Arista Networks Inc (ANET) 2016 Q4 法說會逐字稿

Welcome to the fourth quarter 2016 Arista Networks financial results earnings conference call.

歡迎參加 Arista Networks 2016 年第四季財務業績電話會議。

(Operator Instructions)

（操作員說明）

I will turn the call over the Mr. Chuck Elliott, Director of Investor Relations, sir, you may begin.

我將把電話轉給投資者關係總監查克·埃利奧特先生，先生，您可以開始了。

Thank you, operator, good afternoon, everyone and thank you for joining us. With me on today's call are Jayshree Ullal, Arista Network's President and Chief Executive Officer; and Ita Brennan, Arista's Chief Financial Officer; as well as Mark Taxay, Arista's Senior Vice President and General Counsel; and Anshul Sadana, Arista's Senior Vice President and Chief Customer Officer.

謝謝接線員，大家下午好，謝謝您加入我們。與我一起參加今天電話會議的有 Arista Network 總裁兼執行長 Jayshree Ullal；以及 Arista 財務長 Ita Brennan；以及 Arista 資深副總裁兼總法律顧問 Mark Taxay；以及 Arista 資深副總裁兼首席客戶長 Anshul Sadana。

This afternoon Arista Networks issued a press release announcing the results for its fiscal quarter end-year ended December 31, 2016. If you would like to a copy of the release you can access it online at the company's website. During the course of this conference call Arista Networks management will make forward-looking statements including those relating to our financial outlook for the first-quarter of the FY17 industry innovation, our market opportunity and the impact of litigation which are subject to the risks and uncertainties that we discuss in detail in our documents filed with the SEC, specifically in our most Form 10-Q and Form 10-K, which could cause actual results to differ materially from those anticipated by these statements. These forward-looking statements apply as of today and you should not rely on them as representing our views in the future.

今天下午，Arista Networks 發布了一份新聞稿，宣布截至 2016 年 12 月 31 日的財季年終業績。如果您想要一份新聞稿的副本，可以在該公司網站上在線訪問。在本次電話會議期間，Arista Networks 管理層將做出前瞻性聲明，包括與我們對2017 財年行業創新第一季的財務前景、我們的市場機會以及受風險和不確定性影響的訴訟影響相關的聲明我們在向 SEC 提交的文件中詳細討論了這一點，特別是在我們的大部分錶格 ​​10-Q 和表格 10-K 中，這可能導致實際結果與這些聲明中預期的結果存在重大差異。這些前瞻性陳述從今天起適用，您不應依賴它們來代表我們未來的觀點。

We undertake no obligation to update these statements after this call. Please note that certain financial measures we use on this call are expressed in a non-GAAP basis and have been adjusted to exclude certain charges. We have provided reconciliation of these non-GAAP financial measures to GAAP financial measures in our earnings press release. I will turn the call over to Jayshree.

我們不承擔在本次電話會議後更新這些聲明的義務。請注意，我們在本次電話會議中使用的某些財務指標是按非公認會計準則計算的，並已進行調整以排除某些費用。我們在收益新聞稿中提供了這些非公認會計原則財務指標與公認會計原則財務指標的調節表。我會將電話轉給 Jayshree。

Thank you, Chuck. Thank you, everyone, for joining us this afternoon for our fourth-quarter 2016 earnings call. I am pleased to report that we had another record quarter and 2016 has definitely been a year to remember with key section points as Arista surpassed the $1 billion annual sales mark. Our profitable Q4 2016 growth is demonstrated in non-GAAP revenue of $328 million as we grew 33.6% year over year, while non-GAAP earnings per share grew to record $1.04. Services contributed approximately 12% of overall sales.

謝謝你，查克。感謝大家今天下午參加我們的 2016 年第四季財報電話會議。我很高興地向大家報告，我們的季度業績又創歷史新高，2016 年無疑是值得紀念的一年，因為 Arista 的年銷售額突破了 10 億美元大關。我們 2016 年第四季的獲利成長體現在非 GAAP 營收 3.28 億美元，年增 33.6%，而非 GAAP 每股盈餘成長至創紀錄的 1.04 美元。服務業約佔總銷售額的 12%。

From a geographic perspective, our customers in the Americas contributed 77% of total revenue while the rest of the international theaters progressed well in the quarter. We delivered non-GAAP gross margin of 64.4% in a highly dynamic and competitive industry. As of December 2016, we have now acquired over 4,250 customers over the cumulative years. Starting 2016 we expect to report this statistic annually.

從地理角度來看，我們在美洲的客戶貢獻了總收入的 77%，而其他國際影院在本季度進展良好。在這個充滿活力和競爭激烈的行業中，我們的非 GAAP 毛利率為 64.4%。截至2016年12月，我們已累計獲得超過4,250家客戶。從 2016 年開始，我們預計每年報告一次統計數據。

In terms of new products Arista unveiled its next programmable Leaf Switch called the 7160 series. The Arista 7160 is the first switch based on Cavium's XPliant Silicon with a sweet spot particularly for 25 gigabit Ethernet and it's first offering based on Arista's new AlgoMatch innovation. It combines general purpose memory with advanced pack-it-pat matching algorithms.

在新產品方面，Arista 推出了其下一代可編程 Leaf 交換機，稱為 7160 系列。 Arista 7160 是第一款基於 Cavium XPliant Silicon 的交換機，特別適合 25 GB 以太網，也是第一款基於 Arista 新 AlgoMatch 創新的產品。它將通用記憶體與先進的 pack-it-pat 匹配演算法相結合。

Unlike generic implementations, AlgoMatch delivers higher flexibility, improved power, and costs that are lower costs with a dedicated [turnary], contentable, addressable memories. Examples of these use cases include RPV4 to V6 migration in cloud network, precision based classification where AlgoMatch can also filter improvements over to additional TCAMS, and action specific matching for flexibility such as protocol matching, layer for filtering or de-packet inspections at wire speed.

與通用實作不同，AlgoMatch 提供了更高的靈活性、改進的功率和成本，透過專用的[旋轉]、可內容、可尋址記憶體來降低成本。這些用例的範例包括雲端網路中的RPV4 到V6 遷移、基於精度的分類（其中AlgoMatch 還可以過濾對其他TCAMS 的改進）以及針對靈活性的特定操作匹配，例如協定匹配、過濾層或以線速解包檢查。

Arista will provide a legal update since 2016 marks the completion of two years since Cisco Systems filed its assault of lawsuits. Despite having to weather the many baseless acquisitions, we at Arista demonstrated through our actions and our results. We will continue to uphold our dignity, integrity, and adhere to the law the Arista way. Clearly we're dealing here with a powerful competitor with enormous clout, deep financial pockets, and even political lobbying capabilities often misrepresenting our intentions.

自 2016 年標誌著思科系統公司提起訴訟以來已經過去兩年，Arista 將提供法律更新。儘管不得不經歷許多毫無根據的收購，但我們 Arista 透過我們的行動和結果證明了這一點。我們將繼續維護我們的尊嚴、誠信，並遵守 Arista 的法律方式。顯然，我們面對的是一個強大的競爭對手，它擁有巨大的影響力、雄厚的財力，甚至政治遊說能力也經常扭曲我們的意圖。

So let me take a moment to quickly review the facts. To date Arista has prevailed or obtained favorable administrative law judge ALJ decisions on 9 out of 14 assorted patents in IPC and district court. Four of the five remaining patents primarily cover commonly standard implemented networking features used across the switching industry, such as private VLAN, access lists, and COPP.

讓我花點時間快速回顧一下事實。迄今為止，Arista 已在 IPC 和地方法院就 14 項各類專利中的 9 項贏得了行政法法官 ALJ 的有利裁決。其餘五項專利中的四項主要涵蓋整個交換行業所使用的通用標準實施的網路功能，例如專用 VLAN、存取清單和 COPP。

On December 14th, 2016, Arista received a favorable jury verdict on Cisco's Command Line Interface copyright claims. We consider this an important moral and legal victory not only for Arista but the broader industry to have that standard networking language of communication.

2016 年 12 月 14 日，Arista 收到了陪審團對思科命令列介面版權主張有利的裁決。我們認為，這不僅對 Arista 來說也是重要的道德和法律勝利，對於更廣泛的行業也是如此，因為擁有了標準的網路通訊語言。

Regarding customs, late evening on Friday, January 13, 2017, we were surprised to receive a letter from Customs and Border Protection, CBP, that revoked its previously issued 177 ruling on November 18, 2016. It is important to emphasize that CBP has not ruled that Arista's products infringe. CBP currently has no stated position on that issue.

