurrent deferred tax liabilities, net	—)	42)	129,074)	227,936)	254,710)
Total liabilities (adjusted)	2,727,747)	1,889,548)	1,626,755)	1,190,692)	1,035,894)
Adjustment to Stockholders’ Equity
Stockholders’ equity (as reported)	7,219,059)	4,885,820)	3,978,600)	3,320,291)	2,894,686)
Less: Net deferred tax assets (liabilities)	945,792)	574,870)	313,221)	213,595)	197,315)
Stockholders’ equity (adjusted)	6,273,267)	4,310,950)	3,665,379)	3,106,696)	2,697,371)
Adjustment to Net Income
Net income (as reported)	2,087,321)	1,352,446)	840,854)	634,557)	859,867)
Add: Deferred income tax expense (benefit)	(370,796)	(244,379)	(99,047)	(8,563)	(75,779)
Net income (adjusted)	1,716,525)	1,108,067)	741,807)	625,994)	784,088)

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
Net Profit Margin
Reported net profit margin	35.62%	30.87%	28.52%	27.38%	35.67%
Adjusted net profit margin	29.29%	25.29%	25.16%	27.01%	32.53%
Total Asset Turnover
Reported total asset turnover	0.59	0.65	0.51	0.49	0.58
Adjusted total asset turnover	0.65	0.71	0.56	0.54	0.65
Financial Leverage
Reported financial leverage	1.38	1.39	1.44	1.43	1.45
Adjusted financial leverage	1.43	1.44	1.44	1.38	1.38
Return on Equity (ROE)
Reported ROE	28.91%	27.68%	21.13%	19.11%	29.71%
Adjusted ROE	27.36%	25.70%	20.24%	20.15%	29.07%
Return on Assets (ROA)
Reported ROA	20.98%	19.96%	14.66%	13.39%	20.54%
Adjusted ROA	19.07%	17.87%	14.02%	14.57%	21.00%

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 net profit margin	An indicator of profitability, calculated as adjusted net income divided by total revenue.	Arista Networks Inc. adjusted net profit margin ratio improved from 2021 to 2022 and from 2022 to 2023.
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 adjusted 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 adjusted 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)
Net income	2,087,321)	1,352,446)	840,854)	634,557)	859,867)
Revenue	5,860,168)	4,381,310)	2,948,037)	2,317,512)	2,410,706)
Profitability Ratio
Net profit margin¹	35.62%	30.87%	28.52%	27.38%	35.67%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted net income	1,716,525)	1,108,067)	741,807)	625,994)	784,088)
Revenue	5,860,168)	4,381,310)	2,948,037)	2,317,512)	2,410,706)
Profitability Ratio
Adjusted net profit margin²	29.29%	25.29%	25.16%	27.01%	32.53%

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 Net profit margin = 100 × Net income ÷ Revenue
= 100 × 2,087,321 ÷ 5,860,168 = 35.62%

² Adjusted net profit margin = 100 × Adjusted net income ÷ Revenue
= 100 × 1,716,525 ÷ 5,860,168 = 29.29%

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Profitability ratio	Description	The company
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by total revenue.	Arista Networks Inc. adjusted net profit margin ratio 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)
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 Deferred Taxes
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	9,001,014)	6,200,498)	5,292,134)	4,297,388)	3,733,265)
Activity Ratio
Adjusted total asset turnover²	0.65	0.71	0.56	0.54	0.65

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 ÷ 9,001,014 = 0.65

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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 Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted total assets	9,001,014)	6,200,498)	5,292,134)	4,297,388)	3,733,265)
Adjusted stockholders’ equity	6,273,267)	4,310,950)	3,665,379)	3,106,696)	2,697,371)
Solvency Ratio
Adjusted financial leverage²	1.43	1.44	1.44	1.38	1.38

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
= 9,001,014 ÷ 6,273,267 = 1.43

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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 Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted net income	1,716,525)	1,108,067)	741,807)	625,994)	784,088)
Adjusted stockholders’ equity	6,273,267)	4,310,950)	3,665,379)	3,106,696)	2,697,371)
Profitability Ratio
Adjusted ROE²	27.36%	25.70%	20.24%	20.15%	29.07%

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 × Adjusted net income ÷ Adjusted stockholders’ equity
= 100 × 1,716,525 ÷ 6,273,267 = 27.36%

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Profitability ratio	Description	The company
Adjusted ROE	A profitability ratio calculated as adjusted 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 Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted net income	1,716,525)	1,108,067)	741,807)	625,994)	784,088)
Adjusted total assets	9,001,014)	6,200,498)	5,292,134)	4,297,388)	3,733,265)
Profitability Ratio
Adjusted ROA²	19.07%	17.87%	14.02%	14.57%	21.00%

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 × Adjusted net income ÷ Adjusted total assets
= 100 × 1,716,525 ÷ 9,001,014 = 19.07%

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Profitability ratio	Description	The company
Adjusted ROA	A profitability ratio calculated as adjusted 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 Income Taxes

Income Tax Expense (Benefit)

Effective Income Tax Rate (EITR)

Components of Deferred Tax Assets and Liabilities

Deferred Tax Assets and Liabilities, Classification

Adjustments to Financial Statements: Removal of Deferred Taxes

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

Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)

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

Adjusted Net Profit Margin

Adjusted Total Asset Turnover

Adjusted Financial Leverage

Adjusted Return on Equity (ROE)

Adjusted Return on Assets (ROA)