Arista Networks ANET · USD

Segment and Geographical Information We operate as one reportable segment. The accounting policies of the reportable segment are the same as those described in the summary of significant accounting policies. The financial information reviewed by the CODM reflects quarterly and year-to-date operating results, with a primary focus on revenue, gross margin, operating margin and net income as reported on the consolidated statements of income. Consolidated financial information is used by the CODM to evaluate performance and make decisions regarding resource allocation and other strategic initiatives. This consolidated financial information is also what is used to establish and approve operating budgets and forecasts. The measure of segment assets is reported on the consolidated balance sheets in total. There was no change for each of the periods presented in the measurement methods used to determine reported segment profit and loss. The CODM reviews the following significant segment expenses, which are presented separately on the Company’s consolidated statements of income: cost of revenue and operating expenses. Other segment items that are included in the calculation of the Company’s net income include other income (expense), net, which is further described in Note 3. Financial Statements Details and income taxes, which is further described in Note 8. Income Taxes. Other segment disclosures such as depreciation and amortization and stock-based compensation are disclosed in the Consolidated Statements of Cash Flows.The following table represents revenue based on customers' shipping addresses (in millions): Year Ended December 31,202520242023Americas(1)$7,122.1 $5,729.0 $4,651.2 Europe, Middle East and Africa 1,070.3 713.2 671.0 Asia Pacific 813.3 560.9 538.0 Total revenue $9,005.7 $7,003.1 $5,860.2 (1) Includes $7,063.8 million, $5,663.0 million and $4,541.5 million revenue generated from the U.S. for the three years ended December 31, 2025, 2024 and 2023, respectivelyLong-lived assets, excluding intercompany receivables, investments in subsidiaries, investments in privately-held companies and deferred tax assets, net by location are summarized as follows (in millions):December 31,20252024United States $184.8 $83.5 International 18.3 15.3 Total $203.1 $98.

Commitments and ContingenciesPurchase Commitments We outsource most of our manufacturing and supply chain management operations to third-party contract manufacturers, who procure components and assemble products on our behalf. A significant portion of our purchase orders for finished goods and strategic components, including integrated circuits consigned to contract manufacturers, consists of non-cancellable commitments. Our purchase obligations also encompass software and technology licenses, property and equipment, and other corporate goods and services. As of December 31, 2025, we had non-cancellable purchase commitments not recorded on our balance sheet of $6.8 billion, of which $6.3 billion have confirmed receipt dates within 12 months, and $0.5 billion have confirmed receipt dates greater than 12 months. These open purchase orders are considered enforceable and legally binding, and while we may have some limited ability to reschedule, and adjust our requirements based on our business needs prior to the delivery of goods or performance of services, this can only occur with the agreement of the related supplier.We also had deposits to our contract manufacturers to secure our purchase commitments in the amount of $53.0 million and $95.8 million as of December 31, 2025 and 2024, respectively, which were recorded within prepaid expenses and other current assets, as well as other assets in the consolidated balance sheets. LeasesWe have operating lease arrangements for office space, data center, equipment and other corporate assets. As of December 31, 2025, we had lease payment obligations, net of immaterial sublease income, of $90.5 million, with $22.1 million payable within 12 months.Property projectDuring the year ended December 31, 2021, we purchased land and the improvements thereon in Santa Clara, California to construct a building for office, lab and data center space. The estimated capital expenditures related to this project is expected to be approximately $170.0 million to $195.0 million through December 31, 2026 at which time construction is expected to be completed.Guarantees We have entered into agreements with some of our direct customers and channel partners that contain indemnification provisions relating to potential situations where claims could be alleged that our products infringe the intellectual property rights of a third-party.

