Delaware
|
|
001-36468
|
|
20-1751121
|
(State or other jurisdiction of
incorporation)
|
|
(Commission File No.)
|
|
(IRS Employer Identification
Number)
|
ITEM 2.02
|
Results of Operations and Financial Condition
|
|
ARISTA NETWORKS, INC.
|
|
|
|
|
May 14, 2015
|
By: /s/ Marc Taxay
|
|
|
Marc Taxay
|
|
|
Vice President and General Counsel
|
|
|
|
Exhibit No.
|
Description
|
10.1
|
Offer letter by and between the Company and Ita Brennan, dated April 17, 2015
|
10.2
|
Severance agreement by and between the Company and Ita Brennan, effective May 18, 2015
|
99.1
|
Press release issued by Arista Networks, Inc. dated May 14, 2015
|
1)
|
That you be granted nonstatutory options to purchase 50,000 shares of the Company’s common stock (the “Stock Options”) pursuant to the Company’s 2014 Equity Incentive Plan (the “Plan”) and form of stock option agreement under the Plan (the “Option Agreement”). Subject to the accelerated vesting provisions set forth in such stock option agreement and in the Severance Agreement (as defined below), the Stock Options will vest as to 1/5
th
of the shares subject thereto on the one-year anniversary of the Start Date and thereafter as to 1/60
th
of the shares subject thereto on the monthly anniversary of the Start Date, subject to your continuing to be a Service Provider (as defined in the Plan) through each vesting date. If your status as a Service Provider terminates for any reason, the unvested portion of your Stock Options, after giving effect to the applicable acceleration provisions, terminate as shall be set forth in the Plan and the Option Agreement. The Stock Options will have an exercise price per share equal to the fair market value per share of the Company’s common stock on the date of grant.
|
2)
|
That you will be granted restricted stock units covering 50,000 shares of the Company common stock (the “RSUs”) pursuant to the Company’s 2014 Equity Incentive Plan (the “Plan”) and individual RSU agreement. The RSUs will be governed by the form of RSU Agreement. Subject to the accelerated vesting provisions set forth in such stock option agreement and in the Severance Agreement (as defined below), the Company’s restricted stock units vest on 4 designated dates each quarter (each, a “Quarterly Vesting Date”). Your RSU Agreement will specify these Quarterly Vesting Date. Your RSUs will vest at a rate of 1/5 on the first Quarterly Vesting Date after the one year anniversary of the vesting commencement date and 1/20th of the RSUs vest per quarter on each Quarterly Vesting Date thereafter over a total of approximately five years. All vesting is subject to your continued service to the Company through each Quarterly Vesting Date. If your status as a Service Provider terminates for any reason, the unvested portion of your RSUs, after giving effect to the applicable acceleration provisions, terminate as shall be set forth in the Plan and the RSU Agreement.
|
Accepted:
|
/s/ Ita Brennan
|
|
Date:
|
April 22, 2015
|
(b)
|
delivered as to such lesser extent which would result in no portion of such benefits being subject to excise tax under Section 4999 of the Code,
|
COMPANY
|
|
ARISTA NETWORKS, INC.
|
|
|
By:
|
|
|
Title:
|
|
|
Date:
|
|
|
|
EXECUTIVE
|
|
By: /s/ Ita Brennan
|
|
|
Title: CFO
|
|
|
Date: April 22, 2015
|
|
|
|
|
|
|
•
|
Revenue of
$179.0 million
, an increase of
52.8%
compared to the first quarter of 2014, and an increase of
3.2%
from the fourth quarter of 2014.
|
•
|
Non-GAAP gross margin of
66.1%
, compared to Non-GAAP gross margin of
69.6%
in the first quarter of 2014 and 67.4% in the fourth quarter of 2014.
|
•
|
GAAP gross margin of
65.8%
, compared to GAAP gross margin of
69.4%
in the first quarter of 2014 and
67.1%
in the fourth quarter of 2014.
|
•
|
Non-GAAP net income of
$35.5 million
, or
$0.50
per diluted share, compared to non-GAAP net income of
$16.4 million
, or
$0.25
per diluted share, in the first quarter of 2014.
