|
x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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20-1751121
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification Number)
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Large accelerated filer
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ý
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Accelerated filer
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o
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Non-accelerated filer
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o
(Do not check if a smaller reporting company)
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Smaller reporting company
|
o
|
|
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Page
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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Item 1.
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Item 1A.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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September 30,
2016 |
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December 31,
2015 |
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ASSETS
|
|
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|
||||
CURRENT ASSETS:
|
|
|
|
||||
Cash and cash equivalents
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$
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500,481
|
|
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$
|
687,326
|
|
Marketable securities
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299,667
|
|
|
—
|
|
||
Accounts receivable, net of allowances of $1,540 and $1,529, respectively
|
210,243
|
|
|
144,263
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|
||
Inventories
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162,128
|
|
|
92,129
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||
Prepaid expenses and other current assets
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151,659
|
|
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50,610
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Total current assets
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1,324,178
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|
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974,328
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Property and equipment, net
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78,147
|
|
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79,706
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|
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Investments
|
36,136
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36,636
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Deferred tax assets
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62,221
|
|
|
48,429
|
|
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Other assets
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18,398
|
|
|
20,791
|
|
||
TOTAL ASSETS
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$
|
1,519,080
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|
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$
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1,159,890
|
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LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
CURRENT LIABILITIES:
|
|
|
|
||||
Accounts payable
|
$
|
77,048
|
|
|
$
|
43,966
|
|
Accrued liabilities
|
77,163
|
|
|
60,971
|
|
||
Deferred revenue
|
191,094
|
|
|
122,049
|
|
||
Other current liabilities
|
9,777
|
|
|
8,025
|
|
||
Total current liabilities
|
355,082
|
|
|
235,011
|
|
||
Income taxes payable
|
11,896
|
|
|
14,060
|
|
||
Lease financing obligations, non-current
|
40,041
|
|
|
41,210
|
|
||
Deferred revenue, non-current
|
93,741
|
|
|
74,759
|
|
||
Other long-term liabilities
|
6,900
|
|
|
6,698
|
|
||
TOTAL LIABILITIES
|
507,660
|
|
|
371,738
|
|
||
Commitments and contingencies (Note 5)
|
|
|
|
|
|
||
STOCKHOLDERS’ EQUITY:
|
|
|
|
||||
Preferred stock, $0.0001 par value—100,000 shares authorized, no shares issued and outstanding as of September 30, 2016 and December 31, 2015
|
—
|
|
|
—
|
|
||
Common stock, $0.0001 par value—1,000,000 shares authorized as of September 30, 2016 and December 31, 2015; 70,133 and 68,132 shares issued and outstanding as of September 30, 2016 and December 31, 2015, respectively
|
7
|
|
|
7
|
|
||
Additional paid-in capital
|
636,074
|
|
|
537,904
|
|
||
Retained earnings
|
376,322
|
|
|
250,916
|
|
||
Accumulated other comprehensive loss
|
(983)
|
|
|
(675
|
)
|
||
TOTAL STOCKHOLDERS’ EQUITY
|
1,011,420
|
|
|
788,152
|
|
||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$
|
1,519,080
|
|
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$
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1,159,890
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||||
Product
|
$
|
254,238
|
|
|
$
|
193,339
|
|
|
$
|
702,329
|
|
|
$
|
527,552
|
|
Service
|
36,023
|
|
|
24,209
|
|
|
98,869
|
|
|
64,593
|
|
||||
Total revenue
|
290,261
|
|
|
217,548
|
|
|
801,198
|
|
|
592,145
|
|
||||
Cost of revenue:
|
|
|
|
|
|
|
|
||||||||
Product
|
94,777
|
|
|
67,990
|
|
|
261,711
|
|
|
182,443
|
|
||||
Service
|
9,064
|
|
|
7,810
|
|
|
26,526
|
|
|
22,310
|
|
||||
Total cost of revenue
|
103,841
|
|
|
75,800
|
|
|
288,237
|
|
