Company Update: Arista Networks, Inc. [ANET:NYSE] | Gabelli Funds Analyst Hendi Susanto | 6.4.20

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Slide #1 Intro slide
My name is Hendi Susanto and I am a technology analyst and portfolio manager at Gabelli Funds. Today, I want to talk about Arista Networks.

Slide #2
Technology is disruptive, it brings value creation.
In the Digital Revolution, there are four major building blocks of technology infrastructure.
Computing, Storage, Networking, and Software.
We believe the most interesting building block is networking where things get faster and increasingly more complex. Networking has multiple long-term growth drivers, including Cloud, cyber security, mobility, AI, IoT, 5G, transition from 100G to 400G Ethernet speed, and the new Wi-Fi 6 standard.

Slide #3
In Networking, the complexity of billions of devices will be magnified with faster and faster digital speed. According to Cisco’s forecast, broadband speed will double from 2018 through 2023, while Wi-Fi and Mobile Speed will triple. Online gaming requires 20-40 milliseconds of latency. Global digital content updates now take place in milliseconds. And live event video streaming is here already. Networking is the underlying foundation of all of these.

Slide #4
Cloud and technology infrastructure help us deal with COVID-19 global pandemic.
Cloud infrastructure will become more expansive and powerful,
Network capacity is growing fast. Networking will be the digital freeways.

Slide #5
Arista Networks is the market leader in cloud networking platform. It empowers large-scale cloud, data center and internet companies, service providers, and enterprises. It serves U.S. top 5 and Chinese tier 1 cloud providers, companies that are at the forefront of cloud infrastructure like Facebook, Google, and Microsoft.
Arista Networks has competitive advantages to compete, including cloud-based architecture, software driven networking that enables automation, and ability to utilize lower cost components.

Slide #6
Arista Networks’s core business is high speed data center switching market where the company has been winning market share versus Cisco.
Arista Networks continues to expand its addressable market with multiple avenues of growth opportunities, including routing, Campus network, upcoming 400 GB deployment, and investment to expand in enterprise, service provider, and international markets.
Management forecasts its addressable market will grow from $16 billion in 2018 to $30 billion in 2022.

Slide #7
Arista Networks delivered 2.4 billion dollars of revenue in 2019, and it has the highest operating margin amongst peers with operating margin of at least 35%.
We believe Arista Networks presents an attractive investment opportunity in networking. We calculate a 2021 PMV of 310 dollars per share.