關於海關，2017 年1 月13 日星期五深夜，我們驚訝地收到了來自美國海關與邊境保護局(CBP) 的一封信函，該信函撤銷了其先前於2016 年11 月18 日發布的177 裁決。需要強調的是，CBP 並未裁定 Arista 的產品侵權。 CBP 目前對此問題尚未表明立場。

Instead, CVP has set up a process to obtain input from both parties before issuing a new ruling. We do look forward to cooperating with customs in forthcoming weeks. We are an inner party process to resolve the matter. Arista's firmly resolute and steadfast in lawful supply of our products and servicing them without disruption to our customers.

相反，CVP 建立了一個流程，在發布新裁決之前獲取雙方的意見。我們確實期待在未來幾週內與海關合作。我們正在透過黨內程序來解決這個問題。 Arista 堅定不移地合法供應我們的產品並為其提供服務，不會對我們的客戶造成乾擾。

As a reminder, the ITC and customs order do not prohibit us from selling non-infringing products manufactured in the domestic USA. Speaking of manufacturing, you may remember I spent a lot of time on this topic last quarter. Arista has also made significant strides in global and US supply chain to respond to the increased forecast we experienced in the second half of 2016. Lead times and the predictability of our shipments have been improving and I expect them to be restored by Q1 2017 for our mainstream products as I stated in our prior earnings call.

請注意，ITC 和海關命令並不禁止我們銷售在美國國內製造的非侵權產品。說到製造，您可能還記得上個季度我在這個主題上花了很多時間。 Arista 在全球和美國供應鏈方面也取得了重大進展，以應對我們在2016 年下半年經歷的上調預測。我們發貨的交貨時間和可預測性一直在改善，我預計它們將在2017 年第一季恢復正如我在之前的財報電話會議中所說的那樣，主流產品。

Now I would like to highlight some of the key 2016 events. In 2016 we established ourselves as one of the fastest growing networking companies in recent times. We focussed on being both a growth company and generating profits. This way we continue to invest in R&D innovation and support functions growing our employee head count from 1200 in 2015 to approximately 1500 employees in 2016.

現在我想重點介紹 2016 年的一些重要事件。 2016 年，我們成為近年來發展最快的網路公司之一。我們專注於成為成長型公司並創造利潤。透過這種方式，我們繼續投資於研發創新和支援職能，將我們的員工人數從 2015 年的 1200 人增加到 2016 年的約 1500 人。

We also demonstrated a rich suite of new products and capabilities in 2016 led by the R series universal leaf and spine. And our highly differentiated EOS based on network wide state driven Net BB and CloudVision automation and analytics. We have been delighted by the customers' adoption that fueled across all our top verticals. Our top 10 customers included Cloud Titans, cloud and service providers, as well as financial services in 2016. Microsoft was our top and only 10% concentration customer at 16% of overall 2016 revenue up from 12% in 2015.

2016 年，我們也展示了以 R 系列通用 Leaf 和 Spine 為首的豐富的新產品和功能。我們高度差異化的 EOS 是基於網路範圍狀態驅動的 Net BB 和 CloudVision 自動化和分析。我們對客戶的採用感到高興，這推動了我們所有頂級垂直行業的發展。 2016 年，我們的十大客戶包括雲端巨頭、雲端和服務供應商以及金融服務。微軟是我們最大的客戶，也是僅佔10% 的集中客戶，佔2016 年總收入的16%，高於2015 年的12%。

In conclusion, as we enter 2017, I'm really thankful to Arista customers, partners, employees, shareholders, and our Board of Directors for their dedication and support to us. Arista is clearly outpacing the cloud market in movement. For the first time, in perhaps over two decades, a compelling alternative has emerged to the stagnant IT incumbency. I couldn't be more proud and more pleased with Arista's contributions to this unstoppable cloud migration. Now, I'd like to turn it over to Ita for quarterly and 2016 financials.

總之，在我們進入 2017 年之際，我非常感謝 Arista 客戶、合作夥伴、員工、股東和董事會對我們的奉獻和支持。 Arista 的發展速度明顯超過了雲端市場。大約二十多年來，第一次出現了一個引人注目的替代方案來取代停滯不前的 IT 現有技術。對於 Arista 對這勢不可擋的雲端遷移所做的貢獻，我感到非常自豪和高興。現在，我想將其交給 Ita 來提供季度和 2016 年的財務數據。

Thanks, Jayshree, and good afternoon. This analysis of our Q4 and full-year 2016 results and our guidance for Q1 2017 is based on non-GAAP and excludes all non-cash stock-based compensation expenses, legal costs associated with the ongoing lawsuits, and the release of GAAP tax reserves as described previously. Full reconciliation of our selected GAAP to non-GAAP results are provided in our (inaudible). Total GAAP revenues in Q4 were $328 million up 33.6% year over year and above our guidance of $310 million to $320 million.

謝謝，Jayshree，下午好。我們對 2016 年第四季和全年業績以及 2017 年第一季度指引的分析基於非 GAAP，不包括所有非現金股票補償費用、與正在進行的訴訟相關的法律費用以及 GAAP 稅收儲備的釋放如前所述。我們的（聽不清楚）中提供了我們選擇的 GAAP 與非 GAAP 結果的完全調整。第四季 GAAP 總營收為 3.28 億美元，年增 33.6%，高於我們 3.1 億至 3.2 億美元的指引。

Demand in the quarter remains strong with continued broad based adoption of our products. Services revenues represented approximately 12% of revenues in line with prior quarters. International revenues came in at $74.3 million or 23% of total revenue up from 18% last quarter. This is more in line with our typical quarterly revenue mix and expect strong growth in the international business on a quarter over quarter basis.

隨著我們產品的持續廣泛採用，本季的需求依然強勁。與前幾季相比，服務收入約佔收入的 12%。國際營收為 7,430 萬美元，佔總營收的 23%，高於上季的 18%。這更符合我們典型的季度收入組合，並預計國際業務將環比強勁增長。

We remain focussed in expanding our international footprint but you should expect our geographical revenue mix to fluctuate on a quarter over quarter basis depending on the timing of US and International deployments. Overall gross margin in Q4 was 64.4% down slightly from last quarter at 64.6% and favorable to the midpoint of our guidance of 61% to 64%. This improvement versus guidance reflected a more balanced supply chain in the quarter leveraging both US and International supply sources.

我們仍然專注於擴大我們的國際足跡，但您應該預期我們的地理收入組合將根據美國和國際部署的時間而逐季度波動。第四季的整體毛利率為 64.4%，較上季的 64.6% 略有下降，有利於我們 61% 至 64% 指引值的中位數。與指引相比的改善反映了本季利用美國和國際供應源的供應鏈更加平衡。

Operating expenses for the quarter came in at $105 million up 4.9% from last quarter. Providing significant leverage on a 13% quarter-over-quarter revenue growth rate. R&D spending on a dollar basis was flat quarter over quarter affecting continued growth in head count offset by once off reduction in spending on prototypes and NRV. Sales and marketing expenses increased to $34 million or 10.4% of revenue reflecting typical fourth quarter sales compensation trends.

本季營運費用為 1.05 億美元，較上季成長 4.9%。為 13% 的季度收入成長率提供了巨大的槓桿作用。以美元計算的研發支出環比持平，影響了人員數量的持續增長，但原型機和 NRV 支出的暫時減少抵消了這一影響。銷售和行銷費用增加至 3,400 萬美元，佔收入的 10.4%，反映了第四季度典型的銷售薪酬趨勢。

Our operating income for the quarter was $106 million or 32.3% of revenue. Other expense for the quarter was $0.4 million and our effective tax rate 26.7% resulting in net income for the quarter of $77.5 million or 23.6%. The reduction in the non-GAAP effective tax rate was primarily related to the shift in geographical revenue mix in the quarter.

我們本季的營業收入為 1.06 億美元，佔營收的 32.3%。本季的其他費用為 40 萬美元，有效稅率為 26.7%，導致本季的淨利潤為 7,750 萬美元，即 23.6%。非公認會計原則有效稅率的降低主要與本季地理收入結構的變化有關。

Our new share number for the quarter was 74.4 million shares. Resulting in a diluted earnings per share number of $1.04 up 30% from the prior year. Legal expenses associated with the ongoing lawsuits came in at $12.2 million for the quarter in line with our outlook of $12 million on the last earnings call. As a reminder, these expenses are excluded from the non-GAAP results discussed above.

本季我們的新股數量為 7,440 萬股。稀釋後每股收益為 1.04 美元，較上年增長 30%。本季與正在進行的訴訟相關的法律費用為 1,220 萬美元，與我們上次財報電話會議上的 1,200 萬美元預期一致。提醒一下，這些費用不包括在上面討論的非公認會計準則績效中。

Now turning to the balance sheet. Cash, cash equivalence, and investments ended the quarter at $868 million. We generated $52.8 million of cash from operations in the December quarter. This reflects strong net income performance combined with significant growth and product [rated] deferred revenues offset by continued investments in supply chain working capital.