|
204,753
|
|
||||
Total gross profit
|
186,420
|
|
|
141,748
|
|
|
512,961
|
|
|
387,392
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Research and development
|
70,648
|
|
|
58,748
|
|
|
202,183
|
|
|
152,035
|
|
||||
Sales and marketing
|
33,216
|
|
|
26,508
|
|
|
92,566
|
|
|
77,776
|
|
||||
General and administrative
|
19,535
|
|
|
25,195
|
|
|
52,298
|
|
|
57,670
|
|
||||
Total operating expenses
|
123,399
|
|
|
110,451
|
|
|
347,047
|
|
|
287,481
|
|
||||
Income from operations
|
63,021
|
|
|
31,297
|
|
|
165,914
|
|
|
99,911
|
|
||||
Other income (expense), net:
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
(735
|
)
|
|
(753
|
)
|
|
(2,218
|
)
|
|
(2,406
|
)
|
||||
Other income (expense), net
|
639
|
|
|
13
|
|
|
1,392
|
|
|
(38
|
)
|
||||
Total other income (expense), net
|
(96
|
)
|
|
(740
|
)
|
|
(826
|
)
|
|
(2,444
|
)
|
||||
Income before provision for income taxes
|
62,925
|
|
|
30,557
|
|
|
165,088
|
|
|
97,467
|
|
||||
Provision for income taxes
|
11,668
|
|
|
1,867
|
|
|
39,682
|
|
|
20,289
|
|
||||
Net income
|
$
|
51,257
|
|
|
$
|
28,690
|
|
|
$
|
125,406
|
|
|
$
|
77,178
|
|
Net income attributable to common stockholders:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
50,962
|
|
|
$
|
28,301
|
|
|
$
|
124,475
|
|
|
$
|
75,864
|
|
Diluted
|
$
|
50,980
|
|
|
$
|
28,329
|
|
|
$
|
124,531
|
|
|
$
|
75,967
|
|
Net income per share attributable to common stockholders:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.74
|
|
|
$
|
0.42
|
|
|
$
|
1.82
|
|
|
$
|
1.16
|
|
Diluted
|
$
|
0.69
|
|
|
$
|
0.39
|
|
|
$
|
1.71
|
|
|
$
|
1.07
|
|
Weighted-average shares used in computing net income per share attributable to common stockholders:
|
|
|
|
|
|
|
|
||||||||
Basic
|
69,076
|
|
|
66,629
|
|
|
68,365
|
|
|
65,609
|
|
||||
Diluted
|
73,453
|
|
|
71,887
|
|
|
72,811
|
|
|
71,232
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Net income
|
$
|
51,257
|
|
|
$
|
28,690
|
|
|
$
|
125,406
|
|
|
$
|
77,178
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments
|
(165)
|
|
|
(249
|
)
|
|
(402)
|
|
|
(320
|
)
|
||||
Net change in unrealized gains (losses) on available-for sale securities
|
(113)
|
|
|
(39
|
)
|
|
94
|
|
|
223
|
|
||||
Other comprehensive loss
|
(278)
|
|
|
(288)
|
|
|
(308)
|
|
|
(97)
|
|
||||
Comprehensive income
|
$
|
50,979
|
|
|
$
|
28,402
|
|
|
$
|
125,098
|
|
|
$
|
77,081
|
|
|
Nine Months Ended
September 30, |
||||||
|
2016
|
|
2015
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
||||
Net income
|
$
|
125,406
|
|
|
$
|
77,178
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
14,807
|
|
|
9,724
|
|
||
Stock-based compensation
|
42,708
|
|
|
32,325
|
|
||
Deferred income taxes
|
(13,720
|
)
|
|
(15,483
|
)
|
||
Excess tax benefit on stock-based compensation
|
(30,043
|
)
|
|
(32,381
|
)
|
||
Amortization of investment premiums
|
994
|
|
|
1,332
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
(65,980
|
)
|
|
(63,248
|
)
|
||
Inventories
|
(69,998
|
)
|
|
(31,915
|
)
|
||
Prepaid expenses and other current assets
|
(98,050
|
)
|
|
(19,352
|
)
|
||
Other assets
|
3,208
|
|
|
(3,092
|
)
|
||
Accounts payable
|
35,510
|
|
|
(145
|
)
|
||
Accrued liabilities
|
15,913
|
|
|
18,102
|
|
||
Deferred revenue
|
88,027
|
|
|
84,238
|
|
||
Income taxes payable
|
27,275
|
|
|
24,759
|
|
||
Other liabilities
|
2,628
|
|
|
1,980
|
|
||
Net cash provided by operating activities
|
78,685
|
|
|
84,022
|
|
||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
||||
Proceeds from maturity of marketable securities
|
41,917
|
|
|
58,200
|
|
||
Purchases of marketable securities
|
(342,484
|
)
|
|
—
|
|
||
Purchases of property and equipment
|
(15,787
|
)
|
|
(13,974
|
)
|
||
Investment in privately-held companies
|
(2,500
|
)
|
|
—
|
|
||
Change in restricted cash
|
—
|
|
|
(4,039
|
)
|
||
Purchases of intangible assets
|
(697
|
)
|
|
(743
|
)
|
||
Net cash (used in) provided by investing activities
|
(319,551
|
)
|
|
39,444
|
|
||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
||||
Principal payments of lease financing obligations
|
(960
|
)
|
|
(778
|
)
|
||
Proceeds from issuance of common stock upon exercising options, net of repurchases
|
15,556
|
|
|
14,562
|
|
||
Minimum tax withholding paid on behalf of employees for net share settlement
|
(811
|
)
|
|
—
|
|
||
Proceeds from issuance of common stock under employee stock purchase plan
|
10,326
|
|
|
9,366
|
|
||
Excess tax benefit on stock-based compensation
|
30,043
|
|
|
32,381
|
|
||
Issuance costs from initial public offering
|
—
|
|
|
(261
|
)
|
||
Net cash provided by financing activities
|
54,154
|
|
|
55,270
|
|
||
Effect of exchange rate changes
|
(133
|
)
|
|
(267
|
)
|
||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
(186,845
|
)
|
|
178,469
|
|
||
CASH AND CASH EQUIVALENTS—Beginning of period
|
687,326
|
|
|
240,031
|
|
||
CASH AND CASH EQUIVALENTS—End of period
|
$
|
500,481
|
|
|
$
|
418,500
|
|
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
|
|
|
|
||||
Cash paid for income taxes, net of refunds
|
$
|
34,426
|
|
|
$
|
3,806
|
|
Cash paid for interest—lease financing obligation
|
$
|
2,196
|
|
|
$
|
2,257
|
|
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING INFORMATION:
|
|
|
|
||||
Property and equipment included in accounts payable and accrued liabilities
|
$
|
1,313
|
|
|
$
|
916
|
|
1.
|
Overview and Basis of Presentation
|
2.
