Arista Networks

Economic and market conditions · Economic recession and downturns

Adverse economic conditions, continuing uncertain economic conditions or reduced information technology and network infrastructure spending may adversely affect our business, financial condition, results of operations and prospects. Weak domestic or global economic conditions and continuing economic uncertainty, fear or anticipation of such conditions, a recession, geopolitical pressures, including international trade disputes, changes in tariff policies, global pandemics, a reduction in information technology and network infrastructure spending or a deterioration of the financial performance, condition or prospects of our customers, could adversely affect our business.

Economic and market conditions · Market volatility and financial crises

The trading price of our common stock has been and may continue to be volatile, and the value of your investment could decline. The trading price of our common stock has historically been and is likely to continue to be volatile and could be subject to wide fluctuations in response to various factors, some of which are beyond our control.

Geopolitical and trade · International conflicts and tensions

Geopolitical tensions and conflicts, such as the Russia-Ukraine conflict, and deteriorating U.S.-China relations, may create a greater risk of cyberattacks against our company and our manufacturers, suppliers, logistics providers, banks and other business partners.

Natural and catastrophic events · Natural disasters and extreme weather

Our business is subject to the risks of natural disasters, social unrest, violent conflicts, systemic failures and other catastrophic events. Our corporate headquarters and the operations of our key manufacturing vendors, logistics providers and partners, as well as many of our customers, are located in areas, such as the San Francisco Bay Area, Japan and Taiwan, that are exposed to risks of natural disasters and threats, such as fires, earthquakes, tsunamis.

Credit and liquidity · Credit risk and customer defaults

We are exposed to the credit risk of our channel partners and some of our customers, which could result in material losses. Most of our contracts with customers are on an open credit basis, with standard payment terms of 30 to 90 days.

Credit and liquidity · Access to capital and financing

Any failure to raise additional capital to expand our operations, invest in new products or for other corporate purposes on terms satisfactory to us could reduce our ability to compete and could harm our business, financial condition, results of operations and prospects. If we did need to raise additional funds to expand our operations, invest in new products or for other corporate purposes, we may not be able to obtain additional debt or equity financing on terms satisfactory to us.

International and currency · International operations and emerging markets

We are subject to a number of risks associated with the expansion of our international sales and operations. Our ability to grow our business and our future success will depend to a significant extent on our ability to expand our operations and customer base worldwide. Many of our customers, resellers, partners, suppliers and manufacturers operate around the world.

International and currency · Foreign exchange and currency exposure

We are exposed to fluctuations in currency exchange rates, which could adversely affect our business, financial condition, results of operations and prospects. Our sales contracts are primarily denominated in U.S. dollars, and therefore, substantially all of our revenue is not subject to foreign exchange risk; however, an increase in the U.S. dollar could result in an increase in the cost of our products to our customers outside of the U.S.

Capital structure and performance · Financial performance volatility

Our revenue and revenue growth rates are volatile and may decline or not meet our or our investors' expectations. We have experienced annual revenue growth rates of 28.6%, 19.5%, 33.8%, and 48.6% in 2025, 2024, 2023 and 2022, respectively. In the future, our revenue growth rates will continue to be volatile due to cyclical trends in our business.

Digital transformation and innovation · Artificial intelligence and automation

Issues in the development and use of artificial intelligence, combined with an uncertain regulatory environment, may result in reputational harm, liability, or other adverse consequences to our business operations. We use machine learning and AI technologies in our offerings and business, including in our Arista Guardian for Network Identity offering.

Cybersecurity and data protection · Data breaches and cyber attacks

Our products, services, and external facing or internal network systems, or those of third parties on which we rely, could experience cybersecurity incidents, and defects, errors, or vulnerabilities in our products, or the misuse of our products, could lead to cybersecurity incidents or a failure to detect cybersecurity incidents, create product liability risks, damage our reputation, adversely impact our operating results, or otherwise negatively impact our business.

Innovation and product development · Intellectual property protection and infringement

If we are unable to protect our intellectual property rights, our competitive position could be harmed or we could be required to incur significant expenses to enforce our rights. We depend on our ability to protect our proprietary technology. We rely on trade secret, patent, copyright and trademark laws and confidentiality agreements with employees and third parties, all of which offer only limited protection.

Market position and competition · Disruptive competitors and new market entrants

We also face competition from other companies and new market entrants, including current technology partners, suppliers and customers or other cloud service providers who may acquire or develop network switches and cloud service solutions for internal use and/or to broaden their portfolio of products to market and sell to customers.

Market position and competition · Pricing pressure and margin compression

We expect our gross margins to vary over time and may be adversely affected by numerous factors, including but not limited to pricing pressure on our products and services due to competition, the ability of more fully integrated competitors to bundle their networking products with other products, or utilize proprietary silicon in their products, the mix of sales to large customers who generally receive lower pricing.

Customer and revenue · Customer concentration and key customer dependence

Large purchases by a relatively limited number of customers have accounted for a significant portion of our revenue. For example, sales to one end customer represented 16%, 15%, and 21% of our total revenue, and sales to the other end customer represented 26%, 20%, and 18% of our total revenue for the years ended December 31, 2025, 2024, and 2023, respectively.

Legal and litigation · Product liability and warranty claims

Our standard sales contracts contain indemnification provisions requiring us to defend our customers against third-party claims that could expose us to losses which could seriously harm our business, financial conditions, results of operations and prospects. Under the indemnification provisions of our standard sales contracts, we agree to defend our customers and channel partners against third-party claims asserting infringement, misappropriation or other violation of certain intellectual property rights.

Legal and litigation · Litigation and legal proceedings

We may become involved in litigation that may materially adversely affect us. From time to time, we are involved in legal proceedings relating to matters incidental to the ordinary course of our business, including patent, copyright, commercial, product liability, employment, class action, whistleblower and other litigation.

Tax and financial reporting · Financial reporting and accounting standards

If our estimates or judgments relating to our critical accounting policies are based on assumptions that change or prove to be incorrect or if there is a change in accounting principles, our results of operations could fall below expectations of securities analysts and investors, resulting in a decline in the market price of our common stock.

Data and privacy · Data protection and privacy laws

Many jurisdictions have passed new laws and regulations relating to privacy, data protection, and other matters, and other jurisdictions are considering imposing additional restrictions. These laws continue to develop and may be inconsistent. For example, the California Consumer Privacy Act ('CCPA') became operative on January 1, 2020 and was amended by the California Privacy Rights Act ('CPRA').

Project and contract management · Government contract dependency

A portion of our revenue is generated by sales to government entities, which are subject to a number of challenges and risks. We anticipate increasing our sales efforts to U.S. and foreign, federal, state and local governmental customers in the future. Sales to government entities are subject to a number of risks.