|
☒
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Commission File Number:
|
001-36468
|
|
Arista Networks, Inc.
|
||
(Exact Name of Registrant as Specified in its Charter)
|
Delaware
|
|
20-1751121
|
(State or Other Jurisdiction of Incorporation or Organization)
|
|
(I.R.S. Employer Identification No.)
|
5453 Great America Parkway
|
,
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Santa Clara
|
,
|
California
|
|
95054
|
(Address of principal executive offices)
|
|
(Zip Code)
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(408)
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547-5500
|
|
(Registrant’s telephone number, including area code)
|
Not Applicable
|
(Former name, former address and former fiscal year, if changed since last report)
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
Common Stock, $0.0001 par value
|
ANET
|
New York Stock Exchange
|
|
Large accelerated filer
|
☒
|
|
Accelerated filer
|
☐
|
|
|
Non-accelerated filer
|
☐
|
|
Smaller reporting company
|
☐
|
|
|
|
|
|
Emerging growth company
|
☐
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|
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Page
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PART I. FINANCIAL INFORMATION
|
|||
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|
|
|
Item 1.
|
|
||
|
|
||
|
|
||
|
|
||
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||
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||
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|
||
Item 2.
|
|
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Item 3.
|
|
||
Item 4.
|
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||
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PART II. OTHER INFORMATION
|
|||
|
|
|
|
Item 1.
|
|
||
Item 1A.
|
|
||
Item 2.
|
|
||
Item 3.
|
|
||
Item 4.
|
|
||
Item 5.
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|
||
Item 6.
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||
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|
September 30, 2019
|
|
December 31, 2018
|
||||
ASSETS
|
|
|
|
|
||||
CURRENT ASSETS:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
1,095,265
|
|
|
$
|
649,950
|
|
Marketable securities
|
|
1,351,775
|
|
|
1,306,197
|
|
||
Accounts receivable, net of rebates and allowances of $6,711 and $9,120, respectively
|
|
447,252
|
|
|
331,777
|
|
||
Inventories
|
|
239,802
|
|
|
264,557
|
|
||
Prepaid expenses and other current assets
|
|
106,326
|
|
|
162,321
|
|
||
Total current assets
|
|
3,240,420
|
|
|
2,714,802
|
|
||
Property and equipment, net
|
|
40,188
|
|
|
75,355
|
|
||
Acquisition-related intangible assets, net
|
|
48,319
|
|
|
58,610
|
|
||
Goodwill
|
|
54,855
|
|
|
53,684
|
|
||
Investments
|
|
4,150
|
|
|
30,336
|
|
||
Operating lease right-of-use assets
|
|
91,903
|
|
|
—
|
|
||
Deferred tax assets
|
|
110,630
|
|
|
126,492
|
|
||
Other assets
|
|
29,360
|
|
|
22,704
|
|
||
TOTAL ASSETS
|
|
$
|
3,619,825
|
|
|
$
|
3,081,983
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
||||
CURRENT LIABILITIES:
|
|
|
|
|
||||
Accounts payable
|
|
$
|
78,600
|
|
|
$
|
93,757
|
|
Accrued liabilities
|
|
128,930
|
|
|
123,254
|
|
||
Deferred revenue
|
|
291,384
|
|
|
358,586
|
|
||
Other current liabilities
|
|
49,275
|
|
|
30,907
|
|
||
Total current liabilities
|
|
548,189
|
|
|
606,504
|
|
||
Income taxes payable
|
|
60,278
|
|
|
36,167
|
|
||
Operating lease liabilities, non-current
|
|
87,099
|
|
|
—
|
|
||
Finance lease liabilities, non-current
|
|
—
|
|
|
35,431
|
|
||
Deferred revenue, non-current
|
|
237,628
|
|
|
228,641
|
|
||
Other long-term liabilities
|
|
30,627
|
|
|
31,851
|
|
||
TOTAL LIABILITIES
|
|
963,821
|
|
|
938,594
|
|
||
Commitments and contingencies (Note 7)
|
|
|
|
|
|
|||
STOCKHOLDERS’ EQUITY:
|
|
|
|
|
||||
Preferred stock, $0.0001 par value—100,000 shares authorized and no shares issued and outstanding as of September 30, 2019 and December 31, 2018
|
|
—
|
|
|
—
|
|
||
Common stock, $0.0001 par value—1,000,000 shares authorized as of September 30, 2019 and December 31, 2018; 76,368 and 75,668 shares issued and outstanding as of September 30, 2019 and December 31, 2018
|
|
8
|
|
|
8
|
|
||
Additional paid-in capital
|
|
1,076,732
|
|
|
956,572
|
|
||
Retained earnings
|
|
1,579,063
|
|
|
1,190,803
|
|
||
Accumulated other comprehensive income (loss)
|
|
201
|
|
|
(3,994
|
)
|
||
TOTAL STOCKHOLDERS’ EQUITY
|
|
2,656,004
|
|
|
2,143,389
|
|
||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
$
|
3,619,825
|
|
|
$
|
3,081,983
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
|
||||||||
Product
|
|
$
|
555,066
|
|
|
$
|
485,481
|
|
|
$
|
1,573,652
|
|
|
$
|
1,337,865
|
|
Service
|
|
99,349
|
|
|
77,828
|
|
|
284,508
|
|
|
217,778
|
|
||||
Total revenue
|
|
654,415
|
|
|
563,309
|
|
|
1,858,160
|
|
|
1,555,643
|
|
||||
Cost of revenue:
|
|
|
|
|
|
|
|
|
||||||||
Product
|
|
218,220
|
|
|
187,764
|
|
|
616,906
|
|
|
516,077
|
|
||||
Service
|
|
18,921
|
|
|
13,962
|
|
|
53,219
|
|
|
41,181
|
|
||||
Total cost of revenue
|
|
237,141
|
|
|
201,726
|
|
|
670,125
|
|
|
557,258
|
|
||||
Gross profit
