Common-Size Income Statement

Arista Networks Inc., common-size consolidated income statement

12 months ended:	Dec 31, 2025	Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021
Product	84.13%	84.02%	85.83%	84.82%	80.65%
Service	15.87%	15.98%	14.17%	15.18%	19.35%
Revenue	100.00%	100.00%	100.00%	100.00%	100.00%
Product	-33.08%	-32.83%	-35.17%	-35.92%	-32.51%
Service	-2.87%	-3.04%	-2.88%	-3.01%	-3.69%
Cost of revenue	-35.94%	-35.87%	-38.05%	-38.93%	-36.20%
Gross profit	64.06%	64.13%	61.95%	61.07%	63.80%
Research and development	-13.74%	-14.23%	-14.59%	-16.63%	-19.90%
Sales and marketing	-5.92%	-6.10%	-6.81%	-7.46%	-9.71%
General and administrative	-1.58%	-1.75%	-2.03%	-2.13%	-2.82%
Operating expenses	-21.24%	-22.09%	-23.43%	-26.22%	-32.43%
Income from operations	42.82%	42.05%	38.52%	34.86%	31.37%
Interest income	4.26%	4.44%	2.60%	0.63%	0.24%
Other income (expense)	0.11%	0.13%	0.21%	0.62%	-0.04%
Other income, net	4.37%	4.58%	2.81%	1.25%	0.21%
Income before income taxes	47.19%	46.62%	41.33%	36.10%	31.58%
Provision for income taxes	-8.20%	-5.90%	-5.71%	-5.23%	-3.05%
Net income	38.99%	40.73%	35.62%	30.87%	28.52%

Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).

The common-size income statement reveals several noteworthy trends between 2021 and 2025. Revenue composition shifted modestly, with a slight increase in the proportion of revenue derived from services and a corresponding decrease from products. Profitability metrics demonstrate a consistent improvement over the period, while operating expenses as a percentage of revenue decreased significantly. The effective tax rate increased substantially in the final year of the observed period.

Revenue Composition: Product revenue consistently represented the majority of total revenue, ranging from 80.65% to 85.83% before decreasing slightly to 84.13%. Service revenue, while a smaller portion, exhibited a gradual increase from 15.18% to 15.87% of total revenue. This suggests a potential strategic focus on expanding service offerings.
Cost Structure and Gross Profit: Cost of revenue as a percentage of revenue decreased from 38.93% in 2022 to 35.87% in 2024, before increasing slightly to 35.94% in 2025. This improvement in cost management contributed to an increase in gross profit margin, which rose from 61.07% in 2022 to a peak of 64.13% in 2024, then slightly decreased to 64.06% in 2025.
Operating Expenses: A significant trend is the reduction in operating expenses as a percentage of revenue. Each component – research and development, sales and marketing, and general and administrative – decreased consistently over the five-year period. This resulted in a substantial decrease in total operating expenses, from 32.43% of revenue in 2021 to 21.24% in 2025, indicating improved operational efficiency.
Profitability: Income from operations improved considerably, increasing from 31.37% to 42.82% of revenue. This improvement, coupled with increasing other income, drove a substantial increase in income before income taxes, rising from 31.58% to 47.19%. Net income followed a similar trajectory, increasing from 28.52% to 38.99% of revenue.
Other Income and Taxes: Other income, net, increased significantly as a percentage of revenue, from 0.21% in 2021 to 4.37% in 2025, primarily driven by increases in interest income. The provision for income taxes as a percentage of revenue also increased substantially, from 3.05% in 2021 to 8.20% in 2025. This suggests a change in the company’s tax profile or a reduction in available tax benefits.

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Arista Networks Inc. (NYSE:ANET)

Common-Size Income Statement