現在轉向資產負債表。本季末現金、現金等價物及投資為 8.68 億美元。我們在 12 月季度的營運中產生了 5,280 萬美元的現金。這反映出強勁的淨利表現以及顯著的成長和產品[額定]遞延收入被供應鏈營運資本的持續投資所抵銷。

DSOs come in at 71 days up from 67 days in Q3. This increase primarily the reflects an increase in our deferred revenue balance for the quarter. Inventory turns were 2.2 times down from 2.7 in Q3. Inventory increased to $236.5 million in the quarter up from $162.1 million in the prior period. This reflects growth at both the raw materials and finished goods level and is in line with our strategy of continuing to invest in supply chain related working capital where appropriate.

DSO 的週期從第三季的 67 天增加到 71 天。這一增長主要反映了我們本季遞延收入餘額的增加。庫存週轉率比第三季的 2.7 倍下降了 2.2 倍。本季庫存從上一季的 1.621 億美元增至 2.365 億美元。這反映了原物料和製成品水準的成長，符合我們持續酌情投資供應鏈相關營運資金的策略。

In addition, consistent with last quarter, we maintain a further $60 million of inventory deposits recorded in other assets at the end of the quarter. Our deferred revenue balance was $372.9 million up from $284.8 million in Q3. This balance continues to be made over shorter and long term service contracts and product related deferrals associated with acceptance terms and future deliverables.

此外，與上季一致，我們在季度末也保留了其他資產中記錄的 6,000 萬美元的庫存存款。我們的遞延收入餘額為 3.729 億美元，高於第三季的 2.848 億美元。這種平衡繼續透過短期和長期服務合約以及與驗收條款和未來可交付成果相關的產品相關延期來實現。

Accounts payable days were 62 days down from 68 days in Q3 reflecting the timing of inventory payments and receipts. Capital expenditures for the quarter were $3.9 million. Now turning to outlook for the first quarter and beyond. We are pleased with the strong execution underlying our 2016 financial performance with revenues and earnings per share up 35% on a year-over-year basis. Looking forward to 2017 we believe that the demand drivers of the business remain strong with healthy growth in cloud networking and broad based adoption of our new products.

應付帳款天數從第三季的 68 天減少到 62 天，反映了庫存付款和收貨的時間。該季度的資本支出為 390 萬美元。現在轉向第一季及以後的展望。我們對 2016 年財務表現的強勁執行力感到滿意，營收和每股盈餘較去年同期成長 35%。展望 2017 年，我們相信，隨著雲端網路的健康成長和新產品的廣泛採用，業務的需求驅動力仍然強勁。

Operationally we've continued to ramp volumes at our US contract manufacturer in order to have the flexibility of supporting US custom demands from that site. In addition, we have and will continue to make investments in our US based supply chain driving both availability and cost structure improvements. Based on our current understanding we would reiterate the gross margin outlook we had previously provided of 60% to 65%.

在營運方面，我們繼續增加美國合約製造商的產量，以便能夠靈活地支援該工廠的美國客製化需求。此外，我們已經並將繼續對美國供應鏈進行投資，推動可用性和成本結構的改善。根據我們目前的了解，我們將重申先前提供的 60% 至 65% 的毛利率前景。

Where we operate within this range in any given quarter will be driven by two key factors: customer mix and our level of dependence on US sourcing. With this as a back drop, our guidance for the first quarter, which is based on non-GAAP results and excludes any non-cash stock-based compensation expenses and any legal expenses associated with the ongoing lawsuits is as follows. Revenues of approximately $320 million to $330 million. Gross margin of approximately 61% to 64%. Operating margin of approximately 27%. Our effective tax rate is expected to be approximately 29% with diluted shares of approximately $74.9 million. Please note that based on our current outlook we expect costs associated with the ongoing lawsuits to be approximately $12 million for the quarter. I will turn the call back to Chuck.

我們在任何特定季度在此範圍內的營運將受到兩個關鍵因素的驅動：客戶組合和我們對美國採購的依賴程度。以此為背景，我們對第一季的指導（基於非公認會計準則業績，不包括任何非現金股票補償費用以及與正在進行的訴訟相關的任何法律費用）如下。收入約3.2億至3.3億美元。毛利率約為61%至64%。營業利益率約27%。我們的有效稅率預計約為 29%，稀釋後股份約為 7,490 萬美元。請注意，根據我們目前的展望，我們預計本季與正在進行的訴訟相關的成本約為 1,200 萬美元。我會把電話轉回給查克。

Thank you, Ita. We are now going to move to the Q&A portion of the Arista earnings call. Due to time constraints I'd like to request that everyone please limit themselves to a single question. Thanks, all.

謝謝你，伊塔。我們現在將進入 Arista 財報電話會議的問答部分。由於時間有限，我想請大家只回答一個問題。謝謝大家。

(Operator Instructions)

（操作員說明）

Steve Milunovich, UBS.

史蒂夫·米盧諾維奇，瑞銀集團。

Ita, can you give us a sense of where you are on the component side? You had two months to be able to import components before things were reversed. Were you able to accelerate the rated at which you did that? Do you have sufficient components for the next few months?

Ita，您能為我們介紹一下您在組件方面的狀況嗎？在事情發生逆轉之前，您有兩個月的時間進口組件。你能加快你這樣做的速度嗎？您是否有足夠的組件供未來幾個月使用？

You did mention lead times should be coming in. That suggests there shouldn't be any unusual issues going forward and yet you're still suggesting a fairly wide gross margin range. Maybe you can just update us in terms of where you are on component availability.

您確實提到交貨時間應該到來。這表明未來應該不會出現任何不尋常的問題，但您仍然建議相當寬的毛利率範圍。也許您可以向我們通報您在組件可用性方面的最新情況。

Yes, I think, Steve, if you listen to what we said in our prepared remarks, we obviously continued to ramp our contract manufacturing and US sourcing since the last time we talked and that's going to be the key to supporting customers in the US and ensuring that we're able to support customers in the US.

是的，我認為，史蒂夫，如果你聽一下我們在準備好的發言中所說的話，自上次我們談話以來，我們顯然繼續加大我們的合約製造和美國採購力度，這將是支持美國和美國客戶的關鍵確保我們能夠為美國的客戶提供支援。

We did grow some inventory numbers. You saw that in the year end balance sheet. There is some flexibility there. But ultimately we're building a supply chain that will support the business from the US.

我們確實增加了一些庫存數量。您在年末資產負債表中看到了這一點。那裡有一定的靈活性。但最終我們正在建立一個供應鏈來支持美國的業務。

Alex Kurtz, Pacific Crest Securities.

亞歷克斯‧庫爾茨 (Alex Kurtz)，太平冠證券 (Pacific Crest Securities)。

Yes, thanks, guys, can you hear me okay?

是的，謝謝，夥伴們，你們聽得到我說話嗎？

Yes.

是的。

Jayshree, maybe you could give us a view into the Cloud Titans and their spending patterns and what the white box switching has done to their infrastructure and maybe all those white box ports are creating incremental opportunities for your aggregation switches. Maybe, can you take us into Q4 and how that looked and maybe versus Q4 a year ago?

Jayshree，也許您可以讓我們了解雲端巨頭及其支出模式，以及白盒交換對其基礎設施的影響，也許所有這些白盒連接埠正在為您的聚合交換器創造增量機會。也許，你能帶我們回顧一下第四季的情況嗎？與一年前的第四季相比，情況如何？

Sure, Alex. And, Anshul, maybe you want to add to what I say. We have not seen a significant change in Cloud Titans' behavior in spending with us. Both of the Leaf and Spine. As we've often pointed out with our Titans, it is not just one Leaf or one Spine, there are many tiers of both.

當然，亞歷克斯。安舒爾，也許你想補充我所說的內容。我們還沒有看到 Cloud Titans 在我們這裡消費的行為發生重大變化。葉和脊都有。正如我們經常在泰坦中指出的那樣，它不僅僅是一層葉子或一根脊柱，兩者都有許多層。

When you look at the white box more of that is just a single use case in a tier zero Leaf that most of which is still in very early stages and not in production, so we're seeing healthy demand from all our Cloud Titans. On the Leaf and the Spine and for that matter also on data center interconnect Spines for routing and optical. Between 2015 and 2016 I would say the biggest change is greater reception of our new R series products, greater reception and deployment of 100-gig in the Spine. But otherwise spending patterns and buying patterns have not significantly changed. Anshul, you want to add to that?

