Arista Networks Inc. (NYSE:ANET)

An evaluation of the financial performance over the five-year period reveals consistent and significant growth across all major income measures. Net income showed a strong upward trajectory, increasing from 634,557 thousand US dollars in 2020 to 2,852,054 thousand US dollars in 2024. This represents more than a fourfold rise, indicating substantial improvement in profitability and operational efficiency.

Earnings before tax (EBT) and earnings before interest and tax (EBIT) data are identical for all years, reflecting consistent financial reporting and absence of interest expenses. Both metrics grow robustly from 738,863 thousand US dollars in 2020 to 3,265,034 thousand US dollars in 2024, indicating enhanced earnings capacity before tax obligations.

EBITDA, encompassing earnings before interest, tax, depreciation, and amortization, also exhibits a marked increase, rising from 774,021 thousand US dollars in 2020 to 3,327,072 thousand US dollars in 2024. This demonstrates strong cash flow generation and operational performance improvements excluding non-cash charges.

Overall Trends

All key earnings metrics exhibit strong compounded annual growth rates, illustrating progressive financial health and increased operational profitability.

Profitability

The substantial increase in net income relative to earnings before tax indicates effective tax management and sustained business growth contributing to higher net results.

Operational Efficiency

EBIT and EBITDA growth suggest expanding operational scale and improved efficiency, as earnings before non-operating and non-cash expenses rise sharply.

Cash Generation

The steady expansion of EBITDA reflects strong cash flow generation capability, important for funding growth, investment, and shareholder returns.

Enterprise Value (EV)

The enterprise value of the company demonstrated a persistent and robust upward trajectory over the observed five-year period. Starting at approximately 20.87 billion US dollars at the end of 2020, it nearly doubled by the end of 2021 to 36.59 billion. This growth continued at a slower pace in 2022, reaching 40.32 billion. Notably, in 2023 the enterprise value escalated significantly to 78.00 billion, nearly doubling the prior year’s figure, and further surged to close to 122.75 billion by the end of 2024, indicating strong market valuation expansion.

Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)

EBITDA showed a consistent and substantial increase throughout the period under review. Starting at 774 million US dollars in 2020, EBITDA grew by approximately 26.8% in 2021 to 981 million. Growth accelerated in 2022 with EBITDA reaching around 1.64 billion, followed by an even more pronounced increase in 2023 to approximately 2.49 billion. By the end of 2024, EBITDA had surged to over 3.32 billion, reflecting strong operational performance and improved profitability over time.

EV/EBITDA Ratio

The EV/EBITDA ratio exhibited notable fluctuations rather than a consistent trend. It started at 26.96 in 2020, increased significantly to 37.29 in 2021, which suggests a higher valuation relative to earnings. In 2022, the ratio declined to 24.52, indicating a potential improvement in EBITDA relative to enterprise value or a correction in valuation. However, the ratio again increased sharply to 31.29 in 2023 and further rose to 36.9 by the end of 2024. These fluctuations might reflect changing market expectations, valuation adjustments, or varying growth rates in EV and EBITDA.