Arista Networks (ANET) Q4 2023 Earnings Call Transcript

Arista Networks (NYSE: ANET)
Q4 2023 Earnings Call
Feb 12, 2024, 4:30 p.m. ET

Contents:

• Prepared Remarks

• Questions and Answers

• Call Participants

Prepared Remarks:

Operator

Welcome to the fourth quarter 2023 Arista Networks financial results earnings conference call. During the call, all participants will be in a listen-only mode. After the presentation, we will conduct a question-and-answer session. Instructions will be provided at that time.

[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. Ms. Liz Stine, Arista's director of investor relations, you may begin.

Liz Stine -- Director, Investor Relations

Thank you, operator. Good afternoon, everyone, and thank you for joining us. With me on today's call are Jayshree Ullal, Arista Networks' chairperson and chief executive officer; Ita Brennan, Arista's outgoing chief financial officer; and Chantelle Breithaupt, Arista's incoming chief financial officer. This afternoon, Arista Networks issued a press release announcing the results for its fiscal fourth quarter ending December 31, 2023.

If you would like a copy of this release, you can access it online from our 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 2024 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 acquisitions, 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.

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Also, please note that certain financial measures we use on this 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 our earnings press release. With that, I will turn the call over to Jayshree.

Jayshree Ullal -- President and Chief Executive Officer

Thank you, Liz. Thank you, everyone, for joining us this afternoon for our fourth quarter 2023 earnings call. 2023 has been another memorable year for Arista. We gave initial guidance of 25% year-over-year revenue growth and instead achieved well beyond that at 33.8%, driving revenue to $5.86 billion, coupled with a record non-GAAP earnings per share for the year of $6.94, up in excess of 50% annually.

Back to some Q4 specifics, we delivered revenues of $1.54 billion for the quarter with a non-GAAP record earnings per share of $2.08 due to a one-time favorable tax rate. Services and software support renewals contributed approximately 17% of revenue. Our non-GAAP gross margins of 65.4% was influenced by improving supply chain and greater enterprise mix. International contributions for the