當您查看白盒時，更多只是零層 Leaf 中的單一用例，其中大部分仍處於非常早期的階段，尚未投入生產，因此我們看到來自所有雲泰坦的健康需求。在葉子和主幹上，以及在資料中心互連主幹上，用於路由和光纖。 2015 年至 2016 年間，我想說最大的變化是我們新的 R 系列產品的接收情況更好，Spine 中 100 千兆位元的接收和部署情況更好。但除此之外，支出模式和購買模式並未有顯著變化。安舒爾，你想補充嗎？

Sure, Jayshree. Alex, if you look at the discussion on white boxes, it comes down to, for the Cloud Titans team, the ability to customize and control the network, with EOS programmability and the integration work we do with joint R&D with our Titan customers, we continue to do well in that segment.

當然，傑什裡。 Alex，如果你看一下關於白盒的討論，對於 Cloud Titans 團隊來說，歸根結底就是透過 EOS 可編程性以及我們與 Titan 客戶聯合研發進行的集成工作來定制和控製網絡的能力，我們繼續在該領域表現出色。

That's why for us nothing's really changed. White box is not a new topic for us. We have already been part of spending in these joint projects.

這就是為什麼對我們來說什麼都沒有真正改變。白盒對我們來說並不是一個新話題。我們已經參與了這些聯合項目的支出。

Simon Leopold, Raymond James.

西蒙·利奧波德，雷蒙德·詹姆斯。

Great. Thank you very much. Just really following up, I'm wondering if maybe you could give us a little bit more color on how your mix has evolved in terms of verticals. You talked in the past about the Web Titans probably exceeding more than a quarter revenue and financials as a vertical, maybe dropping into the teens versus 2015. You talked about that earlier this year. If we could reflect back on 2016, if you could maybe give us a little bit more color about how your various verticals are trending overall. Thank you.

偉大的。非常感謝。只是真正跟進，我想知道您是否可以給我們更多關於您的組合在垂直方面如何演變的信息。您過去曾談到，與 2015 年相比，網路巨頭的收入和財務狀況可能會超過四分之一以上，可能會下降到十幾歲。您今年早些時候也談到過這一點。如果我們可以回顧 2016 年，如果您能給我們更多關於您的各個垂直行業的整體趨勢的資訊。謝謝。

Sure, Simon, I think if you look at our four verticals, all four are doing very well. The Cloud Titans continue to be extremely strong. Greater than the teens. The financials have been holding very nicely. It continues to be in the teens but there is very strong spend there.

當然，西蒙，我認為如果你看看我們的四個垂直領域，所有四個領域都做得很好。雲泰坦仍然非常強大。比青少年還厲害。財務狀況一直都非常好。它仍然在十幾歲，但那裡的支出非常強勁。

The service providers and what I also call the cloud specialty providers is extremely strong. Probably the strongest improvement we've seen in 2016 relative to 2015. As a new category beyond the Cloud Titans, we look at the Cloud Titans as the largest scale, but the next tier is looking very strong for us both in terms of cloud hosting providers, service providers, and specialty providers.

服務提供者以及我所說的雲端專業提供者非常強大。相對於2015 年，這可能是我們在2016 年看到的最強勁的改進。作為Cloud Titans 之外的一個新類別，我們將Cloud Titans 視為規模最大的，但下一層在雲端託管方面對我們來說看起來都非常強大提供者、服務提供者和專業提供者。

Then, of course, the high tech enterprise tends to be many enterprise customers, but not extremely large deals. Not as large as the Titans, for sure. All four categories are doing well. All four are double digit percentage contributions to Arista. And if I had to cite a fifth, I would say the cloud specialty providers is starting to emerge as a category by itself.

當然，高科技企業往往是許多企業客戶，但不是特別大的交易。當然，沒有泰坦那麼大。所有四個類別都表現良好。這四項對 Arista 的貢獻百分比均為兩位數。如果我必須舉出第五個，我會說雲端專業提供者本身已經開始成為一個類別。

Thank you.

謝謝。

Jeff Kvaal, Nomura.

傑夫·科瓦爾，野村證券。

Yes, thank you very much. Question for you, Jayshree, and a clarification, perhaps, for you Ita. The question, Jayshree, is if we compare your recent quarterly results, the last couple, obviously, it's been a lot stronger than even your prior couple quarters before that.

是的謝謝你。 Jayshree，這個問題要問你，也許還要向 Ita 澄清一下。 Jayshree，問題是，如果我們比較你們最近的季度業績，很明顯，最後幾季的業績比你們之前幾季的業績要強得多。

I am wondering if there has been an inflection point in the last couple quarters that has helped you and what that tells us for 2017? 2016 being a bit of a snap back year for data center spending. Ita, could you help us with the variables that might bring the gross, the operating margin, back down towards the mid to upper 20s level for March, that would be super.

我想知道過去幾季是否出現了對您有幫助的轉折點，這對 2017 年有何啟示？ 2016 年是資料中心支出快速回升的一年。 Ita，您能否幫助我們了解可能使 3 月份毛利率、營業利潤率回落到 20 多歲左右水平的變量，那就太好了。

Thanks, Jeff, which question do you want answered? One or two?

謝謝，傑夫，你想回答哪個問題？一個或兩個？

Well, I guess I will follow up on the other.

好吧，我想我會跟進另一個。

Okay. So your question was, was there any specific trend where we picked higher or differently in the second half of 2016.

好的。所以你的問題是，我們在 2016 年下半年是否選擇了更高或不同的特定趨勢。

Yes.

是的。

I guess I would point to three trends I'm seeing. I think the overall migration from traditional IT to cloud networking, programmable operating system, highly available, automation, analytics. You know, any work load.

我想我會指出我所看到的三個趨勢。我認為從傳統 IT 到雲端網路、可程式作業系統、高可用性、自動化、分析的整體遷移。你知道，任何工作負載。

These are things that are not just any more for a specific set of niche high performance customers but is becoming more main stream. So we're just seeing this as not one we have to evangelize, but that customers are coming to Arista as the expert, as the front leader, as the pioneer. That I would say is a market trend.

這些東西不再只適用於特定的高效能客戶群，而且正變得越來越主流。因此，我們只是認為這不是我們必須傳播的問題，而是客戶以專家、前沿領導者、先鋒的身份來到 Arista。我想說的是市場趨勢。

The second thing I would say is new products. I think last year was a particularly phenomenal year for new product introduction, both switching and routing and the acceptance of both the R Series and as well as Tomahawk and Trident leaves, and then towards the end of the year, Cavium. We just got a huge upgrade in both the Spine and the Leaf that brought to bear.

我要說的第二件事是新產品。我認為去年對於新產品的推出來說是特別引人注目的一年，無論是交換和路由，還是 R 系列、Tomahawk 和 Trident leaves 的接受度，以及接近年底的 Cavium。我們剛剛對 Spine 和 Leaf 進行了巨大升級。

And the third that always helps is customer spending. I think you saw stronger customer spend which we certainly appreciate and did our best to fulfil.

第三個總是有幫助的就是客戶支出。我認為您看到了更強勁的客戶支出，我們當然對此表示讚賞，並盡力實現這一目標。

Mark Moskowitz, Barclays.

馬克·莫斯科維茨，巴克萊銀行。

Yes, thank you. Going off of the last comments there. I'm trying to figure out here, moving forward, how much of this incremental upside or momentum here in the growth profile is due to just that? An expansion of the portfolio with existing customers versus this portfolio allowing you to also win new customers and penetrate those in a deeper way?

是的，謝謝。放棄最後的評論。我試圖弄清楚，展望未來，成長概況中的這種增量上升或勢頭有多少是由於這一點造成的？與現有客戶相比，擴大產品組合是否能讓您贏得新客戶並更深入滲透這些客戶？

Clearly, Mark, we see both. We are acquiring new customers still at the rate of one a day. But I would be remiss if I didn't tell you that existing customers are equally, if not more important. So we're getting deeper in existing footprint and we're increasing our new customer footprint. So definitely an end.

顯然，馬克，我們兩者都看到了。我們仍然以每天一位的速度獲取新客戶。但如果我沒有告訴你現有客戶同樣重要，甚至更重要，那我就失職了。因此，我們正在加深現有的足跡，並增加新的客戶足跡。所以肯定是結束了。

Vijay Bhagavath, Deutsche Bank.

維傑‧巴加瓦斯 (Vijay Bhagavath)，德意志銀行。

Ita, I hope you can hear me okay.

伊塔，我希望你能聽到我的聲音。

Yes.

是的。

Any color you can give us on the product backlog, I am guessing it is a solid year. Then also the Intel Silver upgrade cycle, Jayshree, how do you think that would help exceleerate100-gig switching this year? We hear a lot of your Cloud Titan customers are starting to upgrading to Sky Lake for half of this year, do you see any read through or Sky Lake as a catalyst 400 gig switching? No pun intended, thanks.

