Arista Networks Inc (ANET) 2023 Q3 法說會逐字稿

Welcome to the Third Quarter 2023 Arista Networks Financial Results Earnings Conference Call.

歡迎參加 Arista Networks 2023 年第三季財務業績電話會議。

(Operator Instructions) As a reminder, this conference is being recorded and will be available for replay from the Investor Relations section at the Arista website following this call.

（操作員說明）謹此提醒，本次會議正在錄製中，並可在本次電話會議後在 Arista 網站的投資者關係部分重播。

Ms. Liz Stine, Arista's Director of Investor Relations, you may begin.

Arista 投資者關係總監 Liz Stine 女士，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 Networks President and Chief Executive Officer; and Ita Brennan, Arista's Chief Financial Officer. This afternoon, Arista Networks issued a press release announcing the results for its fiscal third quarter ending September 30, 2023. If you would like a copy of the release, you can access it online at our website.

謝謝你，接線生。大家下午好，感謝您加入我們。參加今天電話會議的有 Arista Networks 總裁兼執行長 Jayshree Ullal；以及 Arista 財務長 Ita Brennan。今天下午，Arista Networks 發布了一份新聞稿，宣布截至 2023 年 9 月 30 日的第三財季業績。如果您需要該新聞稿的副本，可以在我們的網站上在線訪問。

During the course of this conference call, Arista Networks management will make forward-looking statements, including those relating to our financial outlook for the fourth quarter of the 2023 fiscal year, longer-term financial outlook for 2024 and beyond, our total addressable market and strategy for addressing these market opportunities, including AI, customer demand trends, supply chain constraints, component costs, manufacturing output, inventory management and inflationary pressures on our business, lead times, product innovation, working capital optimization and the benefits of acquisition, which are subject to the risks and uncertainties that we discuss in detail in our documents filed with the SEC, specifically in our most recent Form 10-Q and Form 10-K, and 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. We undertake no obligation to update these statements after this call.

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 2023 財年第四季的財務前景、2024 年及以後的長期財務前景、我們的總目標市場和應對這些市場機遇的策略，包括人工智慧、客戶需求趨勢、供應鏈限制、零件成本、製造產量、庫存管理和我們業務的通膨壓力、交貨時間、產品創新、營運資本優化和收購的好處，這些是受限於我們在向SEC 提交的文件中詳細討論的風險和不確定性，特別是在我們最新的表格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有重大差異。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。我們不承擔在本次電話會議後更新這些聲明的義務。

Also, please note that certain financial measures we use on the call are expressed on a non-GAAP basis and have been adjusted to exclude certain charges. We have provided reconciliations of these non-GAAP financial measures to GAAP financial measures in earnings press release.

另請注意，我們在電話會議中使用的某些財務指標是在非公認會計原則的基礎上表示的，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。

With that, I will turn the call over to Jayshree.

這樣，我會將電話轉給 Jayshree。

Thank you, Liz, and happy Halloween, everyone. We delivered revenues of $1.51 billion for the quarter, with a non-GAAP earnings per share of $1.83. Services and software support renewals contributed approximately 16.8% of revenue. Our non-GAAP gross margins of 63.1% was influenced by improving supply chain overheads and higher enterprise contribution. As we have said before, gross margins have consistently improved every quarter this year and will stabilize next year in 2024.

謝謝你，莉茲，祝大家萬聖節快樂。我們本季實現營收 15.1 億美元，非 GAAP 每股收益為 1.83 美元。服務和軟體支援續約貢獻了約 16.8% 的收入。我們的非 GAAP 毛利率為 63.1%，這是受到供應鏈管理費用改善和企業貢獻增加的影響。正如我們之前所說，毛利率今年每季都持續改善，並將在明年 2024 年趨於穩定。

International contribution registered at 21.5% with Americas at 78.5%. As predicted, Arista's supply chain and lead times are improving steadily in 2023, and we expect it to normalize in 2024. We are now projecting 33% annual growth versus our prior Analyst Day forecast of 25% growth for the 2023 calendar year.

國際貢獻率為 21.5%，其中美洲為 78.5%。正如預測的那樣，Arista 的供應鏈和交貨時間將在2023 年穩步改善，我們預計將在2024 年正常化。我們現在預計年增長率為33%，而先前分析師日預測的2023 年成長率為25%。

During the past year, our Cloud Titan customers have been planning a different mix of AI networking and classic cloud networking for their compute and storage clusters. Our historic classification of our Cloud Titan customers has been based on industry definition of customers with or likely to attain greater than 1 million installed compute service.

在過去的一年中，我們的 Cloud Titan 客戶一直在為其運算和儲存叢集規劃人工智慧網路和經典雲端網路的不同組合。我們對 Cloud Titan 客戶的歷史分類是基於擁有或可能獲得超過 100 萬已安裝運算服務的客戶的行業定義。

Looking ahead, we will combine cloud and AI customer spend into one category called Cloud and AI Titan sector. And as a result of this combination, Oracle OCI becomes a new member of the sector, while Apple shift to cloud specialty providers. This new Cloud and AI Titan sector is projected to represent greater than 40% of our total revenue mix due to the favorable AI investments expected in the future.

展望未來，我們將把雲端和人工智慧客戶支出合併到一個稱為雲端和人工智慧泰坦部門的類別中。此次合併後，Oracle OCI 成為該產業的新成員，而 Apple 則轉向雲端專業供應商。由於未來預計有利的人工智慧投資，這項新的雲端和人工智慧泰坦部門預計將占我們總收入組合的 40% 以上。

In terms of enterprise momentum, Arista continues to focus on multi-domain, modern software with architectural superiority based on our single EOS, extensible operating system and CloudVision stack. This is truly a unique foundation and differentiator. We have demonstrated our strong execution and uncompromised quality with predictable release cadence that our customers have come to enjoy and appreciate. The power of our one consistent software stack across a breadth of use cases, be the WAN routing, campus, branch or data center infrastructure is truly unmatched by our industry peers.

在企業動力方面，Arista 繼續專注於基於我們的單一 EOS、可擴展作業系統和 CloudVision 堆疊的具有架構優勢的多領域現代軟體。這確實是一個獨特的基礎和差異化因素。我們透過可預測的發布節奏展示了強大的執行力和不妥協的質量，贏得了客戶的喜愛和讚賞。我們的一個一致的軟體堆疊在廣泛的用例中（無論是 WAN 路由、園區、分支機構還是資料中心基礎設施）的強大功能確實是我們的行業同行無法比擬的。

Let me illustrate with a few customer wins. Our first customer win is an international one, where the customer is providing services for their interconnect of high-performance compute, HPC clusters, which are often its foundation for GPU as a service offering. Arista's Ethernet modular switch coupled with EOS, created a perfect combination of a switching platform with real-time telemetry, leveraging our EOS state-driven published subscribed model.

讓我用一些贏得客戶的例子來說明。我們贏得的第一個客戶是國際客戶，客戶為其高效能運算、HPC 叢集的互連提供服務，這通常是 GPU 即服務產品的基礎。 Arista 的乙太網路模組化交換器與 EOS 結合，利用我們的 EOS 狀態驅動的發布訂閱模型，創建了交換平台與即時遙測的完美組合。

Our next [one] showcases our expansion of Arista in the public sector with their AI initiative. This grant-funded project utilizes Arista simplified operational models with CloudVision. New AI workloads require high scale, high ratings, high bandwidth and low latency as well as a need for granular visibility. This build out of a single EVPN-VXLAN based 400-gig fabric is based on deep buffers fines and underscores the importance of a lossless architecture for AI networking.

我們的下一個 [一個] 展示了 Arista 透過其 AI 計劃在公共部門的擴張。此由補助金資助的專案利用 Arista 簡化的營運模式和 CloudVision。新的人工智慧工作負載需要高規模、高評級、高頻寬和低延遲，並且需要精細的可見性。這種基於單一 EVPN-VXLAN 的 400 Gig 結構的建構是基於深度緩衝區精細，強調了 AI 網路無損架構的重要性。

This last but not least, customer is an example of a campus spend. A couple of years ago, the customer was looking to do a complete refresh of their agent campus network, which comprises of 4 major headquarter campuses and several remote sites. The customer was able to leverage the Arista validated design models, AVD, all the way from data center into the campus network. The customer chose Arista because we were able to offer best-of-breed operational excellence as well as security with our 0 trust AVA sensors for threat mitigation across the entire campus of wired switches.

最後但並非最不重要的一點是，客戶是校園支出的一個例子。幾年前，客戶希望對其代理園區網路進行徹底更新，該網路由 4 個主要總部園區和幾個遠端站點組成。客戶能夠利用 Arista 驗證的設計模型 AVD，從資料中心一直到園區網路。客戶選擇 Arista 是因為我們能夠透過我們的 0 信任 AVA 感測器提供同類最佳的卓越營運和安全性，以緩解整個有線交換器園區的威脅。

Arista's innovative macro segmentation, MSS, combined with leaf access and core spine delivered a compelling 2-tier Cognitive Campus solution. These 3 customers illustrate our power of the platform and software innovation for a modern network model with a low total cost of operations. We are pleased with our trajectory setting the gold standard in our industry with the lowest CVEs and vulnerabilities and the highest Net Promoter Score for cloud networking.