|
Fair Value Measurements
|
|
September 30, 2016
|
||||||||||||||
|
Level I
|
|
Level II
|
|
Level III
|
|
Total
|
||||||||
Financial Assets:
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
$
|
304,926
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
304,926
|
|
Money market funds-restricted
|
4,041
|
|
|
—
|
|
|
—
|
|
|
4,041
|
|
||||
Commercial Paper
|
11,997
|
|
|
—
|
|
|
—
|
|
|
11,997
|
|
||||
U.S. government notes
|
139,499
|
|
|
—
|
|
|
—
|
|
|
139,499
|
|
||||
Corporate bonds
|
—
|
|
|
148,171
|
|
|
—
|
|
|
148,171
|
|
||||
Total financial assets
|
$
|
460,463
|
|
|
$
|
148,171
|
|
|
$
|
—
|
|
|
$
|
608,634
|
|
|
December 31, 2015
|
||||||||||||||
|
Level I
|
|
Level II
|
|
Level III
|
|
Total
|
||||||||
Financial Assets:
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
$
|
104,156
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
104,156
|
|
Money market funds-restricted
|
4,041
|
|
|
—
|
|
|
—
|
|
|
4,041
|
|
||||
Total financial assets
|
$
|
108,197
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
108,197
|
|
|
September 30, 2016
|
||||||||||||||
|
Amortized Cost
|
|
Unrealized Gains
|
|
Unrealized Losses
|
|
Fair Value
|
||||||||
Commercial paper
|
$
|
11,941
|
|
|
$
|
56
|
|
|
$
|
—
|
|
|
$
|
11,997
|
|
U.S. government notes
|
139,509
|
|
|
22
|
|
|
(32
|
)
|
|
139,499
|
|
||||
Corporate bonds
|
148,123
|
|
|
153
|
|
|
(105
|
)
|
|
148,171
|
|
||||
Total marketable securities
|
$
|
299,573
|
|
|
$
|
231
|
|
|
$
|
(137
|
)
|
|
$
|
299,667
|
|
|
|
September 30, 2016
|
||
Due in 1 year or less
|
|
$
|
171,170
|
|
Due in 1 year through 2 years
|
|
128,497
|
|
|
Total marketable securities
|
|
$
|
299,667
|
|
|
September 30,
2016 |
|
December 31,
2015 |
||||
Accounts receivable
|
$
|
211,783
|
|
|
$
|
145,792
|
|
Allowance for doubtful accounts
|
(291
|
)
|
|
(963
|
)
|
||
Sales return reserve
|
(1,249
|
)
|
|
(566
|
)
|
||
Accounts receivable, net
|
$
|
210,243
|
|
|
$
|
144,263
|
|
|
September 30,
2016 |
|
December 31,
2015 |
||||
Raw materials
|
$
|
64,610
|
|
|
$
|
29,831
|
|
Finished goods
|
97,518
|
|
|
62,298
|
|
||
Total inventories
|
$
|
162,128
|
|
|
$
|
92,129
|
|
|
September 30,
2016 |
|
December 31,
2015 |
||||
Inventory deposit
|
$
|
62,576
|
|
|
$
|
—
|
|
Prepaid income taxes
|
22,817
|
|
|
14,150
|
|
||
Other current assets
|
55,363
|
|
|
29,270
|
|
||
Other prepaid expenses and deposits
|
10,903
|
|
|
7,190
|
|
||
Total prepaid expenses and other current assets
|
$
|
151,659
|
|
|
$
|
50,610
|
|
|
September 30,
2016 |
|
December 31,
2015 |
||||
Equipment and machinery
|
$
|
38,269
|
|
|
$
|
29,101
|
|
Computer hardware and software
|
16,840
|
|
|
12,630
|
|
||
Furniture and fixtures
|
2,865
|
|
|
2,380
|
|
||
Leasehold improvements
|
29,504
|
|
|
24,372
|
|
||
Building
|
35,154
|
|
|
35,154
|
|
||
Construction-in-process
|
304
|
|
|
6,408
|
|
||
Property and equipment, gross
|
122,936
|
|
|
110,045
|
|
||
Less: accumulated depreciation
|
(44,789
|
)
|
|
(30,339
|
)
|
||
Property and equipment, net
|
$
|
78,147
|
|
|
$
|
79,706
|
|
|
September 30,
2016 |
|
December 31,
2015 |
||||
Accrued compensation costs
|
$
|
41,695
|
|
|
$
|
39,479
|
|
Accrued warranty costs
|
5,597
|
|
|
4,718
|
|
||
Accrued manufacturing costs
|
14,558
|
|
|
6,397
|
|
||
Accrued professional fees
|
6,827
|
|
|
4,875
|
|
||
Accrued taxes
|
1,320
|
|
|
1,347
|
|
||
Other
|
7,166
|
|
|
4,155
|
|
||
Total accrued liabilities
|
$
|
77,163
|
|
|
$
|
60,971
|
|
|
Nine Months Ended
September 30, |
||||||
|
2016
|
|
2015
|
||||
Warranty accrual, beginning of period
|
$
|
4,718
|
|
|
$
|
3,204
|
|
Liabilities accrued for warranties issued during the period
|
3,717
|
|
|
3,352
|
|
||
Warranty costs incurred during the period
|
(2,541
|
)
|
|
(1,765
|
)
|
||
Adjustments related to change in estimate
|
(297
|
)
|
|
—
|
|
||
Warranty accrual, end of period
|
$
|
5,597
|
|
|
$
|
4,791
|
|
|
Three Months Ended
September 30, |
Nine Months Ended
September 30, |
||||||||||||
|
2016
|
|
2015
|
2016
|
|
2015
|
||||||||
Cost of revenue
|
$
|
955
|
|
|
$
|
786
|
|
$
|
2,616
|
|
|
$
|
2,206
|
|
Research and development
|
8,010
|
|
|
7,037
|
|
23,062
|
|
|
18,344
|
|
||||
Sales and marketing
|
3,947
|
|
|
2,864
|
|
11,374
|
|
|
8,138
|
|
||||
General and administrative
|
2,204
|
|
|
1,591
|
|
5,656
|
|
|
3,637
|
|
||||
Total stock-based compensation
|
$
|
15,116
|
|
|
$
|
12,278
|
|
$
|
42,708
|
|
|
$
|
32,325
|
|
|
|
Options and RSAs Outstanding
|
|
|
|
|
|||||||
|
|
Number of
Shares Underlying
Outstanding Options and RSAs
(in thousands)
|
|
Weighted-
Average Exercise Price per Share |
|
Weighted-
Average Remaining Contractual Term (Years) of Stock Options |
|
Aggregate
Intrinsic Value of Stock Options Outstanding
(in thousands)
|
|||||
Outstanding—December 31, 2015
|
|
11,630
|
|
|
$
|
24.49
|
|
|
7.6
|
|
$
|
620,802
|
|
Options granted
|
|
440
|
|
|
56.88
|
|
|
|
|
|
|||
Options exercised
|
|
(1,583
|
)
|
|
9.85
|
|
|
|
|
|
|||
Options canceled
|
|
(314
|
)
|
|
30.22
|
|
|
|
|
|
|||
Outstanding—September 30, 2016
|
|
10,173
|
|
|
$
|
28.00
|
|
|
7.1
|
|
$
|
580,661
|
|
Vested and exercisable—September 30, 2016
|
|
3,685
|
|
|
$
|
14.38
|
|
|
6.3
|
|
$
|
260,514
|
|
Vested and expected to vest—September 30, 2016
|
|
9,658
|
|
|
$
|
27.39
|
|
|
7.1
|
|
$
|
557,170
|
|
|
Number of
Shares |
|
Weighted-
Average Grant Date Fair Value Per Share |
|
Weighted-Average
Remaining
Contractual Term (in years)
|
|
Aggregate Intrinsic Value
|
|||||
Unvested balance—December 31, 2015
|
893
|
|
|
$
|
70.14
|
|
|
1.9
|
|
$
|
69,509
|
|
RSUs granted
|
440
|
|
|
63.80
|
|
|
|
|
|
|||
RSUs vested
|
(178
|
)
|
|
69.66
|
|
|
|
|
|
|||
RSUs forfeited
|
(72
|
)
|
|
67.06
|
|
|
|
|
|
|||
Unvested balance—September 30, 2016
|
1,083
|
|
|
$
|
67.85
|
|
|
1.7
|
|
$
|
92,120
|
|
Vested and expected to vest—September 30, 2016
|
1,015
|
|
|
$
|
67.86
|
|
|
1.7
|
|
$
|
86,357
|
|
|
|
|
|
|
|
Number of Shares
|
|
Balance—December 31, 2015
|
|
10,495
|
|
Authorized
|
|
2,044
|
|
Options granted
|
|
(440
|
)
|
RSUs granted
|
|
(440
|
)
|
Options canceled
|
|
314
|
|
Options repurchased
|
|
5
|
|
RSUs forfeited
|
|
72
|
|
Shares traded for taxes
|
|
11
|
|
Balance—September 30, 2016
|
|
12,061
|
|
7.