您可以在產品待辦事項上給我們任何顏色，我猜這是堅實的一年。還有英特爾銀牌升級週期，Jayshree，您認為這將如何幫助今年 100 千兆位元交換？我們聽說你們的許多 Clo​​ud Titan 客戶今年下半年開始升級到 Sky Lake，你們是否認為 Sky Lake 可以作為 400 gig 切換的催化劑？沒有雙關語的意思，謝謝。

We don't disclose backlog for the reason it tends to be -- it moves around a lot. We don't force customers to issue a non-cancelable orders. We don't disclose the product backlog number. Anshul, you want to take the second part of that question?

我們不披露積壓的原因是——它經常變動。我們不會強迫客戶發出不可取消的訂單。我們不透露產品積壓數量。 Anshul，您想回答這個問題的第二部分嗎？

On the silver upgrade cycle, the way the cloud operates is that, if they have demand from their customers they keep on adding to the capacity. There isn't a big stall effect as a result of that but I think for the static cycle we expect the customer would apply these and you'll see these go live in the second half of the year.

在白銀升級週期中，雲端的運作方式是，如果客戶有需求，他們就會不斷增加容量。因此不會產生大的失速效應，但我認為對於靜態週期，我們預計客戶會應用這些，您將看到這些在今年下半年投入使用。

Perfect. Thank you.

完美的。謝謝。

Paul Silverstein, Cowen and Company.

保羅·西爾弗斯坦，考恩公司。

Thanks, I got a pretty pedestrian question. Can you give us an update on the routing piece on the R-based products? Maybe if you can clarify, is there any Cisco reference type DRAM memory? Are you guys seeing that?

謝謝，我有一個很平庸的問題。您能為我們介紹一下基於 R 的產品的路由部分的最新情況嗎？也許您可以澄清一下，是否有 Cisco 參考型 DRAM 記憶體？你們看到了嗎？

So, hi, Paul, no we're not seeing any tight availability. I think our challenge is more US sourcing than anything else. That is the bigger order bit. But to come back to your routing question, you know, we have the same common platform for routing and switching.

所以，嗨，保羅，不，我們沒有看到任何緊張的可用性。我認為我們面臨的挑戰更多的是美國採購。這是更大的訂單位。但回到你的路由問題，你知道，我們有相同的路由和交換通用平台。

Our proxy for routing is really our flex route. As you know, I challenged the team to do, Anshul, what do you think, 100 customers in the next year? How are we feeling about that? And my belief is that we're kind of at the mid-point there. First quarter was single digit customers, second quarter double-digit, and I think we doubled again in Q4. We are progressing nicely.

我們的路由代理實際上是我們的彈性路由。如你所知，我向團隊提出了挑戰，Anshul，您認為明年將有 100 位客戶嗎？我們對此有何感覺？我相信我們正處於中間位置。第一季的客戶數量為個位數，第二季的客戶數量為兩位數，我認為我們在第四季再次翻了一番。我們進展順利。

By this summer we're hoping to have 100 routing customers for the R series and I think that is a good proxy. I would say they're making tremendously good progress there. The R series has probably been one of the fastest and most well accepted new products in the history of our Company.

到今年夏天，我們希望 R 系列的路由客戶達到 100 個，我認為這是一個很好的代理。我想說他們在那裡取得了巨大的進步。 R 系列可能是我們公司歷史上速度最快、最受認可的新產品之一。

Jayshree, just to clarify, did I understand you to say that you are around about 50 on the customer count?

Jayshree，我想澄清一下，我是否理解您所說的客戶數量約為 50 人？

Approximately at the midpoint. As of February, yes.

大約在中點。截至二月，是的。

And you can't give us any insight on the revenue yet, is that correct?

您還不能向我們提供任何有關收入的信息，對嗎？

It is very difficult to split up, because as I told you, the hardware and the platforms are used both with switching and routing.

拆分是非常困難的，因為正如我告訴你的，硬體和平台都用於交換和路由。

Okay. I appreciate it. Thank you.

好的。我很感激。謝謝。

Tai Liani, Bank of America.

泰利亞尼，美國銀行。

Hi, clarification on the numbers and then the question on the new products. On the numbers, we've seen strength in deferred revenues of 40% sequentially two quarters in a row. If you can explain the background for that. The second question is the 7160 in the AlgoMatch, what are the new opportunities that they address?

您好，首先是對數字的澄清，然後是關於新產品的問題。從數字上看，我們看到遞延收入連續兩季成長 40%。如果您能解釋一下背景。第二個問題是 AlgoMatch 中的 7160，它們解決了哪些新機會？

Just on the deferred revenue, Tal, our deferred revenue has a number of different pieces. There is services, deferred revenue which continues to grow quarter-over-quarter and has been growing healthily.

就遞延收入而言，塔爾，我們的遞延收入有許多不同的部分。服務和遞延收入繼續逐季度成長，並且一直在健康成長。

We have product revenue which is there mostly because of some type of acceptance criteria associated with that. Either a generic acceptance period where our customers have time to evaluate the product, et cetera or there's some specific feature set that we need to deliver for that to become revenue. It is really a factor of timing of shipments where there are acceptance terms. It will move around pretty much the same as our shipments to some of the customers will move around.

我們的產品收入主要是因為與之相關的某種驗收標準。要么是我們的客戶有時間評估產品的一般接受期，等等，要么是我們需要提供一些特定的功能集才能將其轉化為收入。這實際上是有接受條款的發貨時間的一個因素。它的移動與我們向某些客戶發貨的移動幾乎相同。

Stanley Kovler, Citi Research.

史丹利‧科夫勒，花旗研究部。

Thank you. I wanted to ask about, again, on the supply side, you have never supplied your supplier base of Silicon providers to Cavium. There are a couple of new products coming to market from a Silicon standpoint. I was wondering if you could address if this is going to impact your existing customer opportunities or new customer opportunities on this new Silicon? And if my math is right, I just wanted to clarify that it looks like for the full year in the Americas vertical, your revenue outside of Microsoft grew about less than half of the Microsoft growth rate. Should we think about that piece accelerating with these potential new products coming online in 2017? Thank you.

謝謝。我想再次詢問一下，在供應方面，你們從未向 Cavium 提供過矽供應商的供應商基礎。從矽的角度來看，有幾種新產品即將上市。我想知道您是否可以解決這是否會影響您現有的客戶機會或這個新晶片上的新客戶機會？如果我的數學是正確的，我只是想澄清一下，在美洲垂直領域，全年來看，微軟以外的收入成長大約不到微軟成長率的一半。我們是否應該考慮隨著這些潛在新產品在 2017 年上線而加速這一進程？謝謝。

Thanks, Stanley. So, first of all, we take great pride in diverse Silicon architectures, I think we've done 12 ones with a very common abstraction layer and drivers. The Cavium XPliant is our latest addition.

謝謝，史丹利。因此，首先，我們對多樣化的矽架構感到非常自豪，我認為我們已經完成了 12 個具有非常通用的抽象層和驅動程式的架構。 Cavium XPliant 是我們的最新產品。

But as you know we have done many before. We've done Jericho, before that Arrod, then Trident, and Tomahawk, and Intel Fulcrum. We're absolutely open to the most competitive Silicon.

但正如你所知，我們之前已經做了很多事情。我們已經完成了 Jericho，之前是 Arrod，然後是 Trident、Tomahawk 和 Intel Fulcrum。我們絕對對最具競爭力的晶片持開放態度。

We're pleased with our partnership with Broadcom. That tends to be the bulk of our Silicon deployment. But we're are equally cognizant of Silicon diversity and I don't think we completely answered Tal when he asked the question, the 7160 AlgoMatch has some very interesting use cases for programmability of the Leaf and also at a very attractive cost point.

我們對與博通的合作關係感到滿意。這往往是我們晶片部署的大部分。但我們同樣認識到矽的多樣性，我認為當 Tal 提出問題時我們並沒有完全回答他，7160 AlgoMatch 對於 Leaf 的可編程性有一些非常有趣的用例，而且成本點也非常有吸引力。

Together with our EOS we are seeing some interesting applications there. I think in terms of international we don't see lesser growth, we're seeing good growth. It is just that there the Cloud Titans, in particular Microsoft to watch the growth because it is so big.

與我們的 EOS 一起，我們在那裡看到了一些有趣的應用程式。我認為就國際而言，我們並沒有看到成長放緩，而是看到了良好的成長。只是雲端巨頭，尤其是微軟，正在關注其成長，因為它太大了。

Kulbinder Garcha, Credit Suisse.

Kulbinder Garcha，瑞士信貸。

Hi, guys, just a couple of questions. Firstly for Jayshree, 2017, will the growth amongst your key verticals be quite balanced or maybe the cloud will be the fastest growing again. That is my first question.

