Arista Networks Inc. (NYSE:ANET)

The analysis of the financial performance over the given periods reveals several key trends regarding profitability, capital investment, and efficiency.

Net Operating Profit After Taxes (NOPAT)

NOPAT demonstrated a consistent upward trajectory throughout the years. Starting at approximately $676 million in 2020, it nearly doubled by 2023 to $2.07 billion and further increased to nearly $3.4 billion by 2024. This reflects strong operating profitability and effective tax management over time.

Invested Capital

Invested capital grew steadily from around $1.87 billion in 2020 to approximately $5.87 billion in 2024. The most notable acceleration occurred between 2021 and 2023, signaling substantial reinvestment and expansion activities. This upward trend indicates augmented capital deployment to support business growth or assets acquisition.

Return on Invested Capital (ROIC)

The ROIC percentage maintained generally high values, indicating efficient use of capital to generate returns. It started at about 36.23% in 2020, peaked significantly at roughly 53.84% in 2021, experienced a decline to 38.8% in 2022, before steadily increasing again to reach 57.91% in 2024. Despite fluctuations, the overall trend points to improved capital efficiency and profitability relative to invested capital.

In summary, the data reflects an organization experiencing strong growth in operating profits accompanied by substantial increases in invested capital. The efficiency of capital use, as measured by ROIC, remains robust with some variability, ultimately achieving its highest point at the end of the period. These trends suggest effective scaling of operations and a favorable balance between profit generation and capital investment.

Operating Profit Margin (OPM)

The operating profit margin shows a consistent upward trend from 32.69% in 2020 to 51.15% in 2024. This indicates improving operational efficiency and profitability over the five-year period, with the most significant increase observed between 2023 and 2024.

Turnover of Capital (TO)

The turnover of capital ratio exhibits some fluctuations. It increased from 1.28 in 2020 to a peak of 1.71 in 2021, followed by a decline to 1.32 in 2023, with a slight recovery to 1.41 in 2024. This suggests variability in how effectively the company is utilizing its capital to generate revenue, with a generally moderate level of capital efficiency.

1 – Effective Cash Tax Rate (CTR)

This metric declined from 86.43% in 2020 to 71.93% in 2022, indicating a decrease in the proportion of pre-tax earnings retained after taxes. However, it rose again to 80.17% by 2024, reflecting some reversal in this trend and potentially improved tax management or changes in tax legislation impacting cash taxes paid.

Return on Invested Capital (ROIC)

The return on invested capital fluctuated considerably but generally increased over the period. It started at 36.23% in 2020, peaked at 53.84% in 2021, declined to 38.8% in 2022, then rose steadily to reach 57.91% by 2024. This pattern suggests periods of varying efficiency in generating returns from invested capital, with strong overall improvement by the end of the period.

The financial data exhibits a consistent upward trend in key profitability and revenue metrics over the five-year period analyzed.

Net Operating Profit Before Taxes (NOPBT)

The NOPBT shows a strong and steady increase year over year. Starting from approximately 782 million US dollars in 2020, it grows to roughly 1.21 billion in 2021, about 1.67 billion in 2022, rising further to 2.74 billion in 2023, and reaching 4.24 billion by the end of 2024. This significant growth reflects enhanced operational efficiency and profitability management.

Adjusted Revenue

Adjusted revenue demonstrates a robust upward trajectory as well. From roughly 2.39 billion US dollars in 2020, it increases to 3.23 billion in 2021 and continues rising to 4.49 billion in 2022. The growth accelerates further to 6.33 billion in 2023 and culminates at approximately 8.29 billion in 2024. This expanding revenue base underpins the company's scaling activities and market penetration.

Operating Profit Margin (OPM)

The operating profit margin also shows ongoing improvement, starting at 32.69% in 2020 and rising steadily each year. It increases to 37.38% in 2021, remains stable at 37.17% in 2022, then sees a notable jump to 43.35% in 2023, and finally reaches 51.15% in 2024. This upward trend in margin indicates more effective cost control and/or higher value generation from operations over time.

Overall, the data reveals a company with expanding revenue and significantly improving profitability, with operating margins growing strongly in the latter years. This pattern suggests successful scaling of operations coupled with enhancing operational efficiencies or premium pricing capability.

Adjusted revenue

The adjusted revenue shows a consistent and substantial upward trend over the five-year period. Starting from approximately $2.39 billion in 2020, it increased each year, reaching around $8.29 billion by 2024. This represents a more than threefold growth, indicating strong sales expansion or increased market demand over time.

Invested capital

Invested capital also increased significantly during the period reviewed. Beginning at about $1.87 billion in 2020, the invested capital rose steadily each year to approximately $5.87 billion by 2024. This upward trajectory suggests ongoing investments into assets, operations, or growth initiatives aligned with the expanding revenue base.

Turnover of capital (TO)

The turnover of capital ratio, which measures revenue generated per unit of invested capital, experienced variability throughout the years. It started at 1.28 in 2020, improved to 1.71 in 2021, indicating more efficient use of capital that year. However, it declined to 1.45 in 2022 and further to 1.32 in 2023, then slightly recovered to 1.41 in 2024. This pattern suggests fluctuating operational efficiency, with some periods reflecting less optimal utilization of the increased invested capital despite continuous revenue growth.

The financial data displays key operating tax and profitability metrics over a five-year period, highlighting significant growth and fluctuations in tax rates.

Cash Operating Taxes

Cash operating taxes have shown a consistent and substantial increase from US$106,136 thousand in 2020 to US$840,462 thousand in 2024. This upward trend indicates growing tax payments reflecting increased profitability or possibly higher taxable income.

Net Operating Profit Before Taxes (NOPBT)

NOPBT has exhibited strong growth during the same period, rising from US$782,340 thousand in 2020 to US$4,239,200 thousand in 2024. This nearly fivefold increase suggests expanding operational efficiency and stronger earnings capacity.

Effective Cash Tax Rate (CTR)

The effective cash tax rate, which represents the proportion of cash taxes paid relative to NOPBT, started at 13.57% in 2020, climbed sharply to a peak of 28.07% in 2022, then moderated to 19.83% by 2024. This pattern indicates a fluctuating tax burden with a peak period followed by improvement, potentially due to changes in tax strategies, regulatory environment, or the composition of taxable income.

Overall, the data reveals robust profitability growth accompanied by increasing tax payments. The fluctuating cash tax rate suggests the company’s tax management and effective tax burden have varied during the period, with an improvement in tax efficiency in the latter years despite the absolute tax payments rising.