|
Net Income Per Share Available to Common Stock
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Basic:
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
51,257
|
|
|
$
|
28,690
|
|
|
$
|
125,406
|
|
|
$
|
77,178
|
|
Less: undistributed earnings allocated to participating securities
|
(295
|
)
|
|
(389
|
)
|
|
(931
|
)
|
|
(1,314
|
)
|
||||
Net income available to common stockholders, basic
|
$
|
50,962
|
|
|
$
|
28,301
|
|
|
$
|
124,475
|
|
|
$
|
75,864
|
|
Diluted:
|
|
|
|
|
|
|
|
||||||||
Net income attributable to common stockholders, basic
|
$
|
50,962
|
|
|
$
|
28,301
|
|
|
$
|
124,475
|
|
|
$
|
75,864
|
|
Add: undistributed earnings allocated to participating securities
|
18
|
|
|
28
|
|
|
56
|
|
|
$
|
103
|
|
|||
Net income attributable to common stockholders, diluted
|
$
|
50,980
|
|
|
$
|
28,329
|
|
|
$
|
124,531
|
|
|
$
|
75,967
|
|
Denominator:
|
|
|
|
|
|
|
|
||||||||
Basic:
|
|
|
|
|
|
|
|
||||||||
Weighted-average shares used in computing net income per share available to common stockholders, basic
|
69,076
|
|
|
66,629
|
|
|
68,365
|
|
|
65,609
|
|
||||
Diluted:
|
|
|
|
|
|
|
|
||||||||
Weighted-average shares used in computing net income per share available to common stockholders, basic
|
69,076
|
|
|
66,629
|
|
|
68,365
|
|
|
65,609
|
|
||||
Add weighted-average effect of dilutive securities:
|
|
|
|
|
|
|
|
||||||||
Stock options and RSUs
|
4,357
|
|
|
5,163
|
|
|
4,429
|
|
|
5,529
|
|
||||
Employee stock purchase plan
|
20
|
|
|
95
|
|
|
17
|
|
|
94
|
|
||||
Weighted-average shares used in computing net income per share available to common stockholders, diluted
|
73,453
|
|
|
71,887
|
|
|
72,811
|
|
|
71,232
|
|
||||
Net income per share attributable to common stockholders:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.74
|
|
|
$
|
0.42
|
|
|
$
|
1.82
|
|
|
$
|
1.16
|
|
Diluted
|
$
|
0.69
|
|
|
$
|
0.39
|
|
|
$
|
1.71
|
|
|
$
|
1.07
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||
Stock options and RSUs to purchase common stock
|
2,688
|
|
|
2,544
|
|
|
3,215
|
|
|
2,275
|
|
8.
|
Income Taxes
|
9.
|
Segment Information
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
United States
|
$
|
233,018
|
|
|
$
|
166,466
|
|
|
$
|
612,852
|
|
|
$
|
437,922
|
|
Other Americas
|
4,081
|
|
|
4,130
|
|
|
8,205
|
|
|
10,294
|
|
||||
Europe, Middle East and Africa
|
37,728
|
|
|
29,457
|
|
|
124,111
|
|
|
94,329
|
|
||||
Asia-Pacific
|
15,434
|
|
|
17,495
|
|
|
56,030
|
|
|
49,600
|
|
||||
Total revenue
|
$
|
290,261
|
|
|
$
|
217,548
|
|
|
$
|
801,198
|
|
|
$
|
592,145
|
|
|
September 30,
2016 |
|
December 31,
2015 |
||||
United States
|
$
|
70,095
|
|
|
$
|
70,719
|
|
International
|
8,052
|
|
|
8,987
|
|
||
Total
|
$
|
78,147
|
|
|
$
|
79,706
|
|
|
Three Months Ended
September 30, |
Nine Months Ended
September 30, |
||||||||||||
|
2016
|
|
2015
|
2016
|
|
2015
|
||||||||
Revenue:
|
|
|
|
|
|
|
||||||||
Product
|
$
|
254,238
|
|
|
$
|
193,339
|
|
$
|
702,329
|
|
|
$
|
527,552
|
|
Service
|
36,023
|
|
|
24,209
|
|
98,869
|
|
|
64,593
|
|
||||
Total revenue
|
290,261
|
|
|
217,548
|
|
801,198
|
|
|
592,145
|
|
||||
Cost of revenue
(1)
:
|
|
|
|
|
|
|
||||||||
Product
|
94,777
|
|
|
67,990
|
|
261,711
|
|
|
182,443
|
|
||||
Service
|
9,064
|
|
|
7,810
|
|
26,526
|
|
|
22,310
|
|
||||
Total cost of revenue
|
103,841
|
|
|
75,800
|
|
288,237
|
|
|
204,753
|
|
||||
Gross profit
|
186,420
|
|
|
141,748
|
|
512,961
|
|
|
387,392
|
|
||||
Operating expenses
(1)
:
|
|
|
|
|
|
|
||||||||
Research and development
|
70,648
|
|
|
58,748
|
|
202,183
|
|
|
152,035
|
|
||||
Sales and marketing
|
33,216
|
|
|
26,508
|
|
92,566
|
|
|
77,776
|
|
||||
General and administrative
|
19,535
|
|
|
25,195
|
|
52,298
|
|
|
57,670
|
|
||||
Total operating expenses
|
123,399
|
|
|
110,451
|
|
347,047
|
|
|
287,481
|
|
||||
Income from operations
|
63,021
|
|
|
31,297
|
|
165,914
|
|
|
99,911
|
|
||||
Interest expense
|
(735
|
)
|
|
(753
|
)
|
(2,218
|
)
|
|
(2,406
|
)
|
||||
Other income (expense), net
|
639
|
|
|
13
|
|
1,392
|
|
|
(38
|
)
|
||||
Total other income (expense), net
|
(96
|
)
|
|
(740
|
)
|
(826
|
)
|
|
(2,444
|
)
|
||||
Income before provision for income taxes
|
62,925
|
|
|
30,557
|
|
165,088
|
|
|
97,467
|
|
||||
Provision for income taxes
|
11,668
|
|
|
1,867
|
|
39,682
|
|
|
20,289
|
|
||||
Net income
|
$
|
51,257
|
|
|
$
|
28,690
|
|
$
|
125,406
|
|
|
$
|
77,178
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||
|
(as a percentage of revenue)
|
||||||||||
Revenue:
|
|
|
|
|
|
|
|
||||
Product
|
87.6
|
%
|
|
88.9
|
%
|
|
87.7
|
%
|
|
89.1
|
%
|
Service
|
12.4
|
|
|
11.1
|
|
|
12.3
|
|
|
10.9
|
|
Total revenue
|
100.0
|
|
|
100.0
|
|
|
100.0
|
|
|
100.0
|
|