Arista 的創新宏分段 MSS 與葉片訪問和核心主幹相結合，提供了引人注目的 2 層認知園區解決方案。這 3 家客戶展示了我們的平台和軟體創新的力量，以實現總營運成本較低的現代網路模型。我們很高興我們的發展軌跡在我們的行業中樹立了黃金標準，具有最低的 CVE 和漏洞以及最高的雲端網路淨推薦值。

And with that, I'd like to hand to Ita, our CFO, for financial specifics.

接下來，我想請我們的財務長 Ita 了解財務細節。

Thanks, Jayshree, and good afternoon. This analysis of our Q3 results and our guidance for Q4 '23 is based on non-GAAP and excludes all noncash stock-based compensation impacts, certain acquisition-related charges and other nonrecurring items. A full reconciliation of our selected GAAP to non-GAAP results is provided in our earnings release.

謝謝，Jayshree，下午好。我們對第三季業績的分析和 23 年第四季的指導是基於非公認會計準則，不包括所有非現金股票薪酬影響、某些收購相關費用和其他非經常性項目。我們的收益報告中提供了我們選擇的 GAAP 與非 GAAP 績效的全面對帳。

Total revenues in Q3 were $1.51 billion, up 28.3% year-over-year and well above the upper end of our guidance of $1.45 billion to $1.5 billion. Services and subscription software contributed approximately 16.8% of revenues in the third quarter, up from 15.2% in Q2. International revenues for the quarter came in at $324.7 million or 21.5% of total revenue, up from 20.9% last quarter. This quarter-over-quarter increase largely reflected a healthy contribution from our enterprise customers in EMEA and APAC and some reduction in domestic shipments to our Cloud Titan customers.

第三季總營收為 15.1 億美元，年增 28.3%，遠高於我們 14.5 億至 15 億美元指引上限。服務和訂閱軟體在第三季貢獻了約 16.8% 的收入，高於第二季的 15.2%。本季國際營收為 3.247 億美元，佔總營收的 21.5%，高於上季的 20.9%。這一季度環比增長在很大程度上反映了我們在歐洲、中東和非洲和亞太地區的企業客戶的健康貢獻，以及我們向 Cloud Titan 客戶的國內發貨量的一些減少。

Overall gross margin in Q3 was 63.1%, well above guidance of approximately 62% and up from 61.3% last quarter. We continue to see incremental improvements in gross margin quarter-over-quarter with higher enterprise shipments and better supply chain costs, somewhat offset by the need for additional inventory reserves as customers refine their forecasted product mix.

第三季的整體毛利率為 63.1%，遠高於約 62% 的指引值，高於上季的 61.3%。我們繼續看到，隨著企業出貨量的增加和供應鏈成本的改善，毛利率環比不斷提高，但隨著客戶完善其預測的產品組合而需要額外的庫存儲備，這在一定程度上抵消了毛利率的改善。

Operating expenses for the quarter were $255.6 million or 16.9% of revenue, down from last quarter at $287.3 million. R&D spending came in at $164.4 million or 10.9% of revenue, down from $188.5 million last quarter. This primarily reflected increased headcount more than offset by lower new product introduction costs in the period.

本季營運費用為 2.556 億美元，佔營收的 16.9%，低於上季的 2.873 億美元。研發支出為 1.644 億美元，佔營收的 10.9%，低於上季的 1.885 億美元。這主要反映了員工人數的增加被同期新產品推出成本的降低所抵消。

Sales and marketing expense was $79 million or 5.2% of revenue, consistent with last quarter, with increased headcount and some reduction in product demo costs. Our G&A costs came in at $12.1 million or 0.8% of revenue, down from last quarter and reflecting the recovery of some bad debt amounts recorded in prior periods.

銷售和行銷費用為 7,900 萬美元，佔營收的 5.2%，與上季持平，員工人數增加，產品展示成本減少。我們的一般管理費用為 1,210 萬美元，佔收入的 0.8%，低於上季度，反映了前期記錄的一些壞帳金額的恢復。

Our operating income for the quarter was $696.2 million or 46.1% of revenue. Other income and expense for the quarter was a favorable $42.3 million, and our effective tax rate is 21.3%. This resulted in net income for the quarter of $581.4 million or 38.5% of revenue. Our diluted share number of -- was 317.6 million shares resulting in a diluted earnings per share number for the quarter of $1.83, up 46.4% from the prior year.

我們本季的營業收入為 6.962 億美元，佔營收的 46.1%。本季的其他收入和支出為 4,230 萬美元，有效稅率為 21.3%。這使得該季度的淨利潤達到 5.814 億美元，佔營收的 38.5%。我們的稀釋後股票數量為 3.176 億股，導致本季稀釋後每股收益為 1.83 美元，比上一年增長 46.4%。

Now turning to the balance sheet. Cash, cash equivalents and investments into the quarter at approximately $4.5 billion. We did not repurchase shares of our common stock in the quarter. To recap our repurchase program to date, we have reported $855.5 million or 8 million shares at an average price of $107 per share under our current $1 billion board authorization. This leaves $144.5 million available for repurchase in future quarters. The actual timing and amount of future repurchases will be dependent on market and business conditions, stock price and other factors.

現在轉向資產負債表。本季的現金、現金等價物和投資約為 45 億美元。本季我們沒有回購普通股。回顧我們迄今為止的回購計劃，根據我們目前 10 億美元的董事會授權，我們已報告 8.555 億美元，即 800 萬股，平均價格為每股 107 美元。這使得未來幾季可以回購 1.445 億美元。未來回購的實際時間和金額將取決於市場和業務狀況、股價和其他因素。

Now turning to operating cash performance for the third quarter. We generated approximately $699 million of cash from operations in the period, reflecting strong earnings performance, combined with some increase in deferred revenue and taxes payable. DSOs come in at 51 days, up from 49 days in Q2, reflecting the strong collections quarter and a good linearity of billings.

現在轉向第三季的營運現金表現。在此期間，我們從營運中產生了約 6.99 億美元的現金，反映出強勁的獲利表現，以及遞延收入和應付稅款的一些增加。 DSO 的週期為 51 天，高於第二季的 49 天，反映出強勁的收款季度和良好的帳單線性。

Inventory turns were 1.1x, down from 1.2% last quarter. Inventory remained flat to last quarter at $1.9 billion, reflecting the ongoing receipt and consumption component from our purchase commitments and an increase in switch-related finished goods. Our purchase commitments at the end of the quarter were $2 billion, down from $2.2 billion at the end of Q2.

庫存週轉率為 1.1 倍，低於上季的 1.2%。庫存與上季持平，為 19 億美元，反映出我們的採購承諾的持續收入和消耗部分以及與開關相關的製成品的增加。我們在本季末的採購承諾為 20 億美元，低於第二季末的 22 億美元。

We expect the overall purchase commitment number to continue to decline as we further optimize our supply position. However, we will maintain a healthy position related to key components, especially as we focus on new products. Our total deferred revenue balance was $1.195 billion, up from $1.085 billion in Q2. The majority of the deferred revenue balances are services related and directly link to the timing and term of service tax, which can vary on a quarter-by-quarter basis. Our product deferred revenue increased by $47 million from last quarter. Account payable days were 44 days, down from 57 days in Q2, reflecting the timing of inventory received payments. Capital expenditures for the quarter were $11.2 million.

隨著我們進一步優化供應狀況，我們預計整體採購承諾數量將持續下降。然而，我們將在關鍵零件方面保持健康的地位，特別是當我們專注於新產品時。我們的遞延收入餘額總額為 11.95 億美元，高於第二季的 10.85 億美元。大部分遞延收入餘額與服務有關，並與服務稅的時間和期限直接相關，服務稅的時間和期限可能會因季度而異。我們的產品遞延收入比上季增加了 4,700 萬美元。應付帳款天數為 44 天，低於第二季的 57 天，反映了庫存收到付款的時間。該季度的資本支出為 1120 萬美元。

Now turning to our outlook for the fourth quarter. Customer planning horizons for new deployments have shortened in concert with steadily improving lead time. On the supply side, we expect to continue to ship against previously committed deployment plans for some time targeting supply improvements were most needed but also careful not to create redundant customer inventory.

現在轉向我們對第四季的展望。隨著交付週期的穩定延長，客戶新部署的規劃期限也隨之縮短。在供應方面，我們預計將在一段時間內繼續按照先前承諾的部署計劃進行發貨，目標是最需要改善供應，但也要小心不要產生多餘的客戶庫存。

As outlined in our guidance, we expect to make incremental improvements to our 2023 outlook, which now calls for year-over-year revenue growth of approximately 33%. On the gross margin front, we expect gross margin of approximately 63% in the fourth quarter, reflecting ongoing supply chain and manufacturing benefits while maintaining a reasonably healthy cloud contribution.

