Stock Analysis on Net
Stock Analysis on Net

Arista Networks Inc. (NYSE:ANET)

Common-Size Income Statement 

Arista Networks Inc., common-size consolidated income statement

Microsoft Excel
12 months ended: Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Product 84.02 85.83 84.82 80.65 79.00
Service 15.98 14.17 15.18 19.35 21.00
Revenue 100.00% 100.00% 100.00% 100.00% 100.00%
Product -32.83 -35.17 -35.92 -32.51 -32.36
Service -3.04 -2.88 -3.01 -3.69 -3.70
Cost of revenue -35.87% -38.05% -38.93% -36.20% -36.06%
Gross profit 64.13% 61.95% 61.07% 63.80% 63.94%
Research and development -14.23 -14.59 -16.63 -19.90 -21.00
Sales and marketing -6.10 -6.81 -7.46 -9.71 -9.90
General and administrative -1.75 -2.03 -2.13 -2.82 -2.86
Operating expenses -22.09% -23.43% -26.22% -32.43% -33.75%
Income from operations 42.05% 38.52% 34.86% 31.37% 30.19%
Interest income 4.44 2.60 0.63 0.24 1.17
Other income (expense) 0.13 0.21 0.62 -0.04 0.52
Other income, net 4.58% 2.81% 1.25% 0.21% 1.69%
Income before income taxes 46.62% 41.33% 36.10% 31.58% 31.88%
Provision for income taxes -5.90 -5.71 -5.23 -3.05 -4.50
Net income 40.73% 35.62% 30.87% 28.52% 27.38%

Based on: 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), 10-K (reporting date: 2020-12-31).

Revenue Composition
The proportion of product revenue relative to total revenue demonstrated an upward trend from 79% in 2020 to a peak of 85.83% in 2023, followed by a slight decline to 84.02% in 2024. Conversely, the service revenue percentage decreased from 21% in 2020 to a low of 14.17% in 2023, with a mild rebound to 15.98% in 2024. This indicates a strategic focus towards product sales over the observed period.
Cost of Revenue
Cost of product revenue as a percentage of total revenue deepened from -32.36% in 2020 to a nadir of -35.92% in 2022, then improved to -32.83% by 2024. Service revenue costs showed a moderate decline from -3.7% in 2020 to -2.88% in 2023 but slightly increased to -3.04% in 2024. Overall, total cost of revenue remained elevated, fluctuating between -36.06% and -38.93%, before easing to -35.87%, reflecting some cost optimization in recent years.
Gross Profit
Gross profit margin experienced a decline from 63.94% in 2020 to its lowest point of 61.07% in 2022, followed by a recovery toward 64.13% in 2024. This trajectory suggests initial pressures on profitability likely due to rising costs or pricing adjustments, with subsequent improvements possibly arising from cost control or favorable revenue mix changes.
Operating Expenses
Research and development expenses steadily decreased from -21% of revenue in 2020 to -14.23% in 2024, showing less emphasis or increased efficiency in this area. Sales and marketing expenses also followed a declining path from -9.9% to -6.1% over the same period, which may indicate improved marketing efficiency or a shift in strategy. General and administrative expenses showed a modest decrease from -2.86% in 2020 to -1.75% in 2024. Total operating expenses thus declined significantly from -33.75% to -22.09%, contributing positively to overall profitability.
Profitability Metrics
Income from operations steadily improved from 30.19% of revenue in 2020 to 42.05% in 2024, reflecting both a better gross margin and reduced operating expenses. Interest income exhibited volatility but showed a notable increase from 1.17% in 2020 to 4.44% in 2024. Other income, net, remained marginal but positive. Income before income taxes rose substantially from 31.88% to 46.62%, indicating robust operational and non-operating income gains. Despite an increased provision for income taxes peaking at -5.9%, net income margin expanded markedly from 27.38% to 40.73%, signifying strengthened overall profitability and efficient tax management.