Cost of revenue:
|
|
|
|
|
|
|
|
||||
Product
|
32.7
|
|
|
31.2
|
|
|
32.7
|
|
|
30.8
|
|
Service
|
3.1
|
|
|
3.6
|
|
|
3.3
|
|
|
3.8
|
|
Total cost of revenue
|
35.8
|
|
|
34.8
|
|
|
36.0
|
|
|
34.6
|
|
Gross margin
|
64.2
|
|
|
65.2
|
|
|
64.0
|
|
|
65.4
|
|
Operating expenses:
|
|
|
|
|
|
|
|
||||
Research and development
|
24.3
|
|
|
27.0
|
|
|
25.2
|
|
|
25.7
|
|
Sales and marketing
|
11.5
|
|
|
12.2
|
|
|
11.6
|
|
|
13.1
|
|
General and administrative
|
6.7
|
|
|
11.6
|
|
|
6.5
|
|
|
9.8
|
|
Total operating expenses
|
42.5
|
|
|
50.8
|
|
|
43.3
|
|
|
48.6
|
|
Income from operations
|
21.7
|
|
|
14.4
|
|
|
20.7
|
|
|
16.8
|
|
Interest expense
|
(0.2
|
)
|
|
(0.3
|
)
|
|
(0.3
|
)
|
|
(0.4
|
)
|
Other income (expense), net
|
0.2
|
|
|
—
|
|
|
0.2
|
|
|
—
|
|
Total other income (expense), net
|
—
|
|
|
(0.3
|
)
|
|
(0.1
|
)
|
|
(0.4
|
)
|
Income before provision for income taxes
|
21.7
|
|
|
14.1
|
|
|
20.6
|
|
|
16.4
|
|
Provision for income taxes
|
4.0
|
|
|
0.9
|
|
|
5.0
|
|
|
3.4
|
|
Net income
|
17.7
|
%
|
|
13.2
|
%
|
|
15.6
|
%
|
|
13.0
|
%
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Cost of revenue
|
$
|
955
|
|
|
$
|
786
|
|
|
$
|
2,616
|
|
|
$
|
2,206
|
|
Research and development
|
8,010
|
|
|
7,037
|
|
|
23,062
|
|
|
18,344
|
|
||||
Sales and marketing
|
3,947
|
|
|
2,864
|
|
|
11,374
|
|
|
8,138
|
|
||||
General and administrative
|
2,204
|
|
|
1,591
|
|
|
5,656
|
|
|
3,637
|
|
||||
Total stock-based compensation
|
$
|
15,116
|
|
|
$
|
12,278
|
|
|
$
|
42,708
|
|
|
$
|
32,325
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||||||||||||||
|
2016
|
|
2015
|
|
Change in
|
|
2016
|
|
2015
|
|
Change in
|
||||||||||||||||
|
$
|
|
$
|
|
$
|
|
%
|
|
$
|
|
$
|
|
$
|
|
%
|
||||||||||||
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Product
|
$
|
254,238
|
|
|
$
|
193,339
|
|
|
$
|
60,899
|
|
|
31.5%
|
|
$
|
702,329
|
|
|
$
|
527,552
|
|
|
$
|
174,777
|
|
|
33.1%
|
Service
|
36,023
|
|
|
24,209
|
|
|
11,814
|
|
|
48.8
|
|
98,869
|
|
|
64,593
|
|
|
34,276
|
|
|
53.1
|
||||||
Total revenue
|
290,261
|
|
|
217,548
|
|
|
72,713
|
|
|
33.4
|
|
801,198
|
|
|
592,145
|
|
|
209,053
|
|
|
35.3
|
||||||
Cost of revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Product
|
94,777
|
|
|
67,990
|
|
|
26,787
|
|
|
39.4
|
|
261,711
|
|
|
182,443
|
|
|
79,268
|
|
|
43.4
|
||||||
Service
|
9,064
|
|
|
7,810
|
|
|
1,254
|
|
|
16.1
|
|
26,526
|
|
|
22,310
|
|
|
4,216
|
|
|
18.9
|
||||||
Total cost of revenue
|
103,841
|
|
|
75,800
|
|
|
28,041
|
|
|
37.0
|
|
288,237
|
|
|
204,753
|
|
|
83,484
|
|
|
40.8
|
||||||
Gross profit
|
$
|
186,420
|
|
|
$
|
141,748
|
|
|
$
|
44,672
|
|
|
31.5%
|
|
$
|
512,961
|
|
|
$
|
387,392
|
|
|
$
|
125,569
|
|
|
32.4%
|
Gross margin
|
64.2
|
%
|
|
65.2
|
%
|
|
|
|
|
|
64.0
|
%
|
|
65.4
|
%
|
|
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||||||||||||||
|
2016
|
|
% of Total
|
|
2015
|
|
% of Total
|
|
2016
|
|
% of Total
|
|
2015
|
|
% of Total
|
||||||||||||
Americas
|
$
|
237,099
|
|
|
81.7
|
%
|
|
$
|
170,596
|
|
|
78.5
|
%
|
|
$
|
621,057
|
|
|
77.5
|
%
|
|
$
|
448,216
|
|
|
75.7
|
%
|
Europe, Middle East and Africa
|
37,728
|
|
|
13.0
|
|
|
29,457
|
|
|
13.5
|
|
|
124,111
|
|
|
15.5
|
|
|
94,329
|
|
|
15.9
|
|
||||
Asia-Pacific
|
15,434
|
|
|
5.3
|
|
|
17,495
|
|
|
8.0
|
|
|
56,030
|
|
|
7.0
|
|
|
49,600
|
|
|
8.4
|
|
||||
Total revenue
|
$
|
290,261
|
|
|
100.0
|
%
|
|
$
|
217,548
|
|
|
100.0
|
%
|
|
$
|
801,198
|
|
|
100.0
|
%
|
|
$
|
592,145
|
|
|
100.0
|
%
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||||||||||||||
|
2016
|
|
2015
|
|
Change in
|
|
2016
|
|
2015
|
|
Change in
|
||||||||||||||||
|
$
|
|
$
|
|
$
|
|
%
|
|
$
|
|
$
|
|
$
|
|
%
|
||||||||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Research and development
|
$
|
70,648
|
|
|
$
|
58,748
|
|
|
$
|
11,900
|
|
|
20.3%
|
|
$
|
202,183
|
|
|
$
|
152,035
|
|
|
$
|
50,148
|
|
|
33.0%
|
Sales and marketing
|
33,216
|
|
|
26,508
|
|
|
6,708
|
|
|
25.3
|
|
92,566
|
|
|
77,776
|
|
|
14,790
|
|
|
19.0
|
||||||
General and administrative
|
19,535
|
|
|
25,195
|
|
|
(5,660
|
)
|
|
(22.5)
|
|
52,298
|
|
|
57,670
|
|
|
(5,372
|
)
|
|
(9.3)
|
||||||
Total operating expenses
|
$
|
123,399
|
|
|
$
|
110,451
|
|
|
$
|
12,948
|
|
|
11.7%
|
|
$
|
347,047
|
|
|
$
|
287,481
|
|
|
$
|
59,566
|
|
|
20.7%
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||||||||||||||
|
2016
|
|
2015
|
|
Change in
|
|
2016
|
|
2015
|
|
Change in
|
||||||||||||||||
|
$
|
|
$
|
|
$
|
|
%
|
|
$
|
|
$
|
|
$
|
|
%
|
||||||||||||
Other income (expense), net:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest expense
|
$
|
(735
|
)
|
|
$
|
(753
|
)
|
|
$
|
18
|
|
|
2.4%
|
|
$
|
(2,218
|
)
|
|
$
|
(2,406
|
)
|
|