正如我們的指導中所述，我們預計將逐步改善 2023 年的前景，目前要求收入年增約 33%。在毛利率方面，我們預計第四季毛利率約為 63%，反映了持續的供應鏈和製造效益，同時保持相當健康的雲端貢獻。

Turning to spending and investments. We expect to monitor the overall macro environment carefully, while engaging in targeted hiring in R&D and go-to-market as the team sees the opportunity to acquire talent. On the cash front, while increases in working capital has begun to moderate in recent quarters, our year-to-date 2023 tax payments have been deferred to October. This will represent a significant incremental use of cash in the fourth quarter at approximately $352 million.

轉向支出和投資。我們預計將仔細監控整體宏觀環境，同時在團隊看到獲得人才的機會時，在研發和進入市場方面進行有針對性的招募。在現金方面，雖然近幾季營運資金的成長開始放緩，但我們今年迄今的 2023 年稅款已推遲至 10 月。這將意味著第四季現金使用量大幅增加，約 3.52 億美元。

With all of this as a backdrop, our guidance for the fourth quarter, which is based on non-GAAP results and excludes any noncash stock-based compensation impacts and other nonrecurring items is as follows: Revenues of approximately $1.5 billion to $1.55 billion, gross margin of approximately 63%, operating margin of approximately 42%. Our effective tax rate is expected to be approximately 21.5% with diluted shares of approximately 319 million shares.

以此為背景，我們對第四季度的指導基於非 GAAP 業績，不包括任何非現金股票薪酬影響和其他非經常性項目，如下： 毛收入約為 15 億至 15.5 億美元利潤率約63%，營業利益率約42%。我們的有效稅率預計約為 21.5%，稀釋後股份約為 3.19 億股。

I will now turn the call back to Liz. Liz?

我現在將把電話轉回給莉茲。麗茲？

Thank you, Ita. We will now move to the Q&A portion of the Arista earnings call.

謝謝你，伊塔。我們現在將進入 Arista 財報電話會議的問答部分。

(Operator Instructions) Thank you for your understanding. Operator, take it away.

（操作說明）感謝您的體諒。接線員，把它拿走。

(Operator Instructions) Your first question comes from the line of Samik Chatterjee with JPMorgan.

（操作員說明）您的第一個問題來自摩根大通的 Samik Chatterjee。

Thank you for the question and congrats on the results. I guess just to keep it simple, Jayshree, if you can give us an update on when we think about the last 90 days, how have the 2 sort of verticals, Cloud Titans and enterprise sort of shown up in terms of momentum of orders and demand relative to where your expectations were 90 days ago. I know some of the cloud companies have talked about their CapEx outlook for next year as well. So an update on that would be helpful. And on the last call, you did talk about a target for double-digit growth next year. So how are you thinking on -- in relation to that number still going into the Investor Day.

感謝您的提問並對結果表示祝賀。我想為了簡單起見，Jayshree，如果您能為我們提供有關過去 90 天的最新情況，雲泰坦和企業這兩種垂直行業在訂單勢頭方面的表現如何，相對於您 90 天前的預期的需求。我知道一些雲端公司也談到了明年的資本支出前景。因此，對此進行更新會很有幫助。在上次電話會議上，您確實談到了明年兩位數成長的目標。那麼，您如何看待投資者日即將到來的這個數字。

Okay. Thanks. Samik, first of all, we are looking forward to sharing more detail on Analyst Day. But just to reiterate, our team has always projected at least a double-digit growth for next year and years beyond. So that goal remains unchanged, and we'll share more with you. Coming back to the last 90 days, as you know, as our lead times improve, our visibility declines but we don't see significant change in improvements or declines in the last 90 days. We continue to see good momentum on enterprise, and we continue to see a good, expected push on the combination of both cloud and AI together.

好的。謝謝。 Samik，首先，我們期待在分析師日分享更多細節。但重申一下，我們的團隊始終預計明年及以後的幾年至少會實現兩位數的成長。所以這個目標保持不變，我們將與您分享更多內容。回到過去 90 天，如您所知，隨著我們的交貨時間縮短，我們的可見度下降，但我們沒有看到過去 90 天的改善或下降發生重大變化。我們繼續看到企業的良好勢頭，並且繼續看到雲端和人工智慧結合的良好、預期的推動。

Your next question comes from the line of Antoine Chkaiban with New Street Research.

您的下一個問題來自 New Street Research 的 Antoine Chkaiban。

So accelerated AI cluster deployment is clearly weighting on traditional infrastructure deployment this year. And I'm keen to hear how sustainable you think this is because the vast majority of workloads still run on traditional infrastructure, right? So is it fair to expect a rebound in traditional infrastructure spend next year?

因此，今年加速的人工智慧叢集部署顯然對傳統基礎架構部署產生了重要影響。我很想知道您認為這有多可持續，因為絕大多數工作負載仍然在傳統基礎設施上運行，對吧？那麼，預計明年傳統基礎建設支出將出現反彈是否公平？

Yes. Thank you, Antoine. I'll share some of my thoughts, and I'd like to hand it over to Anshul for further thoughts. We've always looked at that the cloud network as a front end and the back end. And as we said last year, many of our cloud customers are favoring spending more on the back end with AI, which doesn't mean they stop spending on front end, but they're clearly prioritized and doubled down on AI this year. My guess is as we look at the next few years, they'll continue to double down on AI. But you cannot build an AI bank cluster without thinking of the front end. So we'll see a full cycle here, while today the focus is greatly on AI and the back end of the network. In the future, we expect to see more investments in the front end as well.

是的。謝謝你，安托萬。我將分享一些我的想法，並希望將其交給 Anshul 進一步的想法。我們一直將雲端網路視為前端和後端。正如我們去年所說，我們的許多雲端客戶傾向於在人工智慧後端投入更多，這並不意味著他們停止在前端投入，但今年他們顯然優先考慮並加倍投入人工智慧。我的猜測是，展望未來幾年，他們將繼續加大對人工智慧的投入。但如果不考慮前端，就無法建構人工智慧銀行集群。因此，我們將在這裡看到一個完整的周期，而今天的重點主要集中在人工智慧和網路後端。未來，我們預計也會在前端看到更多的投資。

Jayshree, that's right, you said it's spot on, AI is everyone's priority right now, and the rest will get touched at the right time.

Jayshree，是的，你說得很對，人工智慧現在是每個人的首要任務，其他的會在適當的時候接觸到。

Your next question comes from the line of Matt Niknam with Deutsche Bank.

您的下一個問題來自德意志銀行的 Matt Niknam。

One question, a very simple one on services. Pretty nice improvement, about 13% sequential improvement in the quarter, seasonally, I think we've seen low single digits, mid-single digits. Anything you would call out? And how are we thinking about that for the fourth quarter?

一個問題，一個非常簡單的關於服務的問題。相當不錯的改善，本季環比改善約 13%，從季節性來看，我認為我們已經看到了低個位數、中個位數。有什麼想喊的嗎？我們如何看待第四季的情況？

Yes. Look, I think every now and again, you see kind of a pop on the services line. It's usually either somebody has consumed services faster than they intended to or we've been negotiating a contract. And then when we do actually finally signed the renewals contract, there's some flush of prior periods into the quarter. So if you look back historically, you'll see that happens from time to time. I don't think it changes the kind of fundamental growth in services. We've talked about this kind of mid to maybe a little bit higher teens growth on an ongoing basis year-over-year. I don't think it changes that. It's just -- we do have these little spikes from time to time.

是的。聽著，我想你時不時會看到服務熱線的流行。通常是有人使用服務的速度比他們預期的要快，或者我們一直在談判合約。然後，當我們最終簽署續約合約時，本季的前期工作會有所增加。因此，如果你回顧歷史，你會發現這種情況時有發生。我認為這不會改變服務業的根本成長。我們已經討論過青少年持續逐年成長的情況。我認為這不會改變這一點。只是──我們確實時不時會出現這些小尖峰。

Your next question comes from the line of Karl Ackerman with BNP Paribas.

您的下一個問題來自法國巴黎銀行的卡爾‧阿克曼 (Karl Ackerman)。

I suppose this is a question for Ita. But is the upside in the quarter and outlook coming from a combination of better bookings and working down some of your prior backlog? Just any thoughts in terms of maybe where your backlog may end up relative to normal levels? Pre-pandemic could be super helpful.

我想這是要問 Ita 的問題。但是，本季和前景的上漲是否來自更好的預訂和減少之前的一些積壓訂單的結合？關於您的積壓工作相對於正常水平可能最終會達到什麼程度，有什麼想法嗎？大流行前可能會非常有幫助。

Yes, Karl, we don't talk about backlog specifically. I think what we have said is as lead times improve, you expect to see some reduction in visibility to (inaudible) customers, the time where they have to place orders changes over time, right? So I think that we are seeing that dynamic. We've talked about that dynamic that we are -- as the lead times get better, we are seeing kind of customer planning horizons are shortening. We will be still deploying -- if you listen to my prepared remarks, I mean, we are still deploying equipment into next year from plans that we made some time ago. And that's just kind of, again, working with customers and laying out their plans. But in terms of giving specific numbers, we haven't done that.