|
•
|
GAAP net income of
$24.5 million
, or
$0.34
per diluted share, compared to GAAP net income of
$12.3 million
, or
$0.20
per diluted share, in the first quarter of 2014.
|
•
|
Operating cash flow of
$20.8 million
, compared to
$17.7 million
of operating cash flow in the first quarter of 2014.
|
•
|
Arista Networks has been recognized as a leader in Gartner's 2015 Magic Quadrant for Data Center Networking.
|
•
|
Announced Arista EOS as a Subscription (EaaS) service, a disaggregated offering that aligns to new cloud business models.
|
•
|
Converged solutions with Supermicro to deliver converged compute networking for cloud scale data centers for EVO.
|
•
|
Technology alliances with Infinera to deliver high performance metro-area cloud networks, and Lawo for IP-based broadcast Infrastructure.
|
•
|
Certification from ServiceNow of the Arista cloud networking portfolio, for comprehensive operations and management of the network.
|
•
|
Revenue between $183 and $191 million.
|
•
|
Non-GAAP gross margin in the range of 63% to 65% and
|
•
|
Non-GAAP operating margin in the range of 23% to 25%.
|
Media Contact
Amanda Jaramillo
Corporate Communications
(408) 547-5798
amanda@arista.com
|
|
Investor Contact
Chuck Elliott
Product and Investor Advocacy
(408) 547-5549
chuck@arista.com
|
|
Three Months Ended March 31,
|
||||||
|
2015
|
|
2014
|
||||
Revenue:
|
|
|
|
||||
Product
|
$
|
160,141
|
|
|
$
|
106,493
|
|
Service
|
18,904
|
|
|
10,714
|
|
||
Total Revenue
|
179,045
|
|
|
117,207
|
|
||
Cost of revenue:
|
|
|
|
||||
Product
|
54,439
|
|
|
33,027
|
|
||
Service
|
6,852
|
|
|
2,866
|
|
||
Total cost of revenue
|
61,291
|
|
|
35,893
|
|
||
Total gross profit
|
117,754
|
|
|
81,314
|
|
||
Operating expenses:
|
|
|
|
||||
Research and development
|
43,340
|
|
|
33,446
|
|
||
Sales and marketing
|
24,587
|
|
|
18,655
|
|
||
General and administrative
|
14,072
|
|
|
7,231
|
|
||
Total operating expenses
|
81,999
|
|
|
59,332
|
|
||
Income from operations
|
35,755
|
|
|
21,982
|
|
||
Other income (expense), net:
|
|
|
|
||||
Interest expense—related party
|
—
|
|
|
(432
|
)
|
||
Interest expense
|
(821
|
)
|
|
(2,111
|
)
|
||
Other income (expense), net
|
(468
|
)
|
|
8
|
|
||
Total other income (expense), net
|
(1,289
|
)
|
|
(2,535
|
)
|
||
Income before provision for income taxes
|
34,466
|
|
|
19,447
|
|
||
Provision for income taxes
|
9,974
|
|
|
7,118
|
|
||
Net income
|
$
|
24,492
|
|
|
$
|
12,329
|
|
Net income attributable to common stockholders:
|
|
|
|
||||
Basic
|
$
|
24,032
|
|
|
$
|
6,362
|
|
Diluted
|
$
|
24,071
|
|
|
$
|
6,816
|
|
Net income per share attributable to common stockholders:
|
|
|
|
||||
Basic
|
$
|
0.37
|
|
|
$
|
0.22
|
|
Diluted
|
$
|
0.34
|
|
|
$
|
0.20
|
|
Weighted-average shares used in computing net income per share attributable to common stockholders:
|
|
|
|
||||
Basic
|
64,635
|
|
|
29,124
|
|
||
Diluted
|
70,722
|
|
|
33,816
|
|
|
Three Months Ended March 31,