$
|
188
|
|
|
7.8%
|
Other income (expense), net
|
639
|
|
|
13
|
|
|
626
|
|
|
4,815.4
|
|
1,392
|
|
|
(38
|
)
|
|
1,430
|
|
|
3,763.2
|
||||||
Total other income (expense), net
|
$
|
(96
|
)
|
|
$
|
(740
|
)
|
|
$
|
644
|
|
|
87.0%
|
|
$
|
(826
|
)
|
|
$
|
(2,444
|
)
|
|
$
|
1,618
|
|
|
66.2%
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||||||||||||||
|
2016
|
|
2015
|
|
Change in
|
|
2016
|
|
2015
|
|
Change in
|
||||||||||||||||
|
$
|
|
$
|
|
$
|
|
%
|
|
$
|
|
$
|
|
$
|
|
%
|
||||||||||||
Provision for income taxes
|
$
|
11,668
|
|
|
$
|
1,867
|
|
|
$
|
9,801
|
|
|
525.0%
|
|
$
|
39,682
|
|
|
$
|
20,289
|
|
|
$
|
19,393
|
|
|
95.6%
|
Effective tax rate
|
18.5
|
%
|
|
6.1
|
%
|
|
|
|
|
|
24.0
|
%
|
|
20.8
|
%
|
|
|
|
|
|
September 30,
2016 |
|
December 31,
2015 |
||||
|
(in thousands)
|
||||||
Cash and cash equivalents
|
$
|
500,481
|
|
|
$
|
687,326
|
|
|
Nine Months Ended
September 30, |
||||||
|
2016
|
|
2015
|
||||
|
|
|
|
||||
|
(in thousands)
|
||||||
Cash provided by operating activities
|
$
|
78,685
|
|
|
$
|
84,022
|
|
Cash (used in) provided by investing activities
|
(319,551
|
)
|
|
39,444
|
|
||
Cash provided by financing activities
|
54,154
|
|
|
55,270
|
|
||
Effect of exchange rate changes
|
(133
|
)
|
|
(267
|
)
|
||
Net increase (decrease) in cash and cash equivalents
|
$
|
(186,845
|
)
|
|
$
|
178,469
|
|
•
|
our ability to retain and increase sales to existing customer and attract new end customers, including large end customers;
|
•
|
the budgeting cycles and purchasing practices of end customers, including large end customers who may receive lower pricing terms due to volume discounts;
|
•
|
the buying patterns of our large end customers in which large bulk purchases may or may not occur in certain quarters;
|
•
|
the cost and potential outcomes of existing and future litigation, including Cisco and Optumsoft litigation matters;
|
•
|
our ability to comply with any remedial orders issued in the ITC in the Cisco litigation;
|
•
|
the rate of expansion and productivity of our sales force;
|
•
|
changes in our pricing policies, whether initiated by us or as a result of competition;
|
•
|
the amount and timing of operating costs and capital expenditures related to the operation and expansion of our business;
|
•
|
changes in end-customer, distributor or reseller requirements or market needs;
|
•
|
deferral or cancellation of orders from end customers, including in anticipation of new products or product enhancements announced by us or our competitors, or warranty returns;
|
•
|
the inclusion of any acceptance provisions in our customer contracts or any delays in acceptance of those products;
|
•
|
changes in the growth rate of the networking market;
|
•
|
the actual or rumored timing and success of new product and service introductions by us or our competitors or any other change in the competitive landscape of our industry, including consolidation among our competitors or end customers;
|
•
|
our ability to successfully expand our business domestically and internationally;
|
•
|
our ability to increase the size of our distribution channel;
|
•
|
decisions by potential end customers to purchase cloud networking solutions from larger, more established vendors, white box vendors or their primary network equipment vendors;
|
•
|
price competition;
|
•
|
insolvency or credit difficulties confronting our end customers, which could adversely affect their ability to purchase or pay for our products and services, or confronting our key suppliers, including our sole source suppliers, which could disrupt our supply chain;
|
•
|
any disruption in our sales channel or termination of our relationship with important channel partners;
|
•
|
our inability to fulfill our end customers’ orders due to supply chain delays, access to key commodities or technologies or events that impact our manufacturers or their suppliers;
|
•
|
seasonality or cyclical fluctuations in our markets;
|
•
|
future accounting pronouncements or changes in our accounting policies;
|
•
|
stock-based compensation expense;
|
•
|
our overall effective tax rate, including impacts caused by any reorganization in our corporate structure, any changes in our valuation allowance for domestic deferred tax assets and any new legislation or regulatory developments;
|
•
|
increases or decreases in our expenses caused by fluctuations in foreign currency exchange rates, as an increasing portion of our expenses are incurred and paid in currencies other than the U.S. dollar;
|
•
|
general economic conditions, both domestically and in foreign markets; and
|
•
|
other risk factors described in this Quarterly Report on Form 10-Q.