|
|
417,274
|
|
|
361,583
|
|
|
1,188,035
|
|
|
998,385
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
|
||||||||
Research and development
|
|
118,732
|
|
|
117,589
|
|
|
352,696
|
|
|
324,029
|
|
||||
Sales and marketing
|
|
55,279
|
|
|
47,903
|
|
|
159,372
|
|
|
136,231
|
|
||||
General and administrative
|
|
14,657
|
|
|
15,321
|
|
|
46,182
|
|
|
53,420
|
|
||||
Legal settlement
|
|
—
|
|
|
—
|
|
|
—
|
|
|
405,000
|
|
||||
Total operating expenses
|
|
188,668
|
|
|
180,813
|
|
|
558,250
|
|
|
918,680
|
|
||||
Income from operations
|
|
228,606
|
|
|
180,770
|
|
|
629,785
|
|
|
79,705
|
|
||||
Other income (expense), net
|
|
19,169
|
|
|
8,619
|
|
|
45,313
|
|
|
10,606
|
|
||||
Income before income taxes
|
|
247,775
|
|
|
189,389
|
|
|
675,098
|
|
|
90,311
|
|
||||
Provision for (benefit from) income taxes
|
|
38,880
|
|
|
20,865
|
|
|
75,923
|
|
|
(67,482
|
)
|
||||
Net income
|
|
$
|
208,895
|
|
|
$
|
168,524
|
|
|
$
|
599,175
|
|
|
$
|
157,793
|
|
Net income attributable to common stockholders:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
$
|
208,799
|
|
|
$
|
168,439
|
|
|
$
|
598,861
|
|
|
$
|
157,706
|
|
Diluted
|
|
$
|
208,804
|
|
|
$
|
168,445
|
|
|
$
|
598,880
|
|
|
$
|
157,713
|
|
Net income per share attributable to common stockholders:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
$
|
2.73
|
|
|
$
|
2.25
|
|
|
$
|
7.85
|
|
|
$
|
2.12
|
|
Diluted
|
|
$
|
2.59
|
|
|
$
|
2.08
|
|
|
$
|
7.38
|
|
|
$
|
1.95
|
|
Weighted-average shares used in computing net income per share attributable to common stockholders:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
76,426
|
|
|
75,011
|
|
|
76,301
|
|
|
74,506
|
|
||||
Diluted
|
|
80,753
|
|
|
81,018
|
|
|
81,104
|
|
|
80,844
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net income
|
|
$
|
208,895
|
|
|
$
|
168,524
|
|
|
$
|
599,175
|
|
|
$
|
157,793
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments
|
|
(1,730
|
)
|
|
(379
|
)
|
|
(1,767
|
)
|
|
(1,193
|
)
|
||||
Net change in unrealized gains (losses) on available-for-sale securities
|
|
(104
|
)
|
|
488
|
|
|
5,962
|
|
|
(1,311
|
)
|
||||
Other comprehensive income (loss)
|
|
(1,834
|
)
|
|
109
|
|
|
4,195
|
|
|
(2,504
|
)
|
||||
Comprehensive income
|
|
$
|
207,061
|
|
|
$
|
168,633
|
|
|
$
|
603,370
|
|
|
$
|
155,289
|
|
|
|
Three Months Ended September 30, 2019
|
|
Nine Months Ended September 30, 2019
|
||||||||||||||||||||||||||||||||||||||||||
|
|
Common Stock
|
|
Additional
Paid-In Capital |
|
Retained
Earnings |
|
Accumulated
Other Comprehensive Income (Loss) |
|
Total
Stockholders’ Equity |
|
Common Stock
|
|
Additional
Paid-In Capital |
|
Retained
Earnings |
|
Accumulated
Other Comprehensive Income (Loss) |
|
Total
Stockholders’ Equity |
||||||||||||||||||||||||||
|
|
Shares
|
|
Amount
|
|
|
Shares
|
|
Amount
|
|
||||||||||||||||||||||||||||||||||||
Balance at beginning of period
|
|
76,555
|
|
|
$
|
8
|
|
|
$
|
1,038,740
|
|
|
$
|
1,484,777
|
|
|
$
|
2,035
|
|
|
$
|
2,525,560
|
|
|
75,668
|
|
|
$
|
8
|
|
|
$
|
956,572
|
|
|
$
|
1,190,803
|
|
|
$
|
(3,994
|
)
|
|
$
|
2,143,389
|
|
Cumulative-effect adjustment to beginning balance (1)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,702
|
|
|
—
|
|
|
3,702
|
|
||||||||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
208,895
|
|
|
—
|
|
|
208,895
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
599,175
|
|
|
—
|
|
|
599,175
|
|
||||||||||
Other comprehensive income (loss), net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,834
|
)
|
|
(1,834
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,195
|
|
|
4,195
|
|
||||||||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
26,257
|
|
|
—
|
|
|
—
|
|
|
26,257
|
|
|
—
|
|
|
—
|
|
|
74,845
|
|
|
—
|
|
|
—
|
|
|
74,845
|
|
||||||||||
Issuance of common stock in connection with employee equity incentive plans
|
|
336
|
|
|
—
|
|
|
14,073
|
|
|
—
|
|
|
—
|
|
|
14,073
|
|
|
1,648
|
|
|
—
|
|
|
52,177
|
|
|
|
|
|
|
52,177
|
|
||||||||||||
Tax withholding paid for net share settlement of equity awards
|
|
(11
|
)
|
|
—
|
|
|
(2,407
|
)
|
|
—
|
|
|
—
|
|
|
(2,407
|
)
|
|
(29
|
)
|
|
—
|
|
|
(7,069
|
)
|
|
—
|
|
|
—
|
|
|
(7,069
|
)
|
||||||||||
Vesting of early-exercised stock options
|
|
—
|
|
|
—
|
|
|
69
|
|
|
—
|
|
|
—
|
|
|
69
|
|
|
—
|
|
|
—
|
|
|
207
|
|
|
—
|
|
|
—
|
|
|
207
|
|
||||||||||
Repurchase of common stock
|
|
(512
|
)
|
|
—
|
|
|
—
|
|
|
(114,609
|
)
|
|
—
|
|
|
(114,609
|
)
|
|
(919
|
)
|
|
—
|
|
|
—
|
|
|
(214,617
|
)
|
|
—
|
|
|
(214,617
|
)
|
||||||||||
Balance at end of period
|
|
76,368
|
|
|
$
|
8
|
|
|
$
|
1,076,732
|
|
|
$
|
1,579,063
|
|
|
$
|
201
|
|
|
$
|
2,656,004
|
|
|
76,368
|
|
|
$
|
8
|
|
|
$
|
1,076,732
|
|
|
$
|
1,579,063
|
|
|
$
|
201
|
|
|
$
|
2,656,004
|
|
_________________________________________
|
||||||||||||||||||||||||||||||||||||||||||||||
(1) On January 1, 2019, we adopted Accounting Standard Codification Topic 842 - Leases (“ASC 842”), which resulted in a cumulative-effect adjustment to the beginning balance of Retained Earnings for 2019. See Note 1 of the accompanying notes for further details.