是的，Karl，我們不特別談論積壓。我認為我們所說的是，隨著交貨時間的縮短，您預計會看到（聽不清楚）客戶的可見性有所降低，他們必須下訂單的時間會隨著時間的推移而變化，對吧？所以我認為我們正在看到這種動態。我們已經討論過我們的動態 - 隨著交貨時間變得更好，我們看到客戶規劃期限正在縮短。我們仍將部署——如果你聽我準備好的講話，我的意思是，我們仍在根據我們不久前製定的計劃將設備部署到明年。這只是再次與客戶合作並製定他們的計劃。但就給出具體數字而言，我們還沒有這樣做。

Your next question comes from the line of Amit Daryanani with Evercore.

你的下一個問題來自 Amit Daryanani 和 Evercore 的對話。

Congrats on a nice set of numbers here. I was hoping you could talk a little bit more on the enterprise side. You're seeing some really good strength over here clearly. But maybe you can talk about, is the strength more coming from campus versus the data side, maybe just qualitatively, where are you seeing better trends? And really, the context of this is, I think a lot of your peers are seeing a very severe drop in the growth rates as their backlogs have gone away. You don't seem to be having that issue. So I'm wondering like what is the offset to that and what's enabling the growth. And to the extent you can talk about campus versus the data center, that would be really helpful.

恭喜您獲得了一組不錯的數字。我希望你能多談談企業方面的情況。你在這裡清楚地看到了一些非常好的力量。但也許你可以談談，力量更多來自校園還是數據方面，也許只是定性地，你在哪裡看到更好的趨勢？事實上，這種情況的背景是，我認為許多同行都看到，隨著積壓訂單的消失，成長率急劇下降。你好像沒有這個問題所以我想知道是什麼抵消了這一點以及什麼促進了成長。如果您可以談論園區與資料中心，那將非常有幫助。

Okay, Amit. Again, I'll share a few words and ask Anshul to step in and say some too. Look, if you look back 3 years ago, we started seriously investing in the enterprise. And back in 2020, we had a small enterprise business that it was largely comprised of, you rightly pointed out, data center and some high-performance compute and low latency HFT, can't never forget our original heritage. But in the last 3 years, we have made an investment and seen a significant uptick in enterprise customers wanting to do business with Arista. Historically, it's been the high-tech enterprise and the financials. And today, we're seeing a much better cross-section of verticals, including health care, education, we expect to see more and more distributed enterprises.

好吧，阿米特。我將再次分享幾句話，並請 Anshul 介入並說一些話。你看，如果你回顧三年前，我們就開始認真投資企業。早在 2020 年，我們就有一家小型企業業務，您正確地指出，它主要由資料中心和一些高效能運算和低延遲高頻交易組成，永遠不能忘記我們最初的傳統。但在過去 3 年中，我們進行了投資，並看到希望與 Arista 開展業務的企業客戶顯著增加。從歷史上看，它是高科技企業和金融業。今天，我們看到了更好的垂直行業橫斷面，包括醫療保健、教育，我們期望看到越來越多的分散式企業。

And to your question on data center versus campus, the answer is yes to both. We actually see one uniform architecture where you can have a universal spine that connects into a wired leaf, a wireless leaf, a storage cluster, a compute cluster and a border leaf for routing and WAN transit. It's pretty exciting that Arista surely and remarkably setting the tone for a 2-tier leaf spine architecture across the enterprise and building that modern operating model based on CloudVision.

對於您關於資料中心與園區的問題，答案都是肯定的。我們實際上看到了一種統一的架構，您可以擁有一個通用主幹，連接到有線葉、無線葉、儲存叢集、計算叢集以及用於路由和 WAN 傳輸的邊界葉。令人非常興奮的是，Arista 確實為整個企業的 2 層葉脊架構定下了基調，並建立了基於 CloudVision 的現代營運模式。

Amit, this is Anshul here. We have a great team being led by Chris Schmidt and Ashwin Kohli in this space. And now we sell in many, many countries around the world. And as Jayshree mentioned, both data center and campus customers are coming to us for the automation for the higher quality, for the visibility but able to bring to them across the board in one architecture, one OS and one CloudVision. That message resonates with every CIO today, they are no longer worried about Arista being this new kid on the block that's a risky move for them. We are, in fact, becoming the de facto and they like it. So this is why the momentum just continues. It's good execution by the team, and getting to more and more customers around the world.

阿米特，我是安舒爾。在這個領域，我們有一支由 Chris Schmidt 和 Ashwin Kohli 領導的優秀團隊。現在我們在世界各地很多很多國家銷售。正如 Jayshree 所提到的，資料中心和園區客戶都向我們尋求自動化，以獲得更高的品質和可見性，但能夠透過一種架構、一種作業系統和一種 CloudVision 全面為他們提供服務。這一訊息引起了今天每位 CIO 的共鳴，他們不再擔心 Arista 成為這個街區的新人，這對他們來說是一個冒險的舉動。事實上，我們正​​在成為事實，他們喜歡這樣。這就是為什麼這種勢頭仍在持續。這是團隊的良好執行力，並吸引了世界各地越來越多的客戶。

Your next question comes from the line of Ben Bollin with Cleveland Research.

您的下一個問題來自克利夫蘭研究中心的 Ben Bollin。

Jayshree and Anshul, I was hoping you might be able to comment a little bit about your thoughts as you make progress in the back-end network around GPU cluster opportunity, how you see that developing versus what you've shared with us previously? And any color in particular around both preexisting and the opportunity for net new wins would be helpful.

Jayshree 和 Anshul，我希望您在後端網路圍繞 GPU 叢集機會取得進展時能夠評論一下您的想法，與您之前與我們分享的內容相比，您如何看待這種發展？任何顏色，特別是圍繞現有的和淨新勝利的機會都會有幫助。

Sure. Again, this is an area that Anshul lives and breathes more than I do. So I'll give you some executive comments. But Ben as I see it, the back-end network was something we didn't even see a few months or years ago, and was largely dominated by InfiniBand. Today if I look at the 5 major designs for AI networking, one of them is still very InfiniBand dominated, all the others we're looking at is -- are adopting on dual strategy of both Ethernet and InfiniBand.

當然。再說一次，安舒爾比我更常在這個領域生活和呼吸。所以我會給你一些行政評論。但在 Ben 看來，後端網路是我們幾個月或幾年前都沒有見過的東西，並且主要由 InfiniBand 主導。今天，如果我看一下人工智慧網路的 5 種主要設計，其中之一仍然是 InfiniBand 主導，我們看到的所有其他設計都是 - 正在採用乙太網路和 InfiniBand 的雙重策略。

So I think AI networking is going to become more and more favorable to Ethernet, particularly with the Ultra Ethernet Consortium and the work they're doing to define a spec, you're going to see more products based on UEC. You're going to see more of a connection between the back end and the front-end using IP as a singular protocol. And so we're feeling very encouraged that especially in 2025, there will be a lot of production rollout of back end and, of course, front end based on Ethernet.

因此，我認為人工智慧網路將變得越來越有利於以太網，特別是隨著超以太網聯盟以及他們正在定義規範的工作，您將看到更多基於 UEC 的產品。您將看到更多使用 IP 作為單一協定的後端和前端之間的連線。因此，我們感到非常鼓舞，尤其是在 2025 年，將會有大量的後端產品推出，當然還有基於乙太網路的前端。

Over to you, Anshul.

交給你了，安舒爾。

Sure. Thanks, Jayshree. Ben our Cloud Titan customers as well as the specialty providers have been great partners of ours. So the level of partnership and co-development that's going on in this space, is high. It's just like in previous cycles, previous products that we've done with them. There's a lot of fine-tuning needed in these back-end networks to get the maximum utilization of DPUs. And as you know, we are good at these engineering projects.

當然。謝謝，傑什裡。 Ben 我們的 Cloud Titan 客戶以及專業提供者一直是我們偉大的合作夥伴。因此，這個領域的合作和共同開發水準很高。就像之前的週期、之前我們用它們製作的產品一樣。這些後端網路需要進行大量微調才能最大程度地利用 DPU。如您所知，我們擅長這些工程項目。

So the teams are enjoying it, the activity is much, much higher than before. And the goal is to scale these clusters as quickly as possible, so our customers can run their jobs faster. We're feeling good about it. You've heard comments from Jayshree as well in the past, and you have more on the analyst here on this topic, too, but all good on the activity front that we have.

