ANET · Earnings call · 2026Q2T · Full report

Gross Margin Drivers

Arista Networks, Inc. · 2026-08-04 · Importance 31 · Surprise 32

Q2 gross margin was 63.4%, down from 65.6% in the prior year because of end-customer mix. Gross margin improved from 62.4% in Q1, helped by tariff refunds and favorable customer mix. Tariff refunds contributed approximately 20 to 30 basis points versus guidance and roughly 30 to 40 basis points versus the prior year, while the remaining improvement was customer-mix related. Management maintained a 2026 gross-margin range of 62% to 64%, including anticipated memory and silicon cost increases.

Key facts

• For fiscal 2026, Arista maintains gross margin range of 62% to 64%, inclusive of mix and anticipated supply chain cost increases for memory and silicon.
• Price increases are expected to help only towards the end of the year or more like next year because Arista is still going through a lot of backlog sales.
• Tariff refunds contributed approximately 20 to 30 basis points to the quarter's gross margin versus guide, with the remainder of the sequential gross margin improvement driven by mix.
• Overall gross margin in Q2 was 63.4%, down from 65.6% in the prior year and up from 62.4% in the prior quarter.