|
|
|
Three Months Ended September 30, 2018
|
|
Nine Months Ended September 30, 2018
|
||||||||||||||||||||||||||||||||||||||||||
|
|
Common Stock
|
|
Additional
Paid-In Capital |
|
Retained
Earnings |
|
Accumulated
Other Comprehensive Income (Loss) |
|
Total
Stockholders’ Equity |
|
Common Stock
|
|
Additional
Paid-In Capital |
|
Retained
Earnings |
|
Accumulated
Other Comprehensive Income (Loss) |
|
Total
Stockholders’ Equity |
||||||||||||||||||||||||||
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|||||||||||||||||||||||||||||||||||||
Balance at beginning of period
|
|
74,791
|
|
|
$
|
8
|
|
|
$
|
872,559
|
|
|
$
|
851,957
|
|
|
$
|
(4,551
|
)
|
|
$
|
1,719,973
|
|
|
73,706
|
|
|
$
|
7
|
|
|
$
|
804,731
|
|
|
$
|
859,114
|
|
|
$
|
(1,938
|
)
|
|
$
|
1,661,914
|
|
Cumulative-effect adjustment to beginning balance
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,574
|
|
|
—
|
|
|
3,574
|
|
||||||||||
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
168,524
|
|
|
—
|
|
|
168,524
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
157,793
|
|
|
—
|
|
|
157,793
|
|
||||||||||
Other comprehensive income (loss), net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
109
|
|
|
109
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,504
|
)
|
|
(2,504
|
)
|
||||||||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
23,254
|
|
|
—
|
|
|
—
|
|
|
23,254
|
|
|
—
|
|
|
—
|
|
|
66,583
|
|
|
—
|
|
|
—
|
|
|
66,583
|
|
||||||||||
Issuance of common stock in connection with employee equity incentive plans
|
|
531
|
|
|
—
|
|
|
20,832
|
|
|
—
|
|
|
—
|
|
|
20,832
|
|
|
1,634
|
|
|
1
|
|
|
49,641
|
|
|
—
|
|
|
—
|
|
|
49,642
|
|
||||||||||
Tax withholding paid for net share settlement of equity awards
|
|
(9
|
)
|
|
—
|
|
|
(2,451
|
)
|
|
—
|
|
|
—
|
|
|
(2,451
|
)
|
|
(27
|
)
|
|
—
|
|
|
(6,914
|
)
|
|
—
|
|
|
—
|
|
|
(6,914
|
)
|
||||||||||
Vesting of early-exercised stock options
|
|
—
|
|
|
—
|
|
|
80
|
|
|
—
|
|
|
—
|
|
|
80
|
|
|
—
|
|
|
—
|
|
|
233
|
|
|
—
|
|
|
—
|
|
|
233
|
|
||||||||||
Common stock issued for business acquisition
|
|
80
|
|
|
—
|
|
|
15,555
|
|
|
—
|
|
|
—
|
|
|
15,555
|
|
|
80
|
|
|
—
|
|
|
15,555
|
|
|
—
|
|
|
—
|
|
|
15,555
|
|
||||||||||
Balance at end of period
|
|
75,393
|
|
|
$
|
8
|
|
|
$
|
929,829
|
|
|
$
|
1,020,481
|
|
|
$
|
(4,442
|
)
|
|
$
|
1,945,876
|
|
|
75,393
|
|
|
$
|
8
|
|
|
$
|
929,829
|
|
|
$
|
1,020,481
|
|
|
$
|
(4,442
|
)
|
|
$
|
1,945,876
|
|
|
|
Nine Months Ended September 30,
|
||||||
|
|
2019
|
|
2018
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
||||
Net income
|
|
$
|
599,175
|
|
|
$
|
157,793
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
||||
Depreciation, amortization and other
|
|
24,948
|
|
|
18,440
|
|
||
Stock-based compensation
|
|
74,845
|
|
|
66,583
|
|
||
Noncash lease expense
|
|
12,007
|
|
|
—
|
|
||
Deferred income taxes
|
|
10,945
|
|
|
(49,615
|
)
|
||
(Gain) loss on investments in privately-held companies
|
|
(5,427
|
)
|
|
9,100
|
|
||
Accretion of investment discounts
|
|
(6,032
|
)
|
|
(1,863
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
||||
Accounts receivable, net
|
|
(115,475
|
)
|
|
(68,192
|
)
|
||
Inventories
|
|
24,951
|
|
|
98,284
|
|
||
Prepaid expenses and other current assets
|
|
59,388
|
|
|
(50,507
|
)
|
||
Other assets
|
|
(7,009
|
)
|
|
(767
|
)
|
||
Accounts payable
|
|
(14,361
|
)
|
|
30,515
|
|
||
Accrued liabilities
|
|
5,731
|
|
|
(35,917
|
)
|
||
Deferred revenue
|
|
(58,216
|
)
|
|
13,161
|
|
||
Income taxes payable
|
|
29,808
|
|
|
10,311
|
|
||
Other liabilities
|
|
595
|
|
|
9,974
|
|
||
Net cash provided by operating activities
|
|
635,873
|
|
|
207,300
|
|
||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
||||
Proceeds from maturities of marketable securities
|
|
806,519
|
|
|
366,999
|
|
||
Purchases of marketable securities
|
|
(840,098
|
)
|
|
(827,198
|
)
|
||
Business acquisitions, net of cash acquired
|
|
(1,365
|
)
|
|
(95,640
|
)
|
||
Purchases of property and equipment
|
|
(13,319
|
)
|
|
(17,613
|
)
|
||
Proceeds from (purchases of) investments in privately-held companies
|
|
28,220
|
|
|
(8,000
|
)
|
||
Other investing activities
|
|
—
|
|
|
(2,000
|
)
|
||
Net cash used in investing activities
|
|
(20,043
|
)
|
|
(583,452
|
)
|
||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
||||
Principal payments of lease financing obligations
|
|
—
|
|
|
(1,392
|
)
|
||
Proceeds from issuance of common stock under equity plans
|
|
52,177
|
|
|
49,642
|
|
||
Tax withholding paid on behalf of employees for net share settlement
|
|
(7,069
|
)
|
|
(6,914
|
)
|
||
Repurchase of common stock
|
|
(214,617
|
)
|
|
—
|
|
||
Net cash provided by (used in) financing activities
|
|
(169,509
|
)
|
|
41,336
|
|
||
Effect of exchange rate changes
|
|
(994
|
)
|
|
(984
|
)
|
||
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH
|
|
445,327
|
|
|
(335,800
|
)
|
||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH —Beginning of period
|
|
654,164
|
|
|
864,697
|
|
||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH —End of period (1)
|
|
$
|
1,099,491
|
|
|
$
|
528,897
|
|
|
|
|
|
|
•
|
to apply the short-term lease exception, which allows us to keep leases with an initial term of twelve months or less off the balance sheet.
|
•
|
to account for each separate lease component of a contract and its associated non-lease components as a single lease component for all our leases.