所以團隊們都很享受，活動比以前高很多。我們的目標是盡快擴展這些集群，以便我們的客戶可以更快地運行他們的工作。我們對此感覺良好。您過去也聽過 Jayshree 的評論，並且您也對分析師在這個主題上有更多評論，但在我們的活動方面都很好。

I think one thing to just add is the entropy and efficiency of these large language models and the job completion time has become so critical that it's not just about packet latency. It's really about end-to-end latency. And this is something our team, especially our engineers know a lot about from the early days. So we're really working this end-to-end.

我認為需要補充的一件事是這些大型語言模型的熵和效率，而且作業完成時間變得如此重要，以至於不僅僅是資料包延遲。這實際上與端到端延遲有關。這是我們的團隊，尤其是我們的工程師從早期就非常了解的事情。所以我們確實在進行端到端的工作。

Your next question comes from the line of Aaron Rakers with Wells Fargo.

你的下一個問題來自富國銀行的 Aaron Rakers。

I just want to kind of dovetail off that last question a little bit. I know, Jayshree, last quarter, I think it was you commented that you'd expect to see pilot deployments for these AI opportunities in '24 and then meaningful volume in 2025. First of all, do you reaffirm that view? Or has that changed at all? And then on that, can you give us some context of how you see network spend intensity for these AI fabrics relative to, I think in the past, it's been kind of high single-digit percent of compute spend on networking in classical cloud infrastructure environments?

我只是想稍微吻合最後一個問題。我知道，Jayshree，上個季度，我認為您曾評論過，您希望在24 年看到這些人工智慧機會的試點部署，然後在2025 年看到有意義的數量。首先，您是否重申了這一觀點？或者說這一切已經改變了嗎？然後，您能否給我們一些背景信息，說明您如何看待這些人工智能結構的網絡支出強度，我認為過去，在經典雲基礎設施環境中網絡計算支出的百分比一直很高。 ？

First of all, Aaron, the first question is easy. I reaffirm that view and more later on November 9 at our Analyst Day. So if I tell you everything now, you may not attend that session. Coming back to this networking spend versus the rest of the GPUs and et cetera, I would say it started to get higher and higher with 100-gig, 400-gig and 800-gig, where the optics and the switches are more than 10%, perhaps even 15% in some cases, 20, a lot of its governed by the cables and optics too. But the percentage hasn't changed a lot in high-speed networking. In other words, it's not too different between 10, 100, 200, 400 and 800. So we -- you'll continue to see that 10% to 15% range.

首先阿龍，第一個問題很簡單。我在 11 月 9 日分析師日重申了這一觀點以及更多觀點。因此，如果我現在告訴你一切，你可能不會參加那次會議。回到網路支出與其他 GPU 等的比較，我想說的是，隨著 100-gig、400-gig 和 800-gig，網路支出開始變得越來越高，其中光學元件和交換器超過 10% ，在某些情況下甚至可能是15%，20，其中許多也由電纜和光學元件控制。但在高速網路中這一比例並沒有太大變化。換句話說，10、100、200、400 和 800 之間並沒有太大差異。因此，您將繼續看到 10% 到 15% 的範圍。

Your next question comes from the line of Tal Liani with Bank of America.

你的下一個問題來自塔爾·利亞尼與美國銀行的電話線。

Jayshree, your tone is definitely better this quarter than last quarter. And you sound more confident in the numbers. And I want to understand if something changed in the last 3 months that made you more optimistic. I'm looking at the consensus estimates. And it looks like the growth rate has been declining for 4 quarters from like 54% to about 20% next quarter. And any troughs that Q1 stays there and recovers after that. Do you agree that we are nearing kind of the end of the down adjustment to the growth rates and then it's going to stabilize and go up from there? Or how do you look at the risks of that not materializing?

Jayshree，你這個季度的語氣肯定比上季更好。而且你聽起來對這些數字更有信心。我想了解過去 3 個月是否發生了一些變化讓您變得更加樂觀。我正在查看共識估計。看起來成長率已經連續 4 個季度下降，從 54% 左右下降到下個季度的 20% 左右。 Q1 保持在那裡並在此後恢復的任何低谷。您是否同意我們即將結束成長率下調調整，然後成長率將趨於穩定並從那裡開始上升？或者您如何看待這種情況無法實現的風險？

What do you think Ita?

你覺得伊塔怎麼樣？

So Tal, I think, look, we've been talking about kind of the growth decelerating as we move through the year just because of the comps are so high. I think if you look at the discussion we've had so far about '24 and obviously, the more to come next week, we've talked about double-digit growth. But again, we are expecting that there is some moderation on the cloud side of the business next year.

所以，我認為，塔爾，你看，我們一直在談論隨著這一年的發展，成長會放緩，因為競爭如此之高。我認為，如果你看看我們迄今為止關於 24 世紀的討論，顯然，下週將會有更多討論，我們已經討論了兩位數的增長。但我們再次預計明年雲端方面的業務將會放緩。

So I think within the balance of kind of the plan that we've laid out and the discussions that we've laid out, I think we're executing well, right? We're giving you some upside on the -- in the guide for '23 and by default, to almost kind of some upside of '24, right? So I think we're executing well. But within the balance of what we talked about, we do believe that there's a moderation of price lending as we head into 2024.

因此，我認為在我們制定的計劃和我們制定的討論之間的平衡範圍內，我認為我們執行得很好，對嗎？我們在 23 年的指南中為您提供了一些好處，預設情況下，幾乎是 24 年的一些好處，對吧？所以我認為我們執行得很好。但在我們討論的平衡範圍內，我們確實相信，進入 2024 年，價格貸款將會有所放緩。

And Tal, I think I need to focus on my tone and maybe sign a song or something because that I felt really enthusiastic last quarter and this quarter.

塔爾，我認為我需要專注於我的語氣，也許簽一首歌或其他東西，因為上個季度和本季我感到非常熱情。

But you're pretty happy last quarter. So...

但上個季度你很開心。所以...

I'm a happy kind of [gal] at the moment.

我現在是一個快樂的人。

We are reading between the lines.

我們正在閱讀字裡行間。

Your next question comes from the line of Sabastien Naji with William Blair.

你的下一個問題來自薩巴斯蒂安·納吉和威廉·布萊爾的對話。

I wanted to ask about the change in revenue breakdown and the inclusion of OCI in this new Cloud Titan and AI segment. Was this the result of the material change in Arista's wallet share at Oracle? Or is that business becoming a larger portion of revenue? Anything you can provide there?

我想詢問收入細分的變化以及將 OCI 納入這個新的 Cloud Titan 和 AI 細分市場。這是 Arista 在 Oracle 的錢包份額發生重大變化的結果嗎？或者該業務在收入中所佔的比例是否較大？那裡有什麼可以提供的嗎？

Yes. No, we don't do it based on wallet share of Arista. We do it based on definition. So I think OCI has become a meaningful top-tier cloud customer and they belong in the cloud tightening category and in addition to their AI investments as well. So for reasons of classification and definition, the change is very warranted. And yes, they happened to be a good customer of Arista, that's nice as well.

是的。不，我們不會根據 Arista 的錢包份額來這樣做。我們根據定義來做。因此，我認為 OCI 已經成為一個有意義的頂級雲端客戶，除了人工智慧投資之外，他們也屬於雲端緊縮類別。因此，出於分類和定義的原因，這種改變是非常必要的。是的，他們碰巧是 Arista 的好客戶，這也很好。

Your next question comes from the line of Meta Marshall with Morgan Stanley.

你的下一個問題來自摩根士丹利的梅塔馬歇爾。

Jayshree or Anshul, maybe just some commentary on the Tier 2 and specialty providers. And just what you're seeing in terms of other people kind of building out some of these AI clusters, if you classify some of those customers as largely focused on back end today, and those represent opportunities going forward? Or just kind of what the discussion is outside of the Cloud Titans amongst some of these other guys that are building very large networks?

Jayshree 或 Anshul，也許只是對二級和專業提供者的一些評論。如果您將其中一些客戶歸類為主要關注當今的後端，那麼您所看到的其他人正在建立其中一些人工智慧集群，而這些代表著未來的機會？或者只是雲泰坦之外的其他一些正在建立超大型網路的人正在討論什麼？

Sure. Meta, this is Anshul. The Tier 2 cloud providers are doing exactly what the Tier 1 is doing just at a smaller scale. So the activity is out there. Many companies are trying to build these clusters, maybe not hundreds of thousands GPUs but thousands of GPUs together in their real estate if they can get them. But the designs that we're working on with them, the type of sort of features, fine-tuning is actually very, very similar to the cloud, just at a smaller scale. So we're very happy with that activity and this is across the board. It's very positive to see this in the ecosystem that it's not limited just 4 or 5 customers.