|
•
|
greater name recognition and longer operating histories;
|
•
|
larger sales and marketing budgets and resources;
|
•
|
broader distribution and established relationships with channel partners and end customers;
|
•
|
greater access to larger end-customer bases;
|
•
|
greater end-customer support resources;
|
•
|
greater manufacturing resources;
|
•
|
the ability to leverage their sales efforts across a broader portfolio of products;
|
•
|
the ability to leverage purchasing power with vendor subcomponents;
|
•
|
the ability to bundle competitive offerings with other products and services;
|
•
|
the ability to develop their own silicon chips;
|
•
|
the ability to set more aggressive pricing policies;
|
•
|
lower labor and development costs;
|
•
|
greater resources to make acquisitions;
|
•
|
larger intellectual property portfolios; and
|
•
|
substantially greater financial, technical, research and development or other resources.
|
•
|
greater difficulty in enforcing contracts and accounts receivable collection and longer collection periods;
|
•
|
increased expenses incurred in establishing and maintaining our international operations;
|
•
|
fluctuations in exchange rates between the U.S. dollar and foreign currencies where we do business;
|
•
|
greater difficulty and costs in recruiting local experienced personnel;
|
•
|
wage inflation in certain growing economies;
|
•
|
general economic and political conditions in these foreign markets;
|
•
|
economic uncertainty around the world as a result of sovereign debt issues;
|
•
|
communication and integration problems resulting from cultural and geographic dispersion;
|
•
|
limitations on our ability to access cash resources in our international operations;
|
•
|
ability to establish necessary business relationships and to comply with local business requirements;
|
•
|
risks associated with trade restrictions and foreign legal requirements, including the importation, certification and localization of our products required in foreign countries;
|
•
|
greater risk of unexpected changes in regulatory practices, tariffs and tax laws and treaties;
|
•
|
the uncertainty of protection for intellectual property rights in some countries;
|
•
|
greater risk of a failure of foreign employees to comply with both U.S. and foreign laws, including antitrust regulations, the FCPA and any trade regulations ensuring fair trade practices; and
|
•
|
heightened risk of unfair or corrupt business practices in certain geographies and of improper or fraudulent sales arrangements that may impact financial results and result in restatements of, or irregularities in, financial statements.
|
•
|
changes in end-customer or product mix, including mix of configurations within each product group;
|
•
|
introduction of new products, including products with price-performance advantages;
|
•
|
our ability to reduce production costs;
|
•
|
entry into new markets or growth in lower margin markets;
|
•
|
entry in markets with different pricing and cost structures;
|
•
|
pricing discounts;
|
•
|
increases in material, labor or other manufacturing-related costs, which could be significant especially during periods of supply constraints, or as a result of changes in our manufacturing process or supply chain;
|
•
|
costs associated with defending intellectual property infringement and other claims and the potential outcomes of such disputes, such as those claims discussed in “Legal Proceedings,” including the Cisco and Optumsoft litigation matters;
|
•
|
excess inventory and inventory holding charges;
|
•
|
obsolescence charges;
|
•
|
changes in shipment volume;
|
•
|
the timing of revenue recognition and revenue deferrals;
|
•
|
increased cost, loss of cost savings or dilution of savings due to changes in component pricing or charges incurred due to inventory holding periods if parts ordering does not correctly anticipate product demand or if the financial health of either contract manufacturers or suppliers deteriorates;
|
•
|
lower than expected benefits from value engineering;
|
•
|
increased price competition;
|
•
|
changes in distribution channels;
|
•
|
increased warranty costs; and
|
•
|
how well we execute our strategy and operating plans.
|
•
|
evolve or enhance our products and services;
|
•
|
continue to expand our sales and marketing and research and development organizations;
|
•
|
acquire complementary technologies, products or businesses;
|
•
|
expand operations, in the U.S. or internationally;
|
•
|
hire, train and retain employees; or
|
•
|
respond to competitive pressures or unanticipated working capital requirements.
|
•
|
sensitive data regarding our business, including intellectual property and other proprietary data, could be stolen;
|
•
|
our electronic communications systems, including email and other methods, could be disrupted, and our ability to conduct our business operations could be seriously damaged until such systems can be restored;
|
•
|
our ability to process customer orders and electronically deliver products and services could be degraded, and our distribution channels could be disrupted, resulting in delays in revenue recognition;
|
•
|
defects and security vulnerabilities could be introduced into our software, thereby damaging the reputation and perceived reliability and security of our products and potentially making the data systems of our customers vulnerable to further data loss and cyber incidents; and
|
•
|
personally identifiable data of our customers, employees and business partners could be compromised.