|
|
|
Purchase Price Allocation
|
||
Cash and cash equivalents
|
|
$
|
4,953
|
|
Other tangible assets
|
|
23,872
|
|
|
Liabilities
|
|
(28,707
|
)
|
|
Intangible assets
|
|
63,720
|
|
|
Goodwill
|
|
54,855
|
|
|
Net assets acquired
|
|
$
|
118,693
|
|
|
|
Acquisition Date Fair Value
|
|
Estimated Useful Life
|
||
Developed technology
|
|
$
|
52,510
|
|
|
5 years
|
Customer relationships
|
|
7,080
|
|
|
7 years
|
|
Trade name
|
|
2,470
|
|
|
3 years
|
|
Others
|
|
1,660
|
|
|
1 year
|
|
Total intangible assets acquired
|
|
$
|
63,720
|
|
|
|
|
|
September 30, 2019
|
||||||||||||||||||||||||||
|
|
Amortized Cost
|
|
Unrealized Gains
|
|
Unrealized Losses
|
|
Fair Value
|
|
Level I
|
|
Level II
|
|
Level III
|
||||||||||||||
Financial Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Cash Equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Money market funds
|
|
$
|
647,064
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
647,064
|
|
|
$
|
647,064
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Marketable Securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Corporate bonds
|
|
661,704
|
|
|
3,109
|
|
|
(69
|
)
|
|
664,744
|
|
|
—
|
|
|
664,744
|
|
|
—
|
|
|||||||
U.S. government notes
|
|
368,410
|
|
|
633
|
|
|
(3
|
)
|
|
369,040
|
|
|
369,040
|
|
|
—
|
|
|
—
|
|
|||||||
Agency securities
|
|
262,534
|
|
|
721
|
|
|
(3
|
)
|
|
263,252
|
|
|
—
|
|
|
263,252
|
|
|
—
|
|
|||||||
Commercial paper
|
|
51,739
|
|
|
—
|
|
|
—
|
|
|
51,739
|
|
|
—
|
|
|
51,739
|
|
|
—
|
|
|||||||
Certificates of deposits (1)
|
|
3,000
|
|
|
—
|
|
|
—
|
|
|
3,000
|
|
|
—
|
|
|
3,000
|
|
|
—
|
|
|||||||
|
|
1,347,387
|
|
|
4,463
|
|
|
(75
|
)
|
|
1,351,775
|
|
|
369,040
|
|
|
982,735
|
|
|
—
|
|
|||||||
Other Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Money market funds - restricted
|
|
4,226
|
|
|
—
|
|
|
—
|
|
|
4,226
|
|
|
4,226
|
|
|
—
|
|
|
—
|
|
|||||||
Total Financial Assets
|
|
$
|
1,998,677
|
|
|
$
|
4,463
|
|
|
$
|
(75
|
)
|
|
$
|
2,003,065
|
|
|
$
|
1,020,330
|
|
|
$
|
982,735
|
|
|
$
|
—
|
|
|
|
December 31, 2018
|
||||||||||||||||||||||||||
|
|
Amortized Cost
|
|
Unrealized Gains
|
|
Unrealized Losses
|
|
Fair Value
|
|
Level I
|
|
Level II
|
|
Level III
|
||||||||||||||
Financial Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Cash Equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Money market funds
|
|
$
|
322,080
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
322,080
|
|
|
$
|
322,080
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Marketable Securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Corporate bonds
|
|
660,353
|
|
|
264
|
|
|
(1,399
|
)
|
|
659,218
|
|
|
—
|
|
|
659,218
|
|
|
—
|
|
|||||||
U.S. government notes
|
|
308,946
|
|
|
118
|
|
|
(286
|
)
|
|
308,778
|
|
|
308,778
|
|
|
—
|
|
|
—
|
|
|||||||
Agency securities
|
|
273,993
|
|
|
240
|
|
|
(511
|
)
|
|
273,722
|
|
|
—
|
|
|
273,722
|
|
|
—
|
|
|||||||
Commercial paper
|
|
59,479
|
|
|
—
|
|
|
—
|
|
|
59,479
|
|
|
—
|
|
|
59,479
|
|
|
—
|
|
|||||||
Certificates of deposits (1)
|
|
5,000
|
|
|
—
|
|
|
—
|
|
|
5,000
|
|
|
—
|
|
|
5,000
|
|
|
—
|
|
|||||||
|
|
1,307,771
|
|
|
622
|
|
|
(2,196
|
)
|
|
1,306,197
|
|
|
308,778
|
|
|
997,419
|
|
|
—
|
|
|||||||
Other Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Money market funds - restricted
|
|
4,214
|
|
|
—
|
|
|
—
|
|
|
4,214
|
|
|
4,214
|
|
|
—
|
|
|
—
|
|
|||||||
Total Financial Assets
|
|
$
|
1,634,065
|
|
|
$
|
622
|
|
|
$
|
(2,196
|
)
|
|
$
|
1,632,491
|
|
|
$
|
635,072
|
|
|
$
|
997,419
|
|
|
$
|
—
|
|
|
|
September 30, 2019
|
||
Due in 1 year or less
|
|
$
|
936,777
|
|
Due in 1 year through 2 years
|
|
414,998
|
|
|
Total marketable securities
|
|
$
|
1,351,775
|
|
|
|
September 30, 2019
|
|
September 30, 2018
|
||||
Cash and cash equivalents
|
|
$
|
1,095,265
|
|
|
$
|
524,687
|
|
Restricted cash included in other assets
|
|
4,226
|
|
|
4,210
|
|
||
Total cash, cash equivalents and restricted cash
|
|
$
|
1,099,491
|
|
|
$
|
528,897
|
|
|
|
September 30, 2019
|
|
December 31, 2018
|
||||
Accounts receivable
|
|
$
|
453,963
|
|
|
$
|
340,897
|
|
Allowance for doubtful accounts
|
|
(852
|
)
|
|
(507
|
)
|
||
Product sales rebate and returns reserve
|
|
(5,859
|
)
|
|
(8,613
|
)
|
||
Accounts receivable, net
|
|
$
|
447,252
|
|
|
$
|
331,777
|
|
|
|
September 30, 2019
|
|
December 31, 2018
|
||||
Raw materials
|
|
$
|
120,236
|
|
|
$
|
76,795
|
|
Finished goods
|
|
119,566
|
|
|
187,762
|
|
||
Total inventories
|
|
$
|
239,802
|
|
|
$
|
264,557
|
|
|
|
September 30, 2019
|
|
December 31, 2018
|
||||
Prepaid income taxes
|
|
$
|
25,643
|
|
|
$
|
38,636
|
|
Inventory deposit
|
|
15,090
|
|
|
14,639
|
|
||
Other current assets
|
|
52,800
|
|
|
95,730
|
|
||
Other prepaid expenses and deposits
|
|
12,793
|
|
|
13,316
|
|
||
Total prepaid expenses and other current assets
|
|
$
|
106,326
|
|
|
$
|
162,321
|
|
|
|
September 30, 2019
|
|
December 31, 2018
|
||||
Equipment and machinery
|
|
$
|
62,233
|
|
|
$
|
55,912
|
|
Computer hardware and software
|
|
35,409
|
|
|
30,566
|
|
||
Leasehold improvements
|
|
31,335
|
|
|
36,447
|
|
||
Furniture and fixtures
|
|
3,734
|
|
|
3,697
|
|
||
Building
|
|
—
|
|
|
35,154
|
|
||
Construction-in-process
|
|
140
|
|
|
3,591