Income TaxesThe components of income before provision for income taxes are as follows (in millions):Year Ended December 31,202520242023Domestic $3,369.6 $2,635.6 $1,977.7 Foreign 880.1 629.5 444.3 Income before income taxes $4,249.7 $3,265.1 $2,422.0 The components of the provision for income taxes are as follows (in millions):Year Ended December 31,202520242023Current provision for income taxes:Federal $785.3 $751.3 $574.4 State 142.9 114.7 106.9 Foreign 122.1 39.8 24.2 Total current 1,050.3 905.8 705.5 Deferred tax expense (benefit):Federal (294.1)(504.7)(372.3)State (46.8)(42.8)(41.1)Foreign 28.9 54.7 42.6 Total deferred tax expense (benefit)(312.0)(492.8)(370.8)Total provision for income taxes$738.3 $413.0 $334.7 We adopted ASU 2023-09 "Income Taxes (Topic 740): Improvements to Income Tax Disclosures" on a prospective basis beginning with the year ended December 31, 2025. The following table presents required disclosure pursuant to ASU 2023-09 and reconciles the U.S. federal statutory income tax amount and rate to our total provision for income taxes amount and rate for the year ended December 31, 2025 (in millions except for percentages):Year Ended December 31, 2025AmountPercentU.S. federal statutory income tax rate$892.4 21.00 %State tax, net of federal benefit176.3 1.80 Foreign Tax Effects Ireland Statutory tax rate difference between Ireland and US(45.4)(1.07) Other12.6 0.30 Other jurisdictions (1.4)(0.03)Enactment of New Tax Laws 22.6 0.53 Effect of Cross Border Tax Laws Net Controlled Foreign Corporation Tested Income(32.6)(0.77) Other2.3 0.05 Tax Credits Research and Development Tax Credit(54.8)(1.29)Nontaxable or Nondeductible Items Stock-Based Compensation(123.9)(2.91) Other1.2 0.02 Changes in Unrecognized Tax Benefits(11.0)(0.26) Total Provision for Income Taxes$738.3 17.37 %(1) State taxes in Georgia, Kentucky and Missouri for 2025 made up the majority (greater than 50 percent) of the tax effect in the state tax category.The following table presents the required disclosures prior to our adoption of ASU 2023-09 and reconciles the U.S. federal statutory income tax rate and our effective tax rate for the years ended December 31, 2024 and December 31, 2023 (in percentages):Year Ended December 31,20242023U.S. federal statutory income tax rate21.00 %21.00 %State tax, net of federal benefit 1.75 2.13 Taxes on foreign earnings differential (2.38)(1.96)Tax credits (2.79)(2.74)Stock-based compensation(4.96)(4.59)Other, net 0.03 (0.

Acquisition, Goodwill and Acquisition-Related Intangible Assets Acquisition and Goodwill On June 30, 2025, we completed the acquisition of the VeloCloud business ("VeloCloud") from Broadcom for total cash consideration of $300.0 million. VeloCloud's secure, AI-optimized cloud WAN portfolio provides seamless connectivity to customer sites of any type, complementing Arista's leading data center and campus wired/wireless portfolio. The preliminary purchase price allocation based on the estimated fair values of the assets acquired and liabilities assumed as of the acquisition date, included $268.4 million of intangible assets, $148.0 million of goodwill and $116.4 million of net tangible liabilities assumed as of June 30, 2025. A portion of the goodwill is deductible for tax purposes. The rest of the changes in the carrying value of goodwill for the year ended December 31, 2025 were not material. Acquisition-Related Intangible AssetsAcquisition-related intangible assets, included in other assets, are subject to amortization on a straight-line basis over their estimated useful lives, as we believe this method most closely reflects the pattern in which the economic benefits of the assets will be consumed. The following table presents details of our acquisition-related intangible assets as of December 31, 2025 and 2024 (in millions, except for years):December 31, 2025December 31, 2024Weighted Average Remaining Useful Life (in years)Gross Carrying AmountAccumulated AmortizationNet Carrying AmountGross Carrying AmountAccumulated AmortizationNet Carrying AmountDeveloped technology4.0$241.1 $(139.0)$102.1 $154.9 $(119.2)$35.7 Customer relationships6.2224.3 (48.9)175.4 54.6 (29.5)25.1 Trade name4.524.9 (13.6)11.3 12.4 (11.2)1.2 Total5.3$490.3 $(201.5)$288.8 $221.9 $(159.9)$62.0 Amortization expense related to acquisition-related intangible assets was $41.6 million, $26.8 million and $33.4 million for the years ended December 31, 2025, 2024 and 2023, respectively. As of December 31, 2025, future estimated amortization expense related to the acquired-related intangible assets is as follows (in millions):Years Ending December 31,Future Amortization Expense2026$61.3 202757.4 202854.0 2029 and thereafter116.1 Total $288.

We have developed and implemented a cybersecurity risk management program intended to protect the confidentiality, integrity, and availability of our critical systems and information. In addition, our Legal and Information Technology ("IT")/Information Security ("IS") teams work together to oversee our compliance with applicable laws and regulations and coordinate with subject matter experts throughout our business to identify, monitor and mitigate risk including information security risk management and cyber defense programs.Our cybersecurity risk management program is aligned with our overall enterprise risk management programs and shares common methodologies, reporting channels and governance processes that apply across the enterprise risk management programs to other legal, compliance, strategic, operational, and financial risk areas.Our cybersecurity risk management program includes:•an information security management systems policy, including a business continuity policy, acceptable use and physical security policies, and an incident response policy and plan for responding to cybersecurity incidents, among others;•risk assessments designed to help identify material cybersecurity risks to our critical systems, information, products, services, and our broader enterprise IT environment;•a security team principally responsible for managing (1) our cybersecurity risk assessment processes, (2) our security controls, and (3) our response to cybersecurity incidents;•the use of internal audit teams and external service providers, where appropriate, to assess, test or otherwise assist with aspects of our security controls;•cybersecurity awareness, data protection, and privacy training of our employees, incident response personnel, and senior management; and•a vetting and management process for third party service providers, suppliers, and vendorsThrough this program, our IT/Cybersecurity team identifies and executes improvements based upon its own assessments, public cybersecurity events and the identification of new risks by third parties, including our external cybersecurity consultants. As part of these continuous improvement efforts, there may be times when the IT/Cybersecurity team prioritizes certain cybersecurity fixes or program improvements over other measures, which could lead to new known or unknown risks being identified on an ongoing basis. Cybersecurity threat actors are often highly sophisticated and nimble in their attacks.