|
||||||
|
2015
|
|
2014
|
||||
GAAP gross profit
|
$
|
117,754
|
|
|
$
|
81,314
|
|
GAAP gross margin
|
65.8
|
%
|
|
69.4
|
%
|
||
Stock-based compensation expense
|
636
|
|
|
211
|
|
||
Non-GAAP gross profit
|
$
|
118,390
|
|
|
$
|
81,525
|
|
Non-GAAP gross margin
|
66.1
|
%
|
|
69.6
|
%
|
||
|
|
|
|
||||
GAAP income from operations
|
$
|
35,755
|
|
|
$
|
21,982
|
|
Stock-based compensation expense
|
8,839
|
|
|
4,782
|
|
||
Litigation expense
|
6,670
|
|
|
—
|
|
||
Non-GAAP income from operations
|
$
|
51,264
|
|
|
$
|
26,764
|
|
Non-GAAP operating margin
|
28.6
|
%
|
|
22.8
|
%
|
||
|
|
|
|
||||
GAAP net income
|
$
|
24,492
|
|
|
$
|
12,329
|
|
Stock-based compensation expense
|
8,839
|
|
|
4,782
|
|
||
Litigation expense
|
6,670
|
|
|
—
|
|
||
Income tax effect on non-GAAP exclusions
|
(4,469
|
)
|
|
(705
|
)
|
||
Non-GAAP net income
|
$
|
35,532
|
|
|
$
|
16,406
|
|
|
|
|
|
||||
Weighted average shares used in computing GAAP diluted income per share attributable to common stockholders
|
70,722
|
|
|
33,816
|
|
||
Additional weighted average dilutive shares
1
|
—
|
|
|
32,282
|
|
||
Non-GAAP weighted average diluted shares
|
70,722
|
|
|
66,098
|
|
||
|
|
|
|
||||
GAAP diluted net income per share attributable to common stockholders
|
$
|
0.34
|
|
|
$
|
0.20
|
|
Net income attributable to participating securities
|
—
|
|
|
0.16
|
|
||
Non-GAAP adjustments to net income
|
0.16
|
|
|
0.12
|
|
||
Non-GAAP adjustments to diluted shares
|
—
|
|
|
(0.23
|
)
|
||
Non-GAAP diluted net income per share
|
$
|
0.50
|
|
|
$
|
0.25
|
|
Summary of Stock-Based Compensation Expense
|
|
|
|
||||
Cost of revenue
|
$
|
636
|
|
|
$
|
211
|
|
Research and development
|
4,928
|
|
|
2,467
|
|
||
Sales and marketing
|
2,409
|
|
|
1,428
|
|
||
General and administrative
|
866
|
|
|
676
|
|
||
Total
|
$
|
8,839
|
|
|
$
|
4,782
|
|
|
March 31,
2015 |
|
December 31,
2014 |
||||
ASSETS
|
|
|
|
||||
CURRENT ASSETS:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
275,186
|
|
|
$
|
240,031
|
|
Marketable securities
|
209,153
|
|
|
209,426
|
|
||
Accounts receivable, net
|
113,057
|
|
|
96,982
|
|
||
Inventories
|
91,225
|
|
|
80,519
|
|
||
Deferred tax assets
|
9,801
|
|
|
12,252
|
|
||
Prepaid expenses and other current assets
|
37,622
|
|
|
40,269
|
|
||
Total current assets
|
736,044
|
|
|
679,479
|
|
||
Property and equipment, net
|
72,787
|
|
|
71,558
|
|
||
Investments
|
36,636
|
|
|
36,636
|
|
||
Deferred tax assets
|
12,291
|
|
|
11,510
|
|
||
Other assets
|
17,334
|
|
|
11,840
|
|
||
TOTAL ASSETS
|
$
|
875,092
|
|
|
$
|
811,023
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
CURRENT LIABILITIES:
|
|
|
|
||||
Accounts payable
|
$
|
29,123
|
|
|
$
|
32,428
|
|
Accrued liabilities
|
28,920
|
|
|
40,369
|
|
||
Deferred revenue
|
81,826
|
|
|
60,327
|
|
||
Other current liabilities
|
8,462
|
|
|
11,249
|
|
||
Total current liabilities
|
148,331
|
|
|
144,373
|
|
||
Income taxes payable