|
•
|
actual or anticipated announcements of new products, services or technologies, commercial relationships, acquisitions or other events by us or our competitors;
|
•
|
forward looking statements related to future revenue, gross margins and earnings per share;
|
•
|
price and volume fluctuations in the overall stock market from time to time;
|
•
|
litigation involving us, our industry, or both including events occurring in our litigation with Cisco Systems and Optumsoft;
|
•
|
significant volatility in the market price and trading volume of technology companies in general and of companies in the IT security industry in particular;
|
•
|
fluctuations in the trading volume of our shares or the size of our public float;
|
•
|
sales by our officers, directors or significant stockholders;
|
•
|
actual or anticipated changes or fluctuations in our results of operations;
|
•
|
adverse changes to our relationships with any of our channel partners;
|
•
|
manufacturing, supply or distribution shortages or constraints, or challenges with adding or changing our manufacturing process or supply chain;
|
•
|
whether our results of operations or our financial outlook for future fiscal periods meet the expectations of securities analysts or investors;
|
•
|
actual or anticipated changes in the expectations of investors or securities analysts;
|
•
|
regulatory developments in the U.S., foreign countries or both;
|
•
|
general economic conditions and trends;
|
•
|
major catastrophic events;
|
•
|
sales of large blocks of our common stock; or
|
•
|
departures of key personnel.
|
•
|
a classified board of directors with three-year staggered terms, which could delay the ability of stockholders to change the membership of a majority of our board of directors;
|
•
|
the ability of our board of directors to issue shares of preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer;
|
•
|
the exclusive right of our board of directors to elect a director to fill a vacancy created by the expansion of our board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors;
|
•
|
a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders;
|
•
|
the requirement that a special meeting of stockholders may be called only by the chairman of our board of directors, our president, our secretary or a majority vote of our board of directors, which could delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors;
|
•
|
the requirement for the affirmative vote of holders of at least 66 2/3% of the voting power of all of the then outstanding shares of the voting stock, voting together as a single class, to amend the provisions of our amended and restated certificate of incorporation relating to the issuance of preferred stock and management of our business or our amended and restated bylaws, which may inhibit the ability of an acquirer to effect such amendments to facilitate an unsolicited takeover attempt;
|
•
|
the ability of our board of directors, by majority vote, to amend the bylaws, which may allow our board of directors to take additional actions to prevent an unsolicited takeover and inhibit the ability of an acquirer to amend the bylaws to facilitate an unsolicited takeover attempt; and
|
•
|
advance notice procedures with which stockholders must comply to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of us.
|
|
|
|
|
ARISTA NETWORKS, INC.
|
|
|
|
|
|
Date:
|
November 3, 2016
|
|
By:
|
/s/ JAYSHREE ULLAL
|
|
|
|
|
Jayshree Ullal
|
|
|
|
|
President, Chief Executive Officer and Director
|
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
|
Date:
|
November 3, 2016
|
|
By:
|
/s/ ITA BRENNAN
|
|
|
|
|
Ita Brennan
|
|
|
|
|
Chief Financial Officer
|
|
|
|
|
(Principal Accounting and Financial Officer)
|
|
|
|
|
Incorporated by Reference
|
||||||||
Exhibit Number
|
|
Description
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing Date
|
|
Filed Herewith
|
10.1‡
|
|
Amended and Restated Manufacturing Services Agreement, dated February 18, 2016, between the Registrant and Sanmina Corporation
|
|
|
|
|
|
|
|
|
|
ü
|
31.1
|
|
Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
|
|
|
|
ü
|
31.2
|
|
Certification of the Chief Financial Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002.
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ü
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32.1
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*
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Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.
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ü
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101.INS
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XBRL Instance Document
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101.SCH
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XBRL Taxonomy Extension Schema Document
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101.CAL
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XBRL Taxonomy Extension Calculation Linkbase Document
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101.DEF
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XBRL Taxonomy Extension Definition Linkbase Document
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101.LAB
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XBRL Taxonomy Extension Label Linkbase Document
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101.PRE
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XBRL Taxonomy Extension Presentation Linkbase Document
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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If to Customer:
Arista Networks, Inc.
5453 Great America Parkway
Santa Clara, CA 95054
Attention: Chief Executive Officer
Phone: [*****]
Fax: [*****]
If to Manufacturer:
Sanmina Corporation
2700 North First Street
San Jose, California 95134
Att’n:
EVP, Sales
Phone: [*****]
Fax: [*****]
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with a copy to:
Arista Networks, Inc.
5453 Great America Parkway
Santa Clara, CA 95054
Attention: Legal Department
Phone: [*****]
Fax: [*****]
with a copy to:
Sanmina Corporation
2700 North First Street
San Jose, California 95134
Att’n:
Legal Department
Phone: [*****]
Fax: [*****]
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1.
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[*****]
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2.
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Manufacturer will acknowledge receipt of Customer’s Orders within five (5) business days. Such PO acknowledgement will include the Product shipment date.
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3.
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[*****]. Warranty related defects will be returned using a Return Materials Authorization (“RMA”). Manufacturer will issue an RMA within [*****] of receipt of an RMA request. Upon receipt, Manufacturer and Customer will determine whether the defects were covered by the warranty contained in the Agreement. The shipping costs for RMA returns to Manufacturer and the return of the repaired Product to Customer shall be paid by Customer.
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4.
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[*****]
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5.
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[*****]
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6.
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[*****]
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7.
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Unless otherwise agreed between the Parties all shipments shall be made [*****], and title and risk of loss pass to Customer upon delivery.
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8.
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The Prices shall be negotiated on a [*****] and shall reflect a standard markup in addition to the cost of materials necessary to manufacture Products as set forth below.
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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9.
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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[*****]
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1.
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I have reviewed this quarterly report on Form 10-Q of Arista Networks, Inc. for the quarter ended
September 30, 2016
;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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/s/ JAYSHREE ULLAL
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Jayshree Ullal
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President, Chief Executive Officer and Director
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(Principal Executive Officer)
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1.
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I have reviewed this quarterly report on Form 10-Q of Arista Networks, Inc. for the quarter ended
September 30, 2016
;
|
2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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/s/ ITA BRENNAN
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Ita Brennan
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Chief Financial Officer
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(Principal Accounting and Financial Officer)
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By:
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/s/ JAYSHREE ULLAL
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Name:
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Jayshree Ullal
|
Title:
|
President, Chief Executive Officer and Director
|
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(Principal Executive Officer)
|
By:
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/s/ ITA BRENNAN
|
Name:
|
Ita Brennan
|
Title:
|
Chief Financial Officer
|
|
(Principal Accounting and Financial Officer)
|