|
|
||
Property and equipment, gross
|
|
132,851
|
|
|
165,367
|
|
||
Less: accumulated depreciation
|
|
(92,663
|
)
|
|
(90,012
|
)
|
||
Property and equipment, net
|
|
$
|
40,188
|
|
|
$
|
75,355
|
|
|
|
September 30, 2019
|
|
December 31, 2018
|
||||
Accrued payroll related costs
|
|
$
|
69,522
|
|
|
$
|
70,755
|
|
Accrued manufacturing costs
|
|
25,407
|
|
|
31,336
|
|
||
Accrued product development costs
|
|
17,534
|
|
|
6,988
|
|
||
Accrued professional fees
|
|
7,335
|
|
|
5,678
|
|
||
Accrued warranty costs
|
|
5,408
|
|
|
5,362
|
|
||
Other
|
|
3,724
|
|
|
3,135
|
|
||
Total accrued liabilities
|
|
$
|
128,930
|
|
|
$
|
123,254
|
|
|
|
Nine Months Ended September 30,
|
||||||
|
|
2019
|
|
2018
|
||||
Warranty accrual, beginning of period
|
|
$
|
5,362
|
|
|
$
|
7,415
|
|
Liabilities accrued for warranties issued during the period
|
|
3,887
|
|
|
6,898
|
|
||
Warranty costs incurred during the period
|
|
(3,841
|
)
|
|
(4,198
|
)
|
||
Warranty accrual, end of period
|
|
$
|
5,408
|
|
|
$
|
10,115
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Contract assets, beginning balance
|
|
$
|
1,668
|
|
|
$
|
6,959
|
|
|
$
|
6,341
|
|
|
$
|
—
|
|
Contract assets, ending balance
|
|
14,482
|
|
|
9,417
|
|
|
14,482
|
|
|
9,417
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Contract liabilities, beginning balance
|
|
$
|
42,026
|
|
|
$
|
21,842
|
|
|
$
|
32,595
|
|
|
$
|
16,521
|
|
Less: Revenue recognized from beginning balance
|
|
(3,700
|
)
|
|
(2,157
|
)
|
|
(10,134
|
)
|
|
(6,107
|
)
|
||||
Less: Beginning balance reclassified to deferred revenue
|
|
(1,689
|
)
|
|
(970
|
)
|
|
(967
|
)
|
|
(521
|
)
|
||||
Add: Contract liabilities recognized
|
|
13,506
|
|
|
6,580
|
|
|
28,649
|
|
|
15,402
|
|
||||
Contract liabilities, ending balance
|
|
$
|
50,143
|
|
|
$
|
25,295
|
|
|
$
|
50,143
|
|
|
$
|
25,295
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Interest income
|
|
$
|
13,446
|
|
|
$
|
8,585
|
|
|
$
|
38,451
|
|
|
$
|
21,933
|
|
Interest expense
|
|
—
|
|
|
(673
|
)
|
|
—
|
|
|
(2,040
|
)
|
||||
Gain (loss) on investment in privately-held companies
|
|
4,277
|
|
|
—
|
|
|
5,427
|
|
|
(9,100
|
)
|
||||
Other income (expense), net
|
|
1,446
|
|
|
707
|
|
|
1,435
|
|
|
(187
|
)
|
||||
Total
|
|
$
|
19,169
|
|
|
$
|
8,619
|
|
|
$
|
45,313
|
|
|
$
|
10,606
|
|
|
|
September 30, 2019
|
|
December 31, 2018
|
||||
Cost of investment
|
|
$
|
18,000
|
|
|
$
|
44,136
|
|
Cumulative impairment
|
|
(15,000
|
)
|
|
(15,000
|
)
|
||
Cumulative upward adjustment
|
|
1,150
|
|
|
1,200
|
|
||
Carrying amount of investment
|
|
$
|
4,150
|
|
|
$
|
30,336
|
|
|
|
Financial Statement Classification
|
|
September 30, 2019
|
||
Right-of-use assets:
|
|
|
|
|
||
Operating lease right-of-use assets
|
|
Operating lease right-of-use assets
|
|
$
|
91,903
|
|
Lease liabilities:
|
|
|
|
|
||
Operating lease liabilities, current
|
|
Other current liabilities
|
|
15,545
|
|
|
Operating lease liabilities, non-current
|
|
Operating lease liabilities, non-current
|
|
87,099
|
|
|
Total operating lease liabilities
|
|
|
|
$
|
102,644
|
|
|
|
Financial Statement Classification
|
|
Three Months Ended
September 30, 2019 |
|
Nine Months Ended
September 30, 2019 |
||||
Operating lease costs:
|
|
|
|
|
|
|
||||
Fixed lease costs
|
|
Operating expenses
|
|
$
|
5,800
|
|
|
$
|
16,898
|
|
Variable lease costs
|
|
Operating expenses
|
|
1,534
|
|
|
4,529
|
|
||
Total operating lease costs
|
|
|
|
$
|
7,334
|
|
|
$
|
21,427
|
|
|
|
September 30, 2019
|
||
Remainder of 2019
|
|
$
|
4,932
|
|
2020
|
|
20,510
|
|
|
2021
|
|
21,271
|
|
|
2022
|
|
21,470
|
|
|
2023
|
|
17,694
|
|
|
2024 and thereafter
|
|
36,008
|
|
|
Total future fixed operating lease payments
|
|
121,885
|
|
|
Less:
|
|
|
||
Imputed interest
|
|
(19,241
|
)
|
|
Total operating lease liabilities
|
|
$
|
102,644
|
|
|
|
September 30, 2019
|
Weighted-average remaining lease term — operating leases
|
|
6.0 years
|
Weighted-average discount rate — operating leases
|
|
5.1%
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||
|
|
September 30, 2019
|
|
September 30, 2019
|
||||
Aggregate purchase price
|
|
$
|
114,609
|
|
|
$
|
214,617
|
|
Shares repurchased
|
|
512
|
|
|
919
|
|
||
Average price paid per share
|
|
$
|
223.99
|
|
|
$
|
233.72
|
|
|
|
Options Outstanding
|
|
|
|
|
|||||||
|
|
Number of
Shares Underlying
Outstanding Options
|
|
Weighted-
Average Exercise Price per Share |
|
Weighted-
Average Remaining Contractual Term (Years) of Stock Options |
|
Aggregate
Intrinsic Value of Stock Options Outstanding |
|||||
Balance—December 31, 2018
|
|
5,899
|
|
|
$
|
37.09
|
|
|
5.2
|
|
$
|
1,027,741
|
|
Options granted
|
|
76
|
|
|
226.53
|
|
|
|
|
|
|||
Options exercised
|
|
(1,164
|
)
|
|
29.37
|
|
|
|
|
|
|||
Options canceled
|
|
(64
|
)
|
|
37.08
|
|
|
|
|
|
|||
Balance—September 30, 2019
|
|
4,747
|
|
|
$
|
42.02
|
|
|
4.6
|
|
$
|
935,350
|
|
Vested and exercisable—September 30, 2019
|
|
2,700
|
|
|
$
|
27.53
|
|
|
4.1
|
|
$
|
570,690
|
|
|
|
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, 2018
|
|
1,308
|
|
|
$
|
150.60
|
|
|
1.5
|
|
$
|
275,638
|
|
RSUs granted
|
|
325
|
|
|
245.29
|
|
|
|
|
|
|||
RSUs vested
|
|
(386
|
)
|
|
121.02
|
|
|
|
|
|
|||
RSUs forfeited/canceled