Portions of the registrant’s definitive Proxy Statement relating to its 2026 Annual Meeting of Stockholders to be filed pursuant to Regulation 14A within 120 days after the registrant’s fiscal year end of December 31, 2025 are incorporated by reference into Part III of this Annual Report on Form 10-K.

Net Income Per Share Basic net income per share is computed using the weighted-average number of shares of common stock outstanding during the period. Diluted net income per share is computed using the weighted-average number of shares of common stock outstanding during the period, including potential common shares assuming the dilutive effect of outstanding stock options, restricted stock units, and the employee stock purchase plan using the treasury stock method. Potential common shares whose effect would have been antidilutive are excluded from the computation of diluted net income per share. The following table sets forth the computation of our basic and diluted net income per share attributable to common stockholders, as adjusted to give effect to the Stock Split (in millions, except per share amounts): Year Ended December 31,202520242023Net income $3,511.4 $2,852.1 $2,087.3 Basic weighted-average shares outstanding1,258.0 1,256.3 1,237.4 Add weighted-average effects of dilutive securities:Employee equity awards17.7 24.8 31.1 Diluted weighted-average shares outstanding1,275.7 1,281.1 1,268.5 Net income per share:Basic $2.79 $2.27 $1.69 Diluted $2.75 $2.23 $1.65 The following weighted-average outstanding shares of common stock equivalents were excluded from the computation of diluted net income per share attributable to common stockholders because their effects would have been anti-dilutive for the periods presented, as adjusted to give effect to the Stock Split (in millions): Year Ended December 31,202520242023Employee equity awards1.2 0.3 1.

Fair Value MeasurementsAssets measured at fair values on a recurring basis We measure and report our cash equivalents, restricted cash, and available-for-sale marketable securities at fair value on a recurring basis. The following tables summarize the fair value of these financial assets by significant investment category and their levels within the fair value hierarchy (in millions):December 31, 2025December 31, 2024Level ILevel IILevel IIITotalLevel ILevel IILevel IIITotalFinancial Assets:Cash Equivalents:Money market funds $1,174.8 $— $— $1,174.8 $1,707.5 $— $— $1,707.5 Commercial paper— 29.8 — 29.8 — — — — Corporate bonds— 6.6 — 6.6 — — — — Agency securities— — — — — 3.0 — 3.0 U.S. government notes124.9 — — 124.9 31.4 — — 31.4 1,299.7 36.4 — 1,336.1 1,738.9 3.0 — 1,741.9 Marketable Securities:Commercial paper— 83.0 — 83.0 — 48.8 — 48.8 U.S. government notes2,854.3 — — 2,854.3 1,921.5 — — 1,921.5 Corporate bonds— 4,329.7 — 4,329.7 — 2,593.6 — 2,593.6 Municipal bonds— 14.5 14.5 — — — — Agency securities— 1,497.6 — 1,497.6 — 977.2 — 977.2 2,854.3 5,924.8 — 8,779.1 1,921.5 3,619.6 — 5,541.1 Other Assets:Money market funds - restricted cash1.4 — — 1.4 1.4 — — 1.4 Total Financial Assets$4,155.4 $5,961.2 $— $10,116.6 $3,661.8 $3,622.6 $— $7,284.4 During the year ended on December 31, 2025, the Company did not make any transfers between the levels of the fair value hierarchy. The following table summarizes the amortized cost, unrealized gains and losses, and fair value of our debt securities measured at fair value on a recurring basis (in millions):December 31, 2025December 31, 2024Amortized CostUnrealized GainsUnrealized LossesFair ValueAmortized CostUnrealized GainsUnrealized LossesFair ValueCommercial paper$112.8 $— $— $112.8 $48.8 $— $— $48.8 U.S. government2,970.4 8.8 — 2,979.2 1,954.8 2.7 (4.6)1,952.9 Corporate bonds4,321.2 16.0 (0.9)4,336.3 2,595.7 4.4 (6.5)2,593.6 Municipal bonds14.5 — — 14.5 — — — — Agency securities1,495.5 2.7 (0.6)1,497.6 981.0 1.6 (2.4)980.2 Total $8,914.4 $27.5 $(1.5)$8,940.4 $5,580.3 $8.7 $(13.5)$5,575.5 For debt securities in unrealized loss positions, it is not likely that we will be required to sell such securities before recovery of their amortized cost basis nor do we have the intent to sell such securities before maturity; we invest in debt securities that have maximum maturities of three years and are generally deemed to be low risk based on their credit ratings from the major rating agencies.