大家好，有幾個問題請教一下。首先，對於 Jayshree 來說，2017 年，您的關鍵垂直行業之間的成長是否會相當平衡，或者雲端可能會再次成為成長最快的。這是我的第一個問題。

Are you expecting an impact from the HPE relationship and routing really in the second half of the year? And my question for Ita, gross margin is, gross margin on Q4 year-over- year was up. I'm assuming the previous year you had barely any US money (inaudible). Despite of the headwind you improved it. Was the mix disproportionately good in Q4 or was it sustainable in that gross margin number? Thanks.

您是否預計 HPE 關係和路線會在今年下半年真正產生影響？我對 Ita 的問題是，毛利率是，第四季的毛利率比去年同期上升。我假設前一年你幾乎沒有任何美元（聽不清楚）。儘管有逆風，你還是改進了它。第四季的組合是否異常良好，或者毛利率數字是否可持續？謝謝。

Kulbinder, I will take the gross margin one first. If you look at Q4, we had come into the quarter thinking that we would be fairly heavily leveraged towards the US sourcing. As the quarter went on we did get to access to international parts and so on. So that is reflected in the gross margin number. The guide you've seen is effective repeated coming into the Q1 of the 61% to 64%, that was a good guide for a situation where we were going to be utilizing US sourcing with some help from Silicon international components.

庫賓德，我先考慮毛利率。如果你看一下第四季度，我們在進入本季度時就認為我們將在美國採購方面發揮相當大的槓桿作用。隨著本季的進行，我們確實獲得了國際零件等。這反映在毛利率上。您所看到的指南在 61% 至 64% 的第一季中重複出現，對於我們將在 Silicon International 組件的幫助下利用美國採購的情況來說，這是一個很好的指南。

That is the dynamic that we see as we move to Q1. Some of what we got was more the supply chain was more balanced in Q4 than we expected and that gave us some upside in gross margin. It is a reminder the gross margin can be pretty healthy if we don't have these temporary cost structure effects. Looking into Q1 we see that being back to the 61% to 64% guide.

這就是我們進入第一季時看到的動態。我們得到的一些結果是，第四季的供應鏈比我們預期的更加平衡，這為我們的毛利率帶來了一些上升空間。這提醒我們，如果我們沒有這些暫時的成本結構影響，毛利率可能會相當健康。回顧第一季度，我們發現回到了 61% 至 64% 的指導水準。

Jess Lubert, Wells Fargo Securities.

傑西·盧伯特，富國銀行證券。

Hi, guys, congrats on another solid quarter. Also, I had a numbers question and then more of a question-question. Maybe just first on the numbers given better than seasonal strength you're forecasting for Q1, should we be thinking about slightly weaker than normal seasonality during the June period? Is there anything going on there that we should be thinking about?

嗨，夥計們，祝賀又一個穩定的季度。另外，我有一個數字問題，然後是一個更多的問題。也許首先給出的數字比您預測的第一季季節性強度更好，我們是否應該考慮 6 月期間的季節性強度略弱於正常季節性強度？那裡發生了什麼值得我們思考的事情嗎？

Then I was hoping you could help us understand where you are in the process of developing your domestic supply chain and in the event the current injunction in the 944 case were to continue and you had to fully leverage domestic supply beyond Q1, if you feel like you have the capacity and ability to source components in place, and if that were to occur, where would the gross margins end up falling out given you likely have some offsets from software platforms like CloudVision and some of the FlexRoute software on the R series and, et cetera. If you can help us work through those manners it would be helpful.

然後我希望您能幫助我們了解您在發展國內供應鏈的過程中處於什麼位置，如果 944 案中的當前禁令繼續存在，並且您必須在第一季之後充分利用國內供應，如果您願意的話您有能力採購元件，如果發生這種情況，毛利率最終會下降到哪裡，因為您可能會從CloudVision 等軟體平台和R 系列上的一些FlexRoute 軟體中獲得一些補償，等等。如果您能幫助我們遵守這些禮儀，那將會很有幫助。

Yes, first on the growth. We're pleased with the Q1 outlook, but I wouldn't extrapolate that at this point across the rest of the year. You know, we have a fair few moving pieces to move through, through the middle of the year. So as a base case I'm pretty happy with where consensus is from a growth perspective for the year for now.

是的，首先是成長。我們對第一季的前景感到滿意，但我不會在這一點上推斷今年剩餘時間。你知道，在今年年中，我們有相當多的活動需要完成。因此，作為基本情況，我對目前從今年成長角度達成的共識感到非常滿意。

I think that is probably a good place to start. Obviously if we see as we get more strength in Q2, we'll talk about that. But I think for now the consensus growth rate is a reasonable place to start. Right? In terms of the supply chain, we've continued to invest and develop those sources, both the contract manufacturing and the sourcing. We're in a lot better position than we were, say two quarters ago, as we look at supporting that US business from the US supply chain.

我認為這可能是個很好的起點。顯然，如果我們看到我們在第二季度獲得更多實力，我們會討論這一點。但我認為目前共識成長率是一個合理的起點。正確的？在供應鏈方面，我們繼續投資和開發這些來源，包括合約製造和採購。當我們考慮從美國供應鏈支援美國業務時，我們的處境比兩個季度前要好得多。

We will continue to make investments. We want to optimize the cost structure, et cetera to do that. But we think we have the capacity and now the focus will be on cost structure. We will make some investments. You will see us add some CapEx and stuff over the next couple of quarters as we look to improve that.

我們將繼續進行投資。我們想要優化成本結構等等來做到這一點。但我們認為我們有能力，現在的重點將是成本結構。我們將進行一些投資。您將看到我們在接下來的幾個季度中添加一些資本支出和其他內容，因為我們希望改善這一點。

So gross margins, very much what is in my script. I think if we end up being solely US sourced, they are looking at the lower end of that 60% to 65% gross margin range where we're somewhat mixed like Q1 you'll see us at the midpoint with 62.5%. The midpoint of that 60% to 65%. You will see us focus on trying to improve cost structure over time. We'll lay that out when we feel like we got it figured out.

毛利率與我劇本中的內容非常相似。我認為，如果我們最終完全從美國採購，他們會關注 60% 至 65% 毛利率範圍的下限，我們的毛利率有點​​像第一季那樣混合，你會看到我們處於中點，為 62.5%。中點即60%至65%。隨著時間的推移，您將看到我們專注於努力改善成本結構。當我們覺得我們已經弄清楚了的時候，我們就會把它擺出來。

So just to clarify, we should be thinking about slightly lower seasonality going forward than we've seen in the last couple of years beyond Q1 seems to be implied to get to where the consensus is for a growth rate for the year perspective. Is that the right way to think about it?

因此，為了澄清這一點，我們應該考慮未來的季節性因素會比第一季之後的過去幾年略有下降，這似乎意味著達到對年度成長率的共識。這是正確的思考方式嗎？

Yes, I think if you're looking at it as a year-over-year growth rate that is kind of true for a base case. I think that is what we feel is a good base case maintaining the that kind of consensus, low 20% growth rate for the year-over-year and then we'll update that as we go.

是的，我認為如果你將其視為同比增長率，那麼這對於基本情況來說是正確的。我認為這是我們認為保持這種共識的良好基本情況，即同比增長率為 20%，然後我們將隨時更新。

I think we learn more as we go along, but that's a good start for February.

我認為隨著我們的進展我們會學到更多，但這是二月的一個好的開始。

Rod Hall, JPMorgan.

羅德·霍爾，摩根大通。

Hey, guys, thanks for taking my questions. So great job on the quarter. I wanted to ask you a couple of things.

嘿，夥計們，謝謝你回答我的問題。本季的工作非常出色。我想問你幾件事。

First of all, just to clarification, Ita, on the $60 million of inventory deposits, is that in addition to the inventory or should we consider that additional inventory prepayments? Can you just clarify what exactly that is? And then I guess I wanted -- I can't really believe I'm asking this question given the results, but are you guys seeing optic supply shortages, which we continue to hear about from our industry contacts? Are you seeing those in the market and are they capping your growth? Would you have been able, potentially, to do even more revenue if some of the 2500-gig optics were in better supply? And do you think those optics will be in bet supply later in the year? Can you comment on what is going on with that optics supply? Thanks.

首先，需要澄清的是，Ita，關於 6000 萬美元的庫存押金，這是在庫存之外還是我們應該考慮額外的庫存預付款？你能澄清一下那到底是什麼嗎？然後我想我想——鑑於結果，我真的不敢相信我會問這個問題，但是你們是否看到光學器件供應短缺，我們不斷從行業聯繫人那裡聽到這種情況？您在市場上看到這些嗎？它們是否限制了您的成長？如果某些 2500 千兆位元光學元件的供應更好，您是否能夠獲得更多收入？您認為這些光學元件會在今年稍後投入供應嗎？您能評論一下光學供應的情況嗎？謝謝。

Quickly on the inventory deposits. You should think about that as component inventory that is available to us that we funded.