當然。梅塔，這是安舒爾。第 2 層雲端供應商正在做與第 1 層雲端供應商所做的事情，只是規模較小。所以活動就在那裡。許多公司正在嘗試建立這些集群，如果可以的話，可能不是數十萬個 GPU，而是將數千個 GPU 集中在他們的房地產中。但我們正在與他們合作的設計、功能類型、微調實際上與雲端非常非常相似，只是規模較小。所以我們對這項活動非常滿意，而且是全面的。在生態系統中看到這一點非常積極，因為它不僅限於 4 或 5 個客戶。

I think they're also waiting for GPUs like everyone else is. So there's that common problem that we're not the only one with lead time issues. But to clarify the comment on scale, Anshul and I are also seeing some very interesting enterprise projects against smaller scale. So a lot of customers are trying AI for small clusters, not too different from what we saw with HPC clusters back in the day.

我認為他們也像其他人一樣在等待 GPU。因此，存在一個常見問題，即我們並不是唯一遇到交貨時間問題的公司。但為了澄清對規模的評論，安舒爾和我也看到了一些非常有趣的較小規模的企業專案。因此，許多客戶正在嘗試將人工智慧應用於小型集群，這與我們過去在 HPC 集群中看到的沒有太大不同。

Yes.

是的。

Your next question comes from the line of Michael Ng with Goldman Sachs.

你的下一個問題來自高盛的 Michael Ng。

I just had one on the OpEx outperformance in the quarter. We saw an unseasonal decline quarter-on-quarter. And I think you mentioned lower product introduction costs that may have helped R&D. I was just wondering if you could talk a little bit more about that aspect of it. Any way we should think about product introductions going forward to help us understand the trajectory of OpEx?

我剛剛了解了本季度營運支出的出色表現。我們看到季度環比出現非季節性下降。我認為您提到較低的產品引進成本可能有助於研發。我只是想知道你是否可以多談談這方面的問題。我們應該如何考慮未來的產品推出來幫助我們了解營運支出的發展軌跡？

Yes. I mean a lot of it is timing, right? We've got a lot of different projects, a lot of different products kind of sold through the R&D labs right now. So there is going to be some kind of volatility in terms of when the spend shows up, when the project spend happens, et cetera. So I think we were lower this quarter in Q3 than maybe we even anticipated coming into the quarter. I expect that to come back in kind of the guide for Q4. And again, there may be some volatility in that even going forward, just because it's all about timing, nothing unusual in that. There's just a lot of products kind of going through the R&D labs.

是的。我的意思是很多都是時機，對吧？我們現在有很多不同的項目，透過研發實驗室銷售許多不同的產品。因此，在支出何時出現、專案支出何時發生等方面，將會出現某種波動。因此，我認為本季第三季的業績甚至低於我們對本季的預期。我預計這會以第四季的指南形式出現。再說一次，即使是未來，也可能會出現一些波動，只是因為這完全取決於時機，這沒有什麼不尋常的。有很多產品正在通過研發實驗室。

So Michael, when the chips are down, our spending is down. But when the chips come on hard, our spending is hard too. So -- and expect our prototype to have some high variability, and we've got a lot, a lot of new products in the pipeline that Andy, Anshul, Ken, you are all working on. So we expect that number to go up over the next 4 quarters.

所以邁克爾，當籌碼下降時，我們的支出就會下降。但當晶片出現困難時，我們的支出也會變得困難。所以——預計我們的原型會有一些高可變性，我們已經有很多很多新產品正在醞釀中，安迪、安舒爾、肯，你們都在開發。因此，我們預計該數字將在未來 4 個季度內上升。

Your next question comes from the line of Atif Malik with Citi.

您的下一個問題來自花旗銀行的阿提夫馬利克 (Atif Malik)。

Jayshree, at the recent Open Compute Project Conference, Marvell and Broadcom leading Ethernet switch merchant chip providers sounded very confident in terms of Ethernet adoption at hyperscalers like Meta and Oracle as well. And then one of your peers has talked about $500 million in AI orders whether it's custom chip. So I was curious about your thoughts on the dynamics between custom ship and merchant switch chip providers? And how does that help Arista?

Jayshree 在最近的開放運算專案會議上，Marvell 和 Broadcom 領先的乙太網路交換器商用晶片供應商對於 Meta 和 Oracle 等超大規模企業採用乙太網路方面聽起來非常有信心。然後你的一位同行談到了價值 5 億美元的人工智慧訂單，無論是客製化晶片。所以我很好奇您對定制船舶和商用交換晶片提供者之間動態的看法？這對 Arista 有什麼幫助？

Yes. Atif, we have been strong proponents in our last 15, 17 years of Arista Korea on merchant silicon. We look for the best-of-breed chips. It's something my team -- engineering team has built a lot of chips in their past before, but we decided to work with the best-of-breed companies, Broadcom being one of our favorite and major suppliers. Of course, in the past, we worked with Intel, Cavium, and we don't rule out other suppliers as well. But this is clearly an area where you can't just build one chip, you have to build a portfolio of silicon and what Broadcom has done in building that portfolio not only for cloud networking but for campus and AI is impressive. And you have to not just look at performance, you have to look at price density, power, these are all very important metrics as we look ahead.

是的。 Atif，在過去 15、17 年裡，我們一直是 Arista 韓國在商業晶片上的堅定支持者。我們尋找同類最佳的晶片。我的團隊——工程團隊過去已經製造過很多晶片，但我們決定與最好的公司合作，博通是我們最喜歡的主要供應商之一。當然，過去我們與Intel、Cavium合作，也不排除其他供應商。但這顯然是一個你不能只構建一個晶片的領域，你必須構建一個晶片組合，博通在構建該組合方面所做的工作不僅適用於雲網絡，而且適用於校園和人工智能，令人印象深刻。你不僅要關注性能，還必須關注價格密度、功率，這些都是我們展望未來的非常重要的指標。

The root issue here, and you -- we'll share this more with you going forward as well. It's not just the merchant silicon but how you can enable the merchant silicon with the right software and drivers, and this is an area that really Arista excels, and if you just have chips, you can't build the system. But our system-wide features, whether it's a genetic load balancing, or latency analyzer to really improve the job completion time and deal with that frequent communication and generative AI is also fundamentally important. You're going to hear a lot more about this next week. So stay tuned.

這裡的根本問題，以及你——我們也將與你分享更多這個問題。這不僅僅是商業晶片，還包括如何使用正確的軟體和驅動程式啟用商業晶片，這是 Arista 真正擅長的領域，如果您只有晶片，則無法建立系統。但我們的系統範圍內的功能，無論是遺傳負載平衡，還是延遲分析器，以真正提高工作完成時間並處理頻繁的通訊和生成人工智慧，也從根本上很重要。下週你會聽到更多關於這方面的資訊。所以請繼續關注。

Your next question comes from the line of Ben Reitzes with Melius Research.

您的下一個問題來自 Melius Research 的 Ben Reitzes。

Jayshree and Ita, can you discuss a little more your gross margin commentary that it should moderate next year from the 63% levels in the back half. I mean, are we talking about it going to the first half '23 kind of levels or just a little bit of a degradation next year? And what would be the reason behind it? Other than lead times, is there any other mix or other issues that would cause it to go down?

Jayshree 和 Ita，你們能多討論一下你們的毛利率評論嗎？明年毛利率應該會從下半年的 63% 水準下降。我的意思是，我們是在談論它會達到 23 年上半年的水平還是明年會略有下降？背後的原因是什麼？除了交貨時間之外，是否還有其他組合或其他問題會導致其下降？

So Ben, I think what Jayshree's commentary and my commentary is, we have been seeing it incrementally improved as we've gone through the year. We expect it to stabilize. So not that we expect it to go down next year but more that it will stabilize and then it will become more dependent on customer mix another thing and again, similar to where we've had before. We obviously provide some more outlook on discussion on this next week, too. But -- so the intention was not to say that we think it starts to decline. Again, it was more than we think it will stabilize after a period where we've been seeing these incremental improvements.

Ben，我認為 Jayshree 的評論和我的評論是，隨著這一年的過去，我們已經看到它逐漸得到改善。我們預計它會穩定下來。因此，並不是說我們預計明年它會下降，而是說它會穩定下來，然後它將變得更加依賴客戶組合，這與我們之前的情況類似。顯然，我們也對下​​週的討論提供了更多展望。但是——所以我們的目的並不是說我們認為它開始下降。同樣，在我們看到這些漸進式改進一段時間後，它的穩定程度超出了我們的想像。

Your next question comes from the line of Tim Long with Barclays.

你的下一個問題來自巴克萊銀行的提姆朗。

I just wanted to hit on the Cloud Titan vertical or Cloud Titan AI vertical now, if I could. I think, Ita one of your comments was down a little or something in the quarter. Could you just -- 2 parts here, talk a little bit about that command. Is this just timing? Or are there some different market share dynamics there? And then secondly, if you could talk a little bit about opportunities at other hyperscalers. I know that's something where there's been trial activity and potential and it sounds like it might take a little while but any updates on other cloud titans that could become larger customers.