|
|
(64
|
)
|
|
179.78
|
|
|
|
|
|
|||
Unvested balance—September 30, 2019
|
|
1,183
|
|
|
$
|
184.64
|
|
|
1.6
|
|
$
|
282,612
|
|
|
|
Number of Shares
|
|
Balance—December 31, 2018
|
|
15,386
|
|
Options granted
|
|
(76
|
)
|
RSUs granted
|
|
(325
|
)
|
Options canceled
|
|
64
|
|
RSUs forfeited
|
|
64
|
|
Shares traded for taxes
|
|
29
|
|
Balance—September 30, 2019
|
|
15,142
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Cost of revenue
|
|
$
|
1,258
|
|
|
$
|
1,268
|
|
|
$
|
3,384
|
|
|
$
|
3,706
|
|
Research and development
|
|
13,472
|
|
|
12,010
|
|
|
39,171
|
|
|
34,700
|
|
||||
Sales and marketing
|
|
7,832
|
|
|
6,537
|
|
|
21,463
|
|
|
18,771
|
|
||||
General and administrative
|
|
3,695
|
|
|
3,439
|
|
|
10,827
|
|
|
9,406
|
|
||||
Total stock-based compensation
|
|
$
|
26,257
|
|
|
$
|
23,254
|
|
|
$
|
74,845
|
|
|
$
|
66,583
|
|
|
|
September 30, 2019
|
||||||||||||||
|
|
Stock Option
|
|
RSU
|
|
ESPP
|
|
Restricted Stock
|
||||||||
Unrecognized stock-based compensation expense
|
|
$
|
48,448
|
|
|
$
|
194,942
|
|
|
$
|
12,619
|
|
|
$
|
4,298
|
|
Weighted-average amortization period
|
|
3.5 years
|
|
|
3.3 years
|
|
|
1.3 years
|
|
|
3.0 years
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
|
||||||||
Basic:
|
|
|
|
|
|
|
|
|
||||||||
Net income
|
|
$
|
208,895
|
|
|
$
|
168,524
|
|
|
$
|
599,175
|
|
|
$
|
157,793
|
|
Less: undistributed earnings allocated to participating securities
|
|
(96
|
)
|
|
(85
|
)
|
|
(314
|
)
|
|
(87
|
)
|
||||
Net income available to common stockholders, basic
|
|
$
|
208,799
|
|
|
$
|
168,439
|
|
|
$
|
598,861
|
|
|
$
|
157,706
|
|
Diluted:
|
|
|
|
|
|
|
|
|
||||||||
Net income attributable to common stockholders, basic
|
|
$
|
208,799
|
|
|
$
|
168,439
|
|
|
$
|
598,861
|
|
|
$
|
157,706
|
|
Add: undistributed earnings allocated to participating securities
|
|
5
|
|
|
6
|
|
|
19
|
|
|
7
|
|
||||
Net income attributable to common stockholders, diluted
|
|
$
|
208,804
|
|
|
$
|
168,445
|
|
|
$
|
598,880
|
|
|
$
|
157,713
|
|
Denominator:
|
|
|
|
|
|
|
|
|
||||||||
Basic:
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average shares used in computing net income per share available to common stockholders, basic
|
|
76,426
|
|
|
75,011
|
|
|
76,301
|
|
|
74,506
|
|
||||
Diluted:
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average shares used in computing net income per share available to common stockholders, basic
|
|
76,426
|
|
|
75,011
|
|
|
76,301
|
|
|
74,506
|
|
||||
Add weighted-average effect of dilutive securities:
|
|
|
|
|
|
|
|
|
||||||||
Stock options and RSUs
|
|
4,308
|
|
|
5,967
|
|
|
4,784
|
|
|
6,298
|
|
||||
Employee stock purchase plan
|
|
19
|
|
|
40
|
|
|
19
|
|
|
40
|
|
||||
Weighted-average shares used in computing net income per share available to common stockholders, diluted
|
|
80,753
|
|
|
81,018
|
|
|
81,104
|
|
|
80,844
|
|
||||
Net income per share attributable to common stockholders:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
$
|
2.73
|
|
|
$
|
2.25
|
|
|
$
|
7.85
|
|
|
$
|
2.12
|
|
Diluted
|
|
$
|
2.59
|
|
|
$
|
2.08
|
|
|
$
|
7.38
|
|
|
$
|
1.95
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
Stock options and RSUs to purchase common stock
|
|
277
|
|
|
82
|
|
|
211
|
|
|
87
|
|
Employee stock purchase plan
|
|
41
|
|
|
98
|
|
|
59
|
|
|
59
|
|
Total
|
|
318
|
|
|
180
|
|
|
270
|
|
|
146
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
(in thousands, except percentages)
|
||||||||||||||
Income before income taxes
|
|
$
|
247,775
|
|
|
$
|
189,389
|
|
|
$
|
675,098
|
|
|
$
|
90,311
|
|
Provision for (benefit from) income taxes
|
|
38,880
|
|
|
20,865
|
|
|
$
|
75,923
|
|
|
$
|
(67,482
|
)
|
||
Effective tax rate
|
|
15.7
|
%
|
|
11.0
|
%
|
|
11.2
|
%
|
|
(74.7
|
)%
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Americas
|
|
$
|
532,318
|
|
|
$
|
406,666
|
|
|
$
|
1,418,325
|
|
|
$
|
1,099,624
|
|
Europe, Middle East and Africa
|
|
75,439
|
|
|
92,911
|
|
|
298,768
|
|
|
316,608
|
|
||||
Asia-Pacific
|
|
46,658
|
|
|
63,732
|
|
|
141,067
|
|
|
139,411
|
|
||||
Total revenue
|
|
$
|
654,415
|
|
|
$
|
563,309
|
|
|
$
|
1,858,160
|
|
|
$
|
1,555,643
|
|
|
|
September 30, 2019
|
|
December 31, 2018
|
||||
United States
|
|
$
|
34,225
|
|
|
$
|
69,238
|
|
International
|
|
5,963
|
|
|
6,117
|
|
||
Total
|
|
$
|
40,188
|
|
|
$
|
75,355
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||||||||||||
|
|
2019
|
|
2018
|
|
Change in
|
|
2019
|
|
2018
|
|
Change in
|
||||||||||||||||||
|
|
$
|
|
$
|
|
$
|
|
%
|
|
$
|
|
$
|
|
$
|
|
%
|
||||||||||||||
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Product
|
|
$
|
555,066
|
|
|
$
|
485,481
|
|
|
$
|
69,585
|
|
|
14.3
|
%
|
|
$
|
1,573,652
|
|
|
$
|
1,337,865
|
|
|
$
|
235,787
|
|
|
17.6
|
%
|
Service
|
|
99,349
|
|
|
77,828
|
|
|
21,521
|
|
|
27.7
|
|
|
284,508
|
|
|
217,778
|
|
|
66,730
|
|
|
30.6
|
|
||||||
Total revenue
|
|
654,415
|
|
|
563,309
|
|
|
91,106
|
|
|
16.2
|
|
|
1,858,160
|
|
|
1,555,643
|
|
|
302,517
|
|
|
19.4
|
|
||||||
Cost of revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Product
|
|
218,220
|
|
|
187,764
|
|
|
30,456
|
|
|
16.2
|
|
|
616,906
|
|
|
516,077
|
|
|
100,829
|
|
|
19.5
|
|
||||||
Service
|
|
18,921
|
|
|
13,962
|
|