迅速上存貨存款。您應該將其視為我們資助的可用組件庫存。

And the optics, very quickly on that, we are seeing some challenges and shortages in the 100-gig optics like the rest of the industry. We are getting our fresh air, but we'd like more.

在光學方面，我們很快就看到 100 兆光學元件與業界其他產品一樣面臨一些挑戰和短缺。我們正在呼吸新鮮空氣，但我們想要更多。

Did it cap your growth in this quarter?

它限制了您本季的成長嗎？

Yes, you know that is really hard to answer, Rod.

是的，你知道這真的很難回答，羅德。

With 600-gig, yes.

600 場演出，是的。

Alex Henderson, Needham.

亞歷克斯·亨德森，李約瑟。

Great, thank you, can you hear me?

太好了，謝謝你，你聽得到我說話嗎？

Yes.

是的。

Great. So I wanted to throw you a real lay-up question, let you crow a little bit, since you had such a good quarter. I'm looking at your chart for the Cisco market share at 14.9% and mid-year and I'm looking at the down switching numbers that they have been posting and thinking that number has to have moved quite a bit. As I look at from 14 to 15 you went from 9.3% to 12% and in half a year you expanded about the same amount. Where do you think you are as you are if you're exiting the year on that market share chart if we were to extend it out a little bit?

偉大的。所以我想向你提出一個真正的上籃問題，讓你有點歡呼，因為你有一個這麼好的季度。我正在查看思科年中市場佔有率為 14.9% 的圖表，我正在查看他們發布的下降轉換數字，並認為該數字必須發生相當大的變化。正如我所看到的，從 14 到 15，你從 9.3% 到 12%，半年內你擴大了大約相同的數量。如果我們將市佔率圖表延長一點，您認為您在今年的市佔率圖表上處於什麼位置？

We prefer to let the market share data speak for itself. I don't think any of the analysts have published numbers. But how about we answer that question next month? Probably March we will have a better idea.

我們更願意讓市佔率數據來說話。我認為沒有任何分析師公佈過數據。但我們下個月要回答這個問題怎麼樣？也許三月我們會有更好的想法。

In lieu of that can I address the question of what are you see in terms of pricing or response to the fact that they are continuing to fall off the table there?

相反，我可以回答這樣一個問題：您對定價或對它們繼續從桌面上掉下來這一事實的反應有何看法？

No change in pricing. It continues to be competitive. Nothing different.

定價沒有變動。它仍然具有競爭力。沒什麼不同。

Okay. Thank you.

好的。謝謝。

Thank you, Alex.

謝謝你，亞歷克斯。

James Faucette, Morgan Stanley.

詹姆斯‧福賽特，摩根士丹利。

Great. Thank you very much. I wanted to circle back a little bit on Rod's question on optics, et cetera. How are you thinking about that improving through the year and I would imagine that would also be accompanied by improvement in 100-G aggregation switch demand. I'm just wondering, does that change in mix, if it happens, does that meaningfully impact profitability one way or another that we should be aware of? And maybe you can also talk about what you think the gating factor is on optics right now. Thanks a lot.

偉大的。非常感謝。我想稍微回顧一下羅德關於光學等問題。您如何看待這一年的改善？我想這也將伴隨著 100G 聚合交換器需求的改善。我只是想知道，這種組合變化是否會發生，如果發生的話，這是否會對我們應該意識到的獲利能力產生有意義的影響？也許你也可以談談你認為現在光學上的門控因素是什麼。多謝。

James, the real challenge here was the optics company has underestimated the market demand and they weren't ready when the time came. Since then the cloud companies have been pushing them very, very hard. Through the years the supply should ease out but still no in the greatest position today but every quarter that will make progress from what we see.

詹姆斯，真正的挑戰是光學公司低估了市場需求，而且當時機到來時他們還沒準備好。從那時起，雲端公司一直在非常非常努力地推動它們。多年來，供應應該會有所緩解，但仍然不是今天的最佳位置，但從我們所看到的情況來看，每個季度都會取得進展。

The Cloud Titans have their own supply chain and they have their own relationships with optics' companies and are working hard to recover on their own as well. Which is why we are less affected by it because we are not in the middle of that, they control their own destiny. The 10 gig, 25 gig transition is happening this year as we speak decide to mix [FAG] as other things -- there are too many other factors. It is not just a 100-gig optic discussion. But 100-gig fine are started to get designed and so on. Again I will mention the data center interconnect and all that will also come along with that. So there is a lot of pieces to 100-gig that are starting to come together and I think will make progress as we go through the year.

雲泰坦擁有自己的供應鏈，他們與光學公司有自己的關係，並且也努力恢復自己的狀態。這就是為什麼我們受它的影響較小，因為我們不在其中，他們控制著自己的命運。今年，當我們決定將 [FAG] 與其他事物混合在一起時，10 場演出、25 場演出的轉變正在發生——還有太多其他因素。這不僅僅是一場 100G 光學討論。但是100場的罰款已經開始設計等等。我將再次提及資料中心互連以及隨之而來的所有內容。因此，100 場演出的許多部分正在開始整合，我認為隨著這一年的推進，將會取得進展。

Erik Suppiger, JMP Securities.

Erik Suppiger，JMP 證券。

Congratulations on a very good quarter. On Microsoft, can you talk about the linearity of your business with them and if it was back end loaded? You saw an increase in 2016. Are you still projecting that Microsoft will come down or where are you in terms of your expectations on that?

恭喜您度過了一個非常好的季度。關於微軟，您能談談您與他們的業務線性度以及是否是後端加載的嗎？您在 2016 年看到了成長。您是否仍然預測微軟會下降，或者您對此的期望如何？

Thanks, Erik. Speaking of Microsoft they continue to be clearly a very important top customer. We did see linearity across the quarters in 2016. The Microsoft year end is usually mid-year. So we usually expect to see a strong Q2 or maybe our Q3 is the way it goes.

謝謝，埃里克。說到微軟，他們顯然仍然是一個非常重要的頂級客戶。我們確實看到了 2016 年各個季度的線性關係。微軟的年末通常是年中。因此，我們通常預期第二季會表現強勁，或者第三季可能就是這樣。

I guess we thought we would see around 12% of our revenues, so clearly the Microsoft spend being high had an impact on our concentration being high. So if we were to look at it this year we expect it will be above 10%, but probably not as high as 16%. In 2017 of our revenue. That would be my guess.

我想我們認為我們會看到大約 12% 的收入，所以很明顯，微軟的高支出對我們的高集中度產生了影響。因此，如果我們今年來看的話，我們預計會高於 10%，但可能不會高達 16%。 2017 年我們的收入。這是我的猜測。

Tim Long, BMO Capital Markets.

Tim Long，BMO 資本市場。

Thank you. Two parter on this service business, if I could. First, it has been pretty consistent at 12%, you are growing that deferred balance. That's still a good deal lower than most of your peer companies. Can you talk about potential for the service line to start kicking it in a little higher gear. I understand the products are going rather quickly but moving that up as a percentage. And the gross margins has been pretty strong the last two quarters, could you just talk about the sustain ability of the service gross margin line? Thank you.

謝謝。如果可以的話，兩個人一起參與這項服務業務。首先，它一直非常穩定地保持在 12%，你正在增加遞延餘額。這仍然比大多數同行公司低很多。能談談服務線開始加速發展的潛力嗎？我知道這些產品的發展速度相當快，但百分比有所上升。而且最近兩季的毛利率相當強勁，您能談談服務毛利率線的持續能力嗎？謝謝。

I think, first of all, Tim, the service revenue as a percentage of overall is where we would expect to be for being such a strong product company. We don't see that as low. When the product is so strong the service follows.

我認為，首先，提姆，服務收入佔總收入的百分比是我們作為一家如此強大的產品公司所期望的。我們認為這個數字並不低。當產品如此強大時，服務就會隨之而來。

Maybe in the later years when our product matures then the service takes over as you see with mature companies. We're pleased. We're not expecting to mush push that line. What we are push over time is more and more software revenue on top of that service. LIke we see with FlexRoute and CloudVision and those are obviously based on subscriptions, so they take a little bit longer to see. Anshul, you want to add anything more to that?

也許在後來的幾年裡，當我們的產品成熟時，服務就會接管，就像你在成熟的公司中看到的那樣。我們很高興。我們並不期望推動這條線。隨著時間的推移，我們所推動的是在該服務之上獲得越來越多的軟體收入。就像我們在 FlexRoute 和 CloudVision 中看到的那樣，它們顯然是基於訂閱的，所以它們需要更長的時間才能看到。 Anshul，您還想補充什麼嗎？

On the product side takes a long time for the services business to catch up with the renewals, and so on.

在產品方面，服務業務需要很長時間才能趕上更新等等。

Michael Genovese, MTM Partners.