如果可以的話，我現在只想進入 Cloud Titan 垂直領域或 Cloud Titan AI 垂直領域。我認為，您的評論之一在本季度有所下降。您能在這裡分 2 部分談談該命令嗎？這只是時機嗎？或者那裡有一些不同的市場份額動態嗎？其次，您是否可以談談其他超大規模企業的機會。我知道這已經存在試用活動和潛力，聽起來可能需要一段時間，但其他雲端巨頭的任何更新都可能成為更大的客戶。

Just in terms of cloud, I mean, it's going to be a good cloud year again in 2023 for us. I think but we did come into the year saying we wanted, if we could, to balanced supply a little bit towards enterprise, and we have been doing that because there's been some -- you'll see it's not a huge mix shift but there has been some mix shift towards enterprise when we can, and we're pleased that we've been able to do that.

就雲端而言，我的意思是，2023 年對我們來說將再次成為雲端的好年。我想，但我們確實在今年說過，如果可以的話，我們希望平衡企業的供應，我們一直在這樣做，因為有一些——你會發現這不是一個巨大的混合轉變，但有我們已經盡可能地向企業進行了某種混合轉變，我們很高興能夠做到這一點。

Anshul, I don't know if you want to take that other cloud.

安舒爾，我不知道你是否想帶走另一朵雲。

Sure. Tim, the engagement with other cloud titans for our customers but small customers are still very positive. The good customers are, many of you know, in routed levels, backbone, WAN use cases as well. Then next week, we'll touch a little bit more on the whole build versus my topic.

當然。提姆，我們的客戶和小客戶與其他雲端巨頭的合作仍然非常積極。你們很多人都知道，好的客戶還存在於路由等級、骨幹網路、WAN 用例中。然後下週，我們將更多地討論整個構建和我的主題。

Your next question comes from the line of James Fish with Piper Sandler.

你的下一個問題來自詹姆斯·菲什和派珀·桑德勒的台詞。

So great quarter. Just on the product side, you guys released a new 25-gig offering recently. I guess what's been the early feedback? What kind of differentiates down there? And Jayshree, just to clarify here, when you talk about that double-digit growth rate for next year and years beyond, are you talking about a multiyear CAGR or for '24 specifically and then for '25 and '26 and beyond? Just trying to clarify here.

非常棒的季度。就產品而言，你們最近發布了新的 25 場產品。我想早期的回饋是什麼？那裡有什麼區別？ Jayshree，我想澄清一下，當您談論明年和以後幾年的兩位數增長率時，您是在談論多年複合年增長率還是專門針對 24 年，然後是 25 年和 26 年及以後？只是想在這裡澄清一下。

Okay. Well, Anshul, do you want to answer the product question first?

好的。好吧，Anshul，您想先回答產品問題嗎？

Sure. Jim, the recent announcement was the launch of our 25-gig ultralow-latency switches. These are the 7130 Series. And now the whole world can upgrade the high-frequency trading infrastructure going from 10 to 25, at very, very low latency. You're talking about with cross-point technology, you're talking about 7 nanoseconds, but we also now introduced layer 2, layer 3 features at about 100 to 130 nanoseconds in these...

當然。 Jim，最近發布的消息是我們推出了 25 Gb 超低延遲交換器。這些是 7130 系列。現在全世界都可以以非常非常低的延遲將高頻交易基礎設施從 10 升級到 25。你談論的是交叉點技術，你談論的是 7 奈秒，但我們現在還引入了大約 100 到 130 奈秒的第 2 層、第 3 層功能...

And Anshul, just to put this in perspective, back in the day, it used to be 500 nanoseconds.

Anshul，從長遠來看，過去是 500 奈秒。

That's right, when it keeps going down.

沒錯，當它持續下跌時。

Yes, yes, faster than the speed of light. And James, just to give you a clarification. I was saying, as a company, either myself or Anshul, we're aiming for at least double digits in '24 and years beyond, but I wasn't making any forecast for exact numbers.

是的，是的，比光速還快。詹姆斯，我只是想向你澄清一下。我說過，作為一家公司，無論是我自己還是 Anshul，我們的目標是在 24 年及以後的幾年中實現至少兩位數的增長，但我並沒有對確切的數字做出任何預測。

Your next question comes from the line of Ittai Kidron with Oppenheimer.

你的下一個問題來自 Ittai Kidron 與 Oppenheimer 的關係。

A quick question on gross margin. Nice improvements there. Ita, maybe you can go into the details of how much room is there more to go? And I'm just kind of wondering with your customers now looking at your excellent financials and in recovering gross margins. What are the odds that pricing pressures start coming back, something you probably have not seen much in the last couple of years since COVID, now that margins are normalizing, what -- could prices come down potentially perhaps even for the -- more specifically to the larger customers of yours?

關於毛利率的一個簡單問題。那裡有很好的改進。 Ita，也許你可以詳細說明還有多少空間可以去？我只是想知道您的客戶現在正在關注您出色的財務狀況並恢復毛利率。價格壓力開始捲土重來的可能性有多大，自從新冠肺炎疫情以來，你可能在過去幾年裡沒有看到太多這種情況，現在利潤率正在正常化，價格可能會下降，甚至可能是——更具體地說，您的大客戶？

Ittai, I'll just start by saying prices are always coming down as we go from one speed factor to another between the SerDes technology and the density, the dollar per gigabit is always coming down. So where pricing pressure doesn't change independent of our gross margin, we're always in competitive deals. Where the value really comes in, and again, as I alluded to this, is CapEx versus OpEx. So we expect pricing to be reasonably stable but we expect the operational cost to be significantly advantageous with the Arista technology. The total -- the TCO because of singular cloud vision, because of our software-driven approach, because of the fact that we have single-digit vulnerabilities while our industry peers have 100 to 500 of them in a given 5-year factor. These are all now paying customers enterprises, especially a are very fatigued with the poor quality of our competitors and obtain a lot of attention to that and willing to pay for that quality.

Ittai，我首先要說的是，當我們在 SerDes 技術和密度之間從一種速度因素轉向另一種速度因素時，價格總是會下降，每千兆位元的美元總是會下降。因此，如果定價壓力不會獨立於我們的毛利率而變化，我們總是處於有競爭力的交易中。正如我所提到的，真正體現價值的地方是資本支出與營運支出。因此，我們預計定價將相當穩定，但我們預計 Arista 技術的營運成本將具有顯著優勢。總體而言，TCO 是由於單一的雲端願景、由於我們的軟體驅動方法、由於我們的漏洞數量僅為個位數，而我們的行業同行在給定的 5 年因素中擁有 100 到 500 個漏洞。這些現在都是付費客戶企業，尤其是那些對我們競爭對手的劣質品質感到非常厭倦的企業，並對此給予了很多關注並願意為這種品質付費。

Ittai, as Jayshree mentioned, I want to emphasize this, the market is very competitive, and it has been ever since we started. The gross margin that we report is not the reason why customers try to negotiate pricing. The gross margin is simply a result of what we've been executing on. I think we'll continue doing so.

Ittai，正如 Jayshree 所提到的，我想強調這一點，市場競爭非常激烈，從我們成立以來一直如此。我們報告的毛利率並不是客戶嘗試協商定價的原因。毛利率只是我們一直執行的結果。我想我們會繼續這樣做。

Your next question comes from the line of Simon Leopold with Raymond James.

你的下一個問題來自西蒙·利奧波德和雷蒙德·詹姆斯的台詞。

I wanted to see if you would be able willing to comment on your customer concentration year-to-date. I appreciate it can be lumpy quarter-to-quarter. But given sort of where you were in 2022, I'd just like to get a better understanding what essentially the progress has been in 2023. And in that context, how big is enterprise as a percent of revenue this year-to-date versus where it was last year?

我想看看您是否願意對今年迄今為止的客戶集中度發表評論。我很欣賞季度與季度之間可能會出現波動。但考慮到 2022 年的情況，我只是想更了解 2023 年的基本進展。在這種情況下，今年迄今為止，企業佔收入的百分比有多大？去年在哪裡？

Simon, I -- we're very proud of our customers, even if they're concentrated, we love it. And as you know, the last year, we had some outsized concentration, if I recall the numbers, Meta was at 26%, and what was Microsoft, Ita?

西蒙，我——我們為我們的客戶感到非常自豪，即使他們很專注，我們也喜歡這樣。如你所知，去年我們有一些過度的集中，如果我記得數字的話，Meta 是 26%，而微軟、Ita 是什麼？

Microsoft was 16%.

微軟為16%。

16% to 17%. While we expect due to many of the CapEx news you've seen and shift in AI spending, that it's possible they come down but there's still going to be very strong north of 10% contributors to our 2023 results. And we continue to -- even as the denominator may get larger in the forthcoming years, we continue to look at them as 2 very important and strategic customers for us.

16% 至 17%。雖然我們預計，由於您看到的許多資本支出新聞以及人工智慧支出的變化，它們可能會下降，但對我們 2023 年業績的貢獻仍將超過 10%。我們繼續——即使分母在未來幾年可能會變得更大，我們仍然將他們視為對我們來說非常重要的兩個策略客戶。

Your next question comes from the line of David Vogt with UBS.