|
4,959
|
|
|
35.5
|
|
|
53,219
|
|
|
41,181
|
|
|
12,038
|
|
|
29.2
|
|
||||||
Total cost of revenue
|
|
237,141
|
|
|
201,726
|
|
|
35,415
|
|
|
17.6
|
|
|
670,125
|
|
|
557,258
|
|
|
112,867
|
|
|
20.3
|
|
||||||
Gross profit
|
|
$
|
417,274
|
|
|
$
|
361,583
|
|
|
$
|
55,691
|
|
|
15.4
|
%
|
|
$
|
1,188,035
|
|
|
$
|
998,385
|
|
|
$
|
189,650
|
|
|
19.0
|
%
|
Gross margin
|
|
63.8
|
%
|
|
64.2
|
%
|
|
|
|
|
|
63.9%
|
|
64.2%
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||||||||||
|
|
2019
|
|
% of Total
|
|
2018
|
|
% of Total
|
|
2019
|
|
% of Total
|
|
2018
|
|
% of Total
|
||||||||||||
Americas
|
|
$
|
532,318
|
|
|
81.4
|
%
|
|
$
|
406,666
|
|
|
72.2
|
%
|
|
$
|
1,418,325
|
|
|
76.3
|
%
|
|
$
|
1,099,624
|
|
|
70.7
|
%
|
Europe, Middle East and Africa
|
|
75,439
|
|
|
11.5
|
|
|
92,911
|
|
|
16.5
|
|
|
298,768
|
|
|
16.1
|
|
|
316,608
|
|
|
20.4
|
|
||||
Asia-Pacific
|
|
46,658
|
|
|
7.1
|
|
|
63,732
|
|
|
11.3
|
|
|
141,067
|
|
|
7.6
|
|
|
139,411
|
|
|
8.9
|
|
||||
Total revenue
|
|
$
|
654,415
|
|
|
100.0
|
%
|
|
$
|
563,309
|
|
|
100.0
|
%
|
|
$
|
1,858,160
|
|
|
100.0
|
%
|
|
$
|
1,555,643
|
|
|
100.0
|
%
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||||||||||||
|
|
2019
|
|
2018
|
|
Change in
|
|
2019
|
|
2018
|
|
Change in
|
||||||||||||||||||
|
|
$
|
|
$
|
|
$
|
|
%
|
|
$
|
|
$
|
|
$
|
|
%
|
||||||||||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Research and development
|
|
$
|
118,732
|
|
|
$
|
117,589
|
|
|
$
|
1,143
|
|
|
1.0
|
%
|
|
$
|
352,696
|
|
|
$
|
324,029
|
|
|
$
|
28,667
|
|
|
8.8
|
%
|
Sales and marketing
|
|
55,279
|
|
|
47,903
|
|
|
7,376
|
|
|
15.4
|
|
|
159,372
|
|
|
136,231
|
|
|
23,141
|
|
|
17.0
|
|
||||||
General and administrative
|
|
14,657
|
|
|
15,321
|
|
|
(664
|
)
|
|
(4.3
|
)
|
|
46,182
|
|
|
53,420
|
|
|
(7,238
|
)
|
|
(13.5
|
)
|
||||||
Legal settlement
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
405,000
|
|
|
(405,000
|
)
|
|
(100.0
|
)
|
||||||
Total operating expenses
|
|
$
|
188,668
|
|
|
$
|
180,813
|
|
|
$
|
7,855
|
|
|
4.3
|
%
|
|
$
|
558,250
|
|
|
$
|
918,680
|
|
|
$
|
(360,430
|
)
|
|
(39.2
|
)%
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||||||||||||
|
|
2019
|
|
2018
|
|
Change in
|
|
2019
|
|
2018
|
|
Change in
|
||||||||||||||||||
|
|
$
|
|
$
|
|
$
|
|
%
|
|
$
|
|
$
|
|
$
|
|
%
|
||||||||||||||
Other income (expense), net:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Interest income
|
|
$
|
13,446
|
|
|
$
|
8,585
|
|
|
$
|
4,861
|
|
|
56.6
|
%
|
|
$
|
38,451
|
|
|
$
|
21,933
|
|
|
$
|
16,518
|
|
|
75.3
|
%
|
Interest expense
|
|
—
|
|
|
(673
|
)
|
|
673
|
|
|
(100.0
|
)
|
|
—
|
|
|
(2,040
|
)
|
|
2,040
|
|
|
(100.0
|
)
|
||||||
Gain (loss) on investments in privately-held companies
|
|
4,277
|
|
|
—
|
|
|
4,277
|
|
|
—
|
|
|
5,427
|
|
|
(9,100
|
)
|
|
14,527
|
|
|
(159.6
|
)
|
||||||
Other income (expense), net
|
|
1,446
|
|
|
707
|
|
|
739
|
|
|
104.5
|
|
|
1,435
|
|
|
(187
|
)
|
|
1,622
|
|
|
(867.4
|
)
|
||||||
Total other income (expense), net
|
|
$
|
19,169
|
|
|
$
|
8,619
|
|
|
$
|
10,550
|
|
|
122.4
|
%
|
|
$
|
45,313
|
|
|
$
|
10,606
|
|
|
$
|
34,707
|
|
|
327.2
|
%
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||||||||||||
|
|
2019
|
|
2018
|
|
Change in
|
|
2019
|
|
2018
|
|
Change in
|
||||||||||||||||||
|
|
$
|
|
$
|
|
$
|
|
%
|
|
$
|
|
$
|
|
$
|
|
%
|
||||||||||||||
Income before income taxes
|
|
$
|
247,775
|
|
|
$
|
189,389
|
|
|
$
|
58,386
|
|
|
30.8
|
%
|
|
$
|
675,098
|
|
|
$
|
90,311
|
|
|
$
|
584,787
|
|
|
647.5
|
%
|
Provision for (benefit from) income taxes
|
|
38,880
|
|
|
20,865
|
|
|
18,015
|
|
|
86.3
|
%
|
|
75,923
|
|
|
(67,482
|
)
|
|
143,405
|
|
|
(212.5
|
)%
|
||||||
Effective tax rate
|
|
15.7
|
%
|
|
11.0
|
%
|
|
|
|
|
|
11.2
|
%
|
|
(74.7
|
)%
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
|
|
|
||||
|
|
(in thousands)
|
||||||
Cash provided by operating activities
|
|
$
|
635,873
|
|
|
$
|
207,300
|
|
Cash used in investing activities
|
|
(20,043
|
)
|
|
(583,452
|
)
|
||
Cash provided by (used in) financing activities
|
|
(169,509
|
)
|
|
41,336
|
|
||
Effect of exchange rate changes
|
|
(994
|
)
|
|
(984
|
)
|
||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
|
$
|
445,327
|
|
|
$
|
(335,800
|
)
|
•
|
Our ability to develop new products, new product features and services that address the customer requirements for these markets;
|
•
|
Our ability to attract a customer base in markets in which we have less experience;
|
•
|
Our successful development of new sales and marketing strategies to meet customer requirements;
|
•
|
Our ability to develop new channel relationships and enhance existing relationships to market and sell new products;
|
•
|
Our ability to compete with new and existing competitors in these adjacent markets, many of which may have more financial resources, market experience, brand recognition, relevant intellectual property rights, or established customer relationships than we currently do;
|
•
|
Our ability to skillfully balance our investment in adjacent markets with investment in our existing products and services;
|
•
|
The success of our partnerships with other companies; and
|
•
|
Our ability to grow our sales force to address new markets.