麥可‧吉諾維斯 (Michael Genovese)，MTM 合夥人。

Thanks very much, first, are you seeing any significant sales of disaggregated software and hardware, and if not, what is your current expectation of the timing of when that may begin to happen? And then, secondly, given the gross margin performance, are we at a place here where if 945 and 944 both win in your favor in the near term, where we would actually be above 65% gross margins?

非常感謝，首先，您是否看到分類軟體和硬體有任何重大銷售？如果沒有，您目前對何時開始發生這種情況的預期是什麼？其次，考慮到毛利率表現，如果 945 和 944 在短期內都對您有利，我們的毛利率是否實際上會高於 65%？

Okay. I'll take the first one and probably Ita doesn't want to speculate of any margin 65%. So the answer is no on the second. On the first one, disaggregated, we always said this, the misnomer on disaggregated there is only a handful of customers with the development engineers and capable to do this, primarily our Cloud Titans.

好的。我會選擇第一個，也許 Ita 不想推測任何 65% 的利潤。所以第二個答案是否定的。關於第一個，分解，我們總是這樣說，分解的用詞不當，只有少數擁有開發工程師並且有能力做到這一點的客戶，主要是我們的雲泰坦。

So, no, we haven't seen a lot of activity but when we do we expect to see some this year. When we do I think it will be a handful of customers, single digits, and really targeted at their custom environment and their engineering capability for application and control.

所以，不，我們還沒有看到很多活動，但當我們看到時，我們預計今年會看到一些活動。當我們這樣做時，我認為這將是少數客戶，個位數，並且真正針對他們的客製化環境以及他們的應用和控制工程能力。

Thank you.

謝謝。

Aaron Rikers, Stifel.

亞倫·賴克斯，斯蒂菲爾。

Yes, thank you for taking the question and congratulations on the quarter. I wanted to go back to the question I don't think was answered earlier, the Hewlett-Packard relationship where you stand currently as far as ramping that? And as that ramps, when we should expect to see some contributions developing from that relationship?

是的，感謝您提出問題並對本季表示祝賀。我想回到我認為之前沒有得到解答的問題，即您目前與惠普的關係在加強這一方面的立場如何？隨著這種關係的發展，我們什麼時候應該看到這種關係產生一些貢獻？

I think we didn't answer it fully, but we are very pleased with the partnership with HPE from Meg Whitman downwards, executive level, at the field level, at the SC level, at the product level, the relationship is very strong. We have some executions to do and I think it takes time. Hewlett-Packard has a lot of different switching product lines to consider. Their own. Some of the other partners they had. They have stated that Arista is their preferred partner, but execution and engaging the customers takes time.

我認為我們沒有完全回答這個問題，但我們對與 HPE 的合作關係感到非常滿意，從 Meg Whitman 往下，在執行層、現場層、SC 層、產品層，這種關係非常牢固。我們還有一些處決工作要做，我認為這需要時間。惠普有許多不同的交換產品線需要考慮。他們自己的。他們還有其他一些合作夥伴。他們表示 Arista 是他們的首選合作夥伴，但執行和吸引客戶需要時間。

So I think to see any kind of actual success on this, I've said this before, it is probably second half of 2017 and 2018 before we see -- and the way we'll measure it is not even in material revenue but customer wins. So we're looking at this across all regions and all theaters, we see it as very synergistic, very complimentary and things have been going well. We're off to a good start but a long ways to go on execution.

所以我認為要看到這方面的任何實際成功，我之前說過，可能要到 2017 年下半年和 2018 年我們才能看到——而且我們衡量它的方式甚至不是物質收入，而是客戶獲勝。因此，我們正在所有地區和所有劇院中關注這一點，我們認為這是非常協同、非常互補的，而且一切進展順利。我們有了一個良好的開端，但執行起來還有很長的路要走。

Simona Jankowski, Goldman-Sachs.

西蒙娜·揚科斯基，高盛。

Hi, thank you very much. I just wanted to get a sense of whether you've ramped up your needed capacity at the US manufacturers such that you can support your ongoing needs? Or will you still be using your balance sheet for this current quarter? And how much are yields there? And I think I might have missed it, but what were the lead times last quarter and where are they right now?

你好，非常感謝你。我只是想了解您是否已經提高了美國製造商所需的產能，以便能夠滿足您持續的需求？或者您仍會使用本季的資產負債表嗎？那裡的收益率是多少？我想我可能錯過了，但是上個季度的交貨時間是多少，現在在哪裡？

Hi, Simona, we're pleased with our capacity, we build on it. We always like to leverage both US supply and international to the extent we can. And we can always make improvements there. In terms of lead times, they have come back to our normal ones as we predicted, so our normal lead times are anywhere from four to ten weeks depending upon product.

嗨，西蒙娜，我們對我們的能力感到滿意，我們將在此基礎上繼續發展。我們總是希望盡可能利用美國供應和國際供應。我們總是可以在那裡做出改進。就交貨時間而言，正如我們預測的那樣，他們已經恢復到正常交貨時間，因此我們的正常交貨時間為四到十週，具體取決於產品。

George Notter, Jefferies.

喬治諾特，傑弗里斯。

Thanks for letting me in here. I wanted to ask about also related to the discussion of lead times. Have you seen any evidence of customers building inventory as you guys go through this legal situation with ITC or fight against longer lead times. Is that part of the narrative here or no evidence?

謝謝你讓我進來。我想問的也與交貨時間的討論有關。你們有沒有看到任何證據表明客戶在與 ITC 處理這種法律情況或反對更長的交貨時間時建立庫存。這是敘述的一部分還是沒有證據？

I think we've pretty consistent that we don't believe we are seeing customers do any kind of pre buys. For our key customers we're closely aligned with them in terms of the business we're doing with them.

我認為我們非常一致地認為我們不會看到客戶進行任何類型的預購。對於我們的主要客戶，我們在與他們開展的業務方面與他們密切合作。

Because we have so much intimacy with our customers the answer is no, we're not seeing any pre buys or unusual behavior. We improved our lead times, so at this point they can order up to normal expectation.

因為我們與客戶的關係非常密切，所以答案是否定的，我們沒有看到任何預購或異常行為。我們縮短了交貨時間，因此此時他們的訂單可以達到正常預期。

Great. Thank you.

偉大的。謝謝。

Jeff Kvaal, Nomura.

傑夫·科瓦爾，野村證券。

Thank you for allowing me back in the cue. Sorry for being presumptuous before with the second question. Allow me to cue it up officially. Ita, I'm wonder if you could help us bridge the operating margin GAAP between where you were in this very, very strong quarter and where you are starting to look at 2017. Sounds like R&D was a little bit lighter than expected. What are some of the other variables that would bring us back to the normal range? Thanks.

謝謝你讓我回到提示中。抱歉之前對第二個問題的冒昧。請容許我正式提示一下。 Ita，我想知道您是否可以幫助我們在這個非常非常強勁的季度和您開始展望的 2017 年之間彌合 GAAP 營運利潤率。聽起來研發比預期要少一些。還有哪些變數可以使我們回到正常範圍？謝謝。

Yes, I mean, obviously the gross margin is a part of that equation, right? And we talked about that and you see the guide for gross margins. Then if you look at R&D was flat dollar to dollar in Q4 and obviously the revenue grew significantly that is not a case that we would like to continue. We intend to invest in R&D and invest in sales and marketing as we go forward. I think Q4 has some once off unique attributes that drove that higher bottom line.

是的，我的意思是，顯然毛利率是該等式的一部分，對吧？我們討論過這一點，您可以查看毛利率指南。然後，如果你看看第四季度的研發費用與美元持平，並且顯然收入顯著增長，那麼我們不想繼續這種情況。隨著我們的發展，我們打算投資研發並投資銷售和行銷。我認為第四季有一些曾經獨特的屬性，推動了更高的利潤。

Just to be clear we had some prototypes spend on new products that shifted from Q4 to Q1. So that's what kept the R&D flat.

需要明確的是，我們在新產品上投入了一些原型，這些新產品從第四季度轉移到了第一季。這就是研發保持穩定的原因。

Yes, so we can go back to more typical growth rate on OpEx as we go into 2017.

是的，所以進入 2017 年我們可以回到更典型的營運支出成長率。

Perfect. Thank you both.

完美的。謝謝你們倆。

This concludes the Arista Q4 2016 earnings call. We posted a presentation which provides additional perspective on our FY16 results, which you can access on the investor section of our website. Thank you, everyone for joining us today.

Arista 2016 年第四季財報電話會議到此結束。我們發布了一份演示文稿，提供了有關 2016 財年業績的更多觀點，您可以在我們網站的投資者部分訪問該演示文稿。謝謝大家今天加入我們。

Thank you for joining, ladies and gentlemen. This concludes today's call. You may now disconnect.

女士們、先生們，感謝您的加入。今天的電話會議到此結束。您現在可以斷開連線。