|
17,502
|
|
|
17,323
|
|
||
Lease financing obligations, non-current
|
42,232
|
|
|
42,547
|
|
||
Deferred revenue, non-current
|
50,998
|
|
|
46,141
|
|
||
Other long-term liabilities
|
5,558
|
|
|
4,981
|
|
||
TOTAL LIABILITIES
|
264,621
|
|
|
255,365
|
|
||
STOCKHOLDERS’ EQUITY:
|
|
|
|
||||
Preferred stock
|
—
|
|
|
—
|
|
||
Common stock
|
7
|
|
|
7
|
|
||
Additional paid-in capital
|
456,509
|
|
|
426,171
|
|
||
Retained earnings
|
154,306
|
|
|
129,814
|
|
||
Accumulated other comprehensive loss
|
(351)
|
|
|
(334
|
)
|
||
TOTAL STOCKHOLDERS’ EQUITY
|
610,471
|
|
|
555,658
|
|
||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$
|
875,092
|
|
|
$
|
811,023
|
|
|
Three Months Ended March 31,
|
||||||
|
2015
|
|
2014
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
||||
Net income
|
$
|
24,492
|
|
|
$
|
12,329
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
2,893
|
|
|
2,285
|
|
||
Stock-based compensation
|
8,839
|
|
|
4,782
|
|
||
Deferred income taxes
|
1,670
|
|
|
2,110
|
|
||
Provision for bad debts
|
201
|
|
|
43
|
|
||
Amortization of debt discount
|
—
|
|
|
292
|
|
||
Excess tax benefit on stock based-compensation
|
(10,569
|
)
|
|
(311
|
)
|
||
Other
|
487
|
|
|
—
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
(16,276
|
)
|
|
14,950
|
|
||
Inventories
|
(10,706
|
)
|
|
(5,619
|
)
|
||
Prepaid expenses and other current assets
|
2,613
|
|
|
(3,349
|
)
|
||
Other assets
|
(3,502
|
)
|
|
(2,794
|
)
|
||
Accounts payable
|
(1,936
|
)
|
|
(5,904
|
)
|
||
Accrued liabilities
|
(12,358
|
)
|
|
27
|
|
||
Deferred revenue
|
26,356
|
|
|
(2,797
|
)
|
||
Interest payable
|
—
|
|
|
1,110
|
|
||
Interest payable—related party
|
—
|
|
|
370
|
|
||
Income taxes payable
|
8,985
|
|
|
109
|
|
||
Other liabilities
|
(422
|
)
|
|
56
|
|
||
Net cash provided by operating activities
|
20,767
|
|
|
17,689
|
|
||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
||||
Purchases of property and equipment
|
(5,136
|
)
|
|
(3,103
|
)
|
||
Other investing activities
|
(667
|
)
|
|
—
|
|
||
Net cash used in investing activities
|
(5,803
|
)
|
|
(3,103
|
)
|
||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
||||
Principal payments of lease financing obligations
|
(255
|
)
|
|
(133
|
)
|
||
Payments—offering costs
|
(261
|
)
|
|
(775
|
)
|
||
Proceeds from issuance of common stock upon exercising options, net of repurchases
|
5,322
|
|
|
1,861
|
|
||
Proceeds from issuance of common stock under employee stock purchase plan
|
4,856
|
|
|
—
|
|
||
Excess tax benefit on stock-based compensation
|
10,569
|
|
|
311
|
|
||
Net cash provided by financing activities
|
20,231
|
|
|
1,264
|
|
||
Effect of exchange rate changes
|
(40
|
)
|
|
10
|
|
||
NET INCREASE IN CASH AND CASH EQUIVALENTS
|
35,155
|
|
|
15,860
|
|
||
CASH AND CASH EQUIVALENTS—Beginning of period
|
240,031
|
|
|
113,664
|
|
||
CASH AND CASH EQUIVALENTS—End of period
|
$
|
275,186
|
|
|
$
|
129,524
|
|