|
•
|
our ability to increase sales to existing customers and attract new end customers, including large end customers;
|
•
|
the budgeting cycles, purchasing practices and buying patterns of end customers, including large end customers who may receive lower pricing terms due to volume discounts and who may or may not make large bulk purchases in certain quarters;
|
•
|
changes in end-customer, geographic or product mix;
|
•
|
changes in the growth rate of existing or new customers, including large end customers;
|
•
|
changes in growth rates of the networking market;
|
•
|
the cost and potential outcomes of existing and future litigation;
|
•
|
increased expenses resulting from the tariffs imposed by the U.S. on goods from other countries and tariffs imposed by other countries on U.S. goods, including the tariffs implemented by the U.S. government on various imports from China;
|
•
|
changes in the sales and implementation cycles for our products including the qualification and testing of our products by our customers and any delays or cancellations of purchases caused by such activities;
|
•
|
the rate of expansion and productivity of our sales force including any expansion into new markets;
|
•
|
changes in our pricing policies, whether initiated by us or as a result of competition;
|
•
|
our inability to fulfill our end customers’ orders due to the availability of inventory, supply chain delays, access to key commodities or technologies or events that impact our manufacturers or their suppliers;
|
•
|
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;
|
•
|
difficulty forecasting, budgeting and planning due to limited visibility beyond the first two quarters into the spending plans of current or prospective customers;
|
•
|
deferral, reduction 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;
|
•
|
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 sales or distribution channel, any disruption in our sales or distribution channels, and/or termination of our relationship with important channel partners;
|
•
|
decisions by potential end customers to purchase our 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;
|
•
|
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, including the Tax Cuts and Jobs Act of 2017 (the “Tax Act”);
|
•
|
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 including bundling of products that are competitive with ours with other products that we do not sell or with support service contracts;
|
•
|
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 foreign legal requirements, including the importation, certification and localization of our products required in foreign countries;
|
•
|
risks associated with U.S. government trade restrictions, including those which may impose restrictions, including prohibitions, on the exportation, reexportation, sale, shipment or other transfer of programming, technology, components, and/or services to foreign persons;
|
•
|
greater risk of unexpected changes in regulatory practices, tariffs and tax laws and treaties, including the Tax Act;
|
•
|
greater risk of unexpected changes in tariffs imposed by the U.S. on goods from other countries and tariffs imposed by other countries on U.S. goods, including the tariffs implemented by the U.S. government on various imports from China, Canada, Mexico and the EU, and by the governments of these jurisdictions on certain U.S. goods, and any other possible tariffs that may be imposed on services such as ours, the scope and duration of which, if implemented, remain uncertain;
|
•
|
deterioration of political relations between the U.S. and Canada, the U.K., the EU, Mexico and China, which could have a material adverse effect on our sales and operations in these countries;
|
•
|
greater risk of changes in diplomatic and trade relationships, including new tariffs, trade protection measures, import or export licensing requirements, trade embargoes and other trade barriers;
|
•
|
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, geographic or product mix, including mix of configurations within each product group;
|
•
|
increased price competition and changes in the actions of our competitors or their pricing strategies;
|
•
|
introduction of new products, including products with price-performance advantages and new business models including the sale and delivery of more software and subscription solutions;
|
•
|
increases in material or component costs including such increases caused by any restriction from sourcing components and manufacturing products internationally;
|
•
|
our ability to reduce production costs;
|
•
|
entry into new markets or growth in lower margin markets, including markets with different pricing and cost structures, through acquisitions or internal development;
|
•
|
entry in markets with different pricing and cost structures;
|
•
|
pricing discounts, particularly to our large end customers;
|
•
|
increases in material costs in the event we are restricted from sourcing components and manufacturing products internationally;
|
•
|
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 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;
|
•
|
increased costs arising from the tariffs imposed by the U.S. on goods from other countries and tariffs imposed by other countries on U.S. goods, including the tariffs recently implemented and additional tariffs that have been proposed by the U.S. government on various imports from China, Canada, Mexico and the E.U. and by the governments of these jurisdictions on certain U.S. goods;
|
•
|
lower than expected benefits from value engineering;
|
•
|
changes in distribution channels;
|
•
|
increased warranty costs; and
|
•
|
our ability to 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 or our customers, 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;
|
•
|
changes or decreases in the growth rate of our revenues and the networking market;
|
•
|
litigation involving us, our industry, or both;
|
•
|
manufacturing, supply or distribution shortages or constraints, or challenges with adding or changing our manufacturing process or supply chain;
|
•
|
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;
|
•
|
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.
|
|
|
Total Number of Shares Purchased
|
|
Average Price Paid Per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
Approximate Dollar Value of Shares That May Yet Be Purchased Under the Publicly Announced Plans or Programs
|
||||||
July 1, 2019 - July 31, 2019
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
899,992
|
|
August 1, 2019 - August 31, 2019
|
|
512
|
|
|
223.99
|
|
|
512
|
|
|
785,383
|
|
||
September 1, 2019 - September 30, 2019
|
|
—
|
|
|
—
|
|
|
—
|
|
|
785,383
|
|
||
|
|
512
|
|
|
|
|
512
|
|
|
|
|
|
|
Exhibit Number
|
|
Description
|
10.1
|
|
|
31.1
|
|
|
31.2
|
|
|
32.1*
|
|
|
101.INS
|
|
Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
|
101.SCH
|
|
Inline XBRL Taxonomy Extension Schema Document.
|
101.CAL
|
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
|
101.DEF
|
|
Inline XBRL Taxonomy Extension Definition Linkbase Document.
|
101.LAB
|
|
Inline XBRL Taxonomy Extension Label Linkbase Document.
|
101.PRE
|
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
|
104
|
|
Cover Page Interactive File (formatted as Inline XBRL and contained in Exhibit 101)
|
|
|
|
Arista Networks, Inc.
|
|
|
|
(Registrant)
|
|
|
|
|
Date:
|
October 31, 2019
|
By:
|
/s/ JAYSHREE ULLAL
|
|
|
|
Jayshree Ullal
|
|
|
|
President, Chief Executive Officer and Director
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
Date:
|
October 31, 2019
|
By:
|
/s/ ITA BRENNAN
|
|
|
|
Ita Brennan
|
|
|
|
Chief Financial Officer
|
|
|
|
(Principal Accounting and Financial Officer)
|
ARISTA NETWORKS, INC.
|
|
|
(Signature)
|
|
|
(Print name)
|
|
|
(Title)
|
|
|
|
[INSERT INDEMNITEE NAME]
|
|
|
(Signature)
|
|
|
(Print name)
|
|
|
(Street address)
|
|
|
(City, State and ZIP)
|
1.
|
I reviewed this Quarterly Report on Form 10-Q of Arista Networks, Inc. for the quarter ended September 30, 2019;
|
2.
|
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.
|
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.
|
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)
|
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)
|
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
|
(d)
|
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
|
5.
|
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)
|
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
|
(b)
|
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.
|
/s/ JAYSHREE ULLAL
|
Jayshree Ullal
|
President, Chief Executive Officer and Director
|
(Principal Executive Officer)
|
1.
|
I reviewed this Quarterly Report on Form 10-Q of Arista Networks, Inc. for the quarter ended September 30, 2019;
|
2.
|
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.
|
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.
|
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)
|
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)
|
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
|
(d)
|
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
|
5.
|
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)
|
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
|
(b)
|
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.
|
/s/ ITA BRENNAN
|
Ita Brennan
|
Chief Financial Officer
|
(Principal Accounting and Financial Officer)
|
By:
|
/s/ JAYSHREE ULLAL
|
Name:
|
Jayshree Ullal
|
Title:
|
President, Chief Executive Officer and Director
|
|
(Principal Executive Officer)
|
By:
|
/s/ ITA BRENNAN
|
Name:
|
Ita Brennan
|
Title:
|
Chief Financial Officer
|
|
(Principal Accounting and Financial Officer)
|