Arista Networks Inc. (NYSE:ANET)

The financial data reveals several noteworthy trends and fluctuations in the company’s quarterly performance and cash flow activities over multiple years.

Net Income

Net income exhibited a generally upward trend from early 2020 through 2025. Starting at approximately $138 million, net income steadily increased each year, peaking near $889 million by the end of 2024, before a slight decline in early 2025. This growth suggests improved profitability over the analyzed period.

Depreciation and Amortization

This expense showed some variability without a clear long-term trend. Initial values were relatively stable, with a notable dip in mid-2020, then a fluctuating increase through early 2023. The subsequent quarters reveal alternating increases and decreases, indicating changes in capital asset utilization or amortization schedules.

Stock-Based Compensation

Stock-based compensation expenses increased noticeably from $27.5 million in Q1 2020 to $127.9 million by Q4 2025. This suggests an expanding employee compensation cost component tied to equity incentives, reflecting potential growth in workforce or revised compensation policies.

Deferred Income Taxes

Deferred income taxes exhibited significant volatility, with large negative values in several quarters, especially from late 2021 through 2025. This variation implies considerable timing differences in taxable income recognition or tax planning strategies, adding complexity to the company’s tax position.

Amortization (Accretion) of Investment Premiums/Discounts

This item generally increased in absolute value over time, moving from around $1 million in Q1 2020 to over $16 million negative in 2024, reflecting growing adjustments related to investments and debt instruments.

Working Capital Items (Accounts Receivable, Inventories, Accounts Payable)

Accounts receivable and inventories showed erratic patterns, including large negative swings indicating periods of significant build-up or reductions. For example, inventories were deeply negative in multiple quarters, which may illustrate fluctuations in production or demand. Accounts payable also displayed sharp variability, with large positive and negative movements, suggesting changing payment terms or supplier dynamics.

Deferred Revenue

This liability generally increased over time, from near zero or negative in 2020 to several hundred million dollars by late 2024 and early 2025. Such growth indicates expanding advance payments from customers, possibly linked to service contracts or subscription models.

Income Taxes, Net

The net income taxes oscillated between positive and negative values, indicating irregular tax expenses or refunds across quarters. The swings, including large negative amounts, may reflect tax timing effects, credits, or audits.

Operating Activities

Net cash provided by operating activities showed strong growth initially, peaking over $1.2 billion in late 2024 before a variable trend in 2025. Adjustments to reconcile net income to cash flows and changes in working capital contributed to the volatility but overall reflected a robust cash-generating capacity.

Investing Activities

Investing cash flows were predominantly negative, with large purchases of marketable securities and property and equipment. There were exceptions of positive cash flows from sales or maturities of securities. The significant outflows in some periods align with strategic investments or acquisitions, including a notable $300 million payment for business combinations in 2025.

Financing Activities

Financing cash flows were mixed, with substantial cash used in repurchasing common stock, especially strong in mid-2020 and again in late 2024, indicating active capital return policies. Proceeds from issuance of common stock under equity plans appear modest in comparison. Overall, financing cash flows showed net outflows but with periods of positive cash inflows.

Cash Position

Net changes in cash and equivalents fluctuated widely, consistent with the activity in operating, investing, and financing cash flows. The company experienced both substantial increases in cash, over $746 million in late 2024, and significant decreases such as nearly $918 million in early 2025, reflecting active liquidity management amidst investment and shareholder return programs.

In summary, the company demonstrated strong profitability growth with increased non-cash compensation expenses. Operating cash flow remained resilient despite fluctuations in working capital. Investing activities involved significant marketable securities transactions and acquisitions, while financing activities reflected a strategy of share repurchases balanced by equity issuance. Tax and deferred items showed complexity and volatility, suggesting active fiscal management. Overall, the data portrays an evolving financial profile characterized by growth investment, shareholder returns, and maintaining liquidity.