您的下一個問題來自瑞銀集團 (UBS) 的大衛沃格特 (David Vogt)。

I just want to follow up on Simon's question, maybe put it a little bit differently. So if I think about your market sector trend update, how much of the shift to that 40% to 45% cloud and AI Titans reflects the inclusion of new AI use cases going forward and the shift of Oracle combined with maybe some normalization at Meta and Microsoft. Can you kind of help us think through the dynamics there? And if it looks like share is going to be unchanged with enterprise and financials, does that suggest to you that those markets are going to grow comparably over the long term across the cycle? Is that the way to look at it?

我只是想跟進西蒙的問題，也許說得有點不同。因此，如果我考慮您的市場部門趨勢更新，向40% 到45% 的雲端和人工智慧泰坦的轉變在多大程度上反映了未來新人工智慧用例的納入以及Oracle 的轉變，再加上Meta 和AI 的一些標準化微軟。您能幫助我們思考那裡的動態嗎？如果看起來企業和金融市場的份額將保持不變，這是否表明這些市場將在整個週期的長期內實現相對增長？是這樣看的嗎？

Yes. David, your analysis is really deep on this one. Let me just say how innocently we reported this, which is, Oracle is a greater than $1 million installed server company right now. And their -- both their cloud spend as OCI and AI is significant, both as a company and for Arista. But we're not making any assumptions and that will vary every year, of course, on the mix of Meta, Microsoft or Oracle or any other for that matter. We're simply seeing AI is going to become such an important component of all our cloud titans that is now a combined vertical. Don't read too much more into that.

是的。大衛，你對這一點的分析非常深入。我只想說，我們報道這一點是多麼天真，也就是說，Oracle 目前是一家安裝價值超過 100 萬美元的伺服器公司。他們的 OCI 和 AI 雲端支出對於公司和 Arista 都很重要。但我們不會做出任何假設，當然每年都會有所不同，這取決於 Meta、Microsoft 或 Oracle 或任何其他與此相關的組合。我們只是看到人工智慧將成為我們所有雲端巨頭的重要組成部分，這些巨頭現在是一個綜合垂直領域。不要對此進行過多的解讀。

Yes. It's more of a forward-looking impact, to be honest David. Historically, this doesn't really change the trends that we've been talking about previously. It's really more about the future and how do you think AI will impact these numbers going forward.

是的。老實說，大衛，這更像是一種前瞻性的影響。從歷史上看，這並沒有真正改變我們之前討論的趨勢。這實際上更多的是關於未來，以及你認為人工智慧將如何影響未來的這些數字。

Yes, I AI is just (inaudible) that much important right now, it's right. You know that. But as it starts to become important, then this combined will go north of the 39% we have normally forecast.

是的，人工智慧現在（聽不清楚）非常重要，這是對的。你懂的。但隨著它開始變得重要，這個數字加起來將超過我們通常預測的 39%。

Your next question comes from the line of Erik Suppiger with JMP Securities.

您的下一個問題來自 JMP 證券公司的 Erik Suppiger。

Thanks for taking my question and congrats. I know you don't want to talk about backlog but can you give us a sense at what point or at what time you think your book-to-bill will return back to 1 or greater than 1? Or when will your lead times reach a normalized level? And then I have a quick follow-up after that.

感謝您提出我的問題並表示祝賀。我知道您不想談論積壓，但您能否告訴我們您認為您的訂單出貨比將在什麼時間點恢復到 1 或大於 1？或者您的交貨時間何時才能達到正常水平？之後我會進行快速跟進。

Jayshree is not going to talk about book-to-bill, if you don't talk about backlog, Erik. I think, honestly, we're making improvements. And Jayshree talked about how lead times are much improved, right? So we'll continue to do that. That's a positive thing for the customers and for the business. And we're still not back to kind of the turns business that we had some time ago. We're making progress, but we're still not there.

如果你不談論積壓，Jayshree 就不會談論訂單到帳單，Erik。老實說，我認為我們正在做出改進。 Jayshree 談到交貨時間如何大大縮短，對吧？所以我們將繼續這樣做。這對客戶和企業來說都是一件正面的事情。我們還沒有回到前一段時間的那種輪流業務。我們正在取得進展，但我們還沒有達到目標。

May be I just want to add, and I'm quite proud of the progress the team has made. When you look back 2 years ago, we were short of components. We were making multiyear purchases. There was a risk of a very large exposure because you can't get all these forecasts right. And then obviously, the mix changes from time to time, especially with the cloud and AI. So it's very hard to measure our business on book-to-bill and backlog at a given time. But if you have to look at it as an overall multiyear trend.

也許我只是想補充一點，我對團隊所取得的進步感到非常自豪。當你回顧兩年前時，我們缺少組件。我們正在進行多年採購。由於您無法正確做出所有這些預測，因此存在巨大風險。顯然，這種組合會不時發生變化，尤其是雲端和人工智慧。因此，很難根據特定時間的訂單到帳單和積壓情況來衡量我們的業務。但如果你必須將其視為多年的整體趨勢。

Can you comment then on just when will the lead times be at a normalized level?

您能否評論一下交貨時間何時才能達到正常水平？

Yes. And I think we said this. It's been improving consistently and we expect it to be normalized just like our gross margins in 2024.

是的。我想我們已經說過了。它一直在持續改善，我們預計它會像我們的毛利率一樣在 2024 年正常化。

Operator, we have time for one last question.

接線員，我們還有時間回答最後一個問題。

Your last question today comes from the line of Woo Jin Ho with Bloomberg.

你今天的最後一個問題來自於宇振浩與彭博社的對話。

Great. [I made a cut]. Happy Halloween folks. So I think there was a mention on merchant silicon earlier in the Q&A. And one of your merchant silicon partners has actually moved up the stack towards the service provider routing. I'm just curious if there's any intention on going after that piece if that chip is made available to you?

偉大的。 [我剪了一個]。各位萬聖節快樂。所以我認為早些時候在問答中提到了商業晶片。您的一個商業晶片合作夥伴實際上已經向服務提供者路由的方向提升了堆疊。我只是好奇如果你可以使用該晶片，是否有任何意圖去追求那塊晶片？

Sure. Woo Jin, I believe you are referring to the latest announcement Broadcom on their 25.60 Jericho chip that was announced recently.

當然。 Woo Jin，我相信您指的是 Broadcom 最近發布的 25.60 Jericho 晶片的最新公告。

Yes, the Qumran3D.

是的，Qumran3D。

Qumran3D, exactly. So it's the same family, same features. And as you know, we've been a great partner of Broadcom for a long time, and we will continue to build new products. This is not a new entry, so to speak. We've been building these products that can be used on switches our orders for a while, and that bandwidth just doubled going to now 25.6. So you can expect some products from us in the future with those variants as well. But really -- nothing really changed. Just innovation continues and merchant silicon continues to succeed.

確切地說，Qumran3D。所以它們是同一個家族，具有相同的功能。如您所知，長期以來我們一直是博通的優秀合作夥伴，我們將繼續開發新產品。可以這麼說，這不是一個新條目。我們建造這些可在我們訂單的交換器上使用的產品已經有一段時間了，頻寬增加了一倍，達到現在的 25.6。因此，您將來也可以期待我們提供的一些具有這些變體的產品。但實際上，一切都沒有真正改變。只有不斷創新，商用晶片才能持續成功。

And the investment, Woo Jin, we have made in our routing stack over the last 10 years, I want to say, has just gotten better and stronger. Power in the Internet, power in the cloud, power in the AI, these are hard problems. And they require thousands of engineers of investment to build the right VXLAN, BGP routing, EVPN, et cetera. So it's not just a chip. It's how we name the chip to do these complicated routing algorithms.

我想說，Woo Jin，過去 10 年我們在路由堆疊中所做的投資變得越來越好、越來越強。網路的力量、雲的力量、人工智慧的力量，這些都是難題。它們需要數千名工程師的投資來建立正確的 VXLAN、BGP 路由、EVPN 等。所以它不僅僅是一個晶片。這就是我們為執行這些複雜路由演算法的晶片命名的方式。

This concludes the Arista Networks Third Quarter 2023 Earnings Call. We have posted a presentation, which provides additional information on our results, which you can access on the Investors section of our website. As a reminder, Arista will be posting our 2023 Cloud and AI Innovators Analyst Day on Thursday, November 9. If you are interested in attending virtually, you may register from the Investors section of our website.

Arista Networks 2023 年第三季財報電話會議到此結束。我們發布了一份演示文稿，其中提供了有關我們業績的更多信息，您可以在我們網站的投資者部分訪問這些信息。謹此提醒，Arista 將於 11 月 9 日星期四舉辦 2023 年雲端和人工智慧創新者分析師日活動。如果您有興趣虛擬參加，可以從我們網站的投資者部分進行註冊。

Thank you for joining us today, and thank you for your interest in Arista.

感謝您今天加入我們，並感謝您對 Arista 的興趣。

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

感謝您的加入。女士們、先生們，今天的電話會議到此結束。您現在可以斷開連線。