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Wire · AI networking · Arista

W.006Arista’s revenue jumped 20% in a quarter. Its deferred revenue didn’t

Arista’s third-quarter revenue rose 58.5% to $3.66B, 20% more than the quarter before, and it guides to $3.9–4.0B next. Deferred revenue, product and service it has billed but not yet recognized, fell $26M to $6.84B: its first quarterly decline after 11 straight rises. Inventory rose $675M in the quarter, and Arista told analysts its purchase commitments reached $11.4B.

· Run 2 · Wire
Deferred revenue, Sep 30
$6.84B
−$26M on June 30, after 11 quarterly rises in a row
Revenue, Q3 2026
$3.66B
+58.5% on a year earlier, +20.5% on Q2
Q4 2026 outlook
$3.9–4.0B
non-GAAP operating margin 48–49%; consensus was $3.60B
Purchase commitments, per the call
$11.4B
from $9.7B in June and $4.8B a year earlier; inventory $3.21B

Deferred revenue stopped growing as revenue jumped

Revenue in each quarter, and total deferred revenue (current plus non-current) at its end, $. The figure over a pair is deferred revenue as a multiple of that quarter’s revenue; shown for alternate quarters and the last.

Revenue…Q3 2026Deferred revenue, quarter end
0$2B$4B$6B$8BQ1 ’24: revenue $1,571MQ1 ’24: deferred revenue $1,663M (current $998M, non-current $665M), 1.06× the quarter’s revenue1.1×Q1’24Q2 ’24: revenue $1,690MQ2 ’24: deferred revenue $2,119M (current $1,330M, non-current $789M), 1.25× the quarter’s revenueQ2’24Q3 ’24: revenue $1,811MQ3 ’24: deferred revenue $2,507M (current $1,600M, non-current $908M), 1.38× the quarter’s revenue1.4×Q3’24Q4 ’24: revenue $1,930MQ4 ’24: deferred revenue $2,791M (current $1,727M, non-current $1,064M), 1.45× the quarter’s revenueQ4’24Q1 ’25: revenue $2,005MQ1 ’25: deferred revenue $3,089M (current $2,073M, non-current $1,016M), 1.54× the quarter’s revenue1.5×Q1’25Q2 ’25: revenue $2,205MQ2 ’25: deferred revenue $4,062M (current $2,788M, non-current $1,274M), 1.84× the quarter’s revenueQ2’25Q3 ’25: revenue $2,308MQ3 ’25: deferred revenue $4,686M (current $3,521M, non-current $1,166M), 2.03× the quarter’s revenue2.0×Q3’25Q4 ’25: revenue $2,488MQ4 ’25: deferred revenue $5,372M (current $4,003M, non-current $1,370M), 2.16× the quarter’s revenueQ4’25Q1 ’26: revenue $2,709MQ1 ’26: deferred revenue $6,199M (current $4,910M, non-current $1,289M), 2.29× the quarter’s revenue2.3×Q1’26Q2 ’26: revenue $3,036MQ2 ’26: deferred revenue $6,866M (current $5,101M, non-current $1,765M), 2.26× the quarter’s revenueQ2’26Q3 ’26: revenue $3,658MQ3 ’26: deferred revenue $6,840M (current $5,102M, non-current $1,737M), 1.87× the quarter’s revenue1.9×Q3’26
0$2B$4B$6B$8BQ1 ’24: revenue $1,571MQ1 ’24: deferred revenue $1,663M (current $998M, non-current $665M), 1.06× the quarter’s revenueQ1’24Q2 ’24: revenue $1,690MQ2 ’24: deferred revenue $2,119M (current $1,330M, non-current $789M), 1.25× the quarter’s revenueQ2’24Q3 ’24: revenue $1,811MQ3 ’24: deferred revenue $2,507M (current $1,600M, non-current $908M), 1.38× the quarter’s revenueQ3’24Q4 ’24: revenue $1,930MQ4 ’24: deferred revenue $2,791M (current $1,727M, non-current $1,064M), 1.45× the quarter’s revenueQ4’24Q1 ’25: revenue $2,005MQ1 ’25: deferred revenue $3,089M (current $2,073M, non-current $1,016M), 1.54× the quarter’s revenueQ1’25Q2 ’25: revenue $2,205MQ2 ’25: deferred revenue $4,062M (current $2,788M, non-current $1,274M), 1.84× the quarter’s revenueQ2’25Q3 ’25: revenue $2,308MQ3 ’25: deferred revenue $4,686M (current $3,521M, non-current $1,166M), 2.03× the quarter’s revenueQ3’25Q4 ’25: revenue $2,488MQ4 ’25: deferred revenue $5,372M (current $4,003M, non-current $1,370M), 2.16× the quarter’s revenueQ4’25Q1 ’26: revenue $2,709MQ1 ’26: deferred revenue $6,199M (current $4,910M, non-current $1,289M), 2.29× the quarter’s revenueQ1’26Q2 ’26: revenue $3,036MQ2 ’26: deferred revenue $6,866M (current $5,101M, non-current $1,765M), 2.26× the quarter’s revenueQ2’26Q3 ’26: revenue $3,658MQ3 ’26: deferred revenue $6,840M (current $5,102M, non-current $1,737M), 1.87× the quarter’s revenueQ3’26
Data
QuarterRevenueNon-GAAP gross marginDeferred, currentDeferred, non-currentDeferred, totalTotal ÷ revenueInventory
Q1 ’24$1,571M64.2%$998M$665M$1,663M1.06×$2,025M
Q2 ’24$1,690M65.4%$1,330M$789M$2,119M1.25×$1,854M
Q3 ’24$1,811M64.6%$1,600M$908M$2,507M1.38×$1,770M
Q4 ’24$1,930M64.2%$1,727M$1,064M$2,791M1.45×$1,835M
Q1 ’25$2,005M64.1%$2,073M$1,016M$3,089M1.54×$1,957M
Q2 ’25$2,205M65.6%$2,788M$1,274M$4,062M1.84×$2,059M
Q3 ’25$2,308M65.2%$3,521M$1,166M$4,686M2.03×$2,156M
Q4 ’25$2,488M63.4%$4,003M$1,370M$5,372M2.16×$2,247M
Q1 ’26$2,709M62.4%$4,910M$1,289M$6,199M2.29×$2,380M
Q2 ’26$3,036M63.4%$5,101M$1,765M$6,866M2.26×$2,535M
Q3 ’26$3,658M64%$5,102M$1,737M$6,840M1.87×$3,210M

What the balance shows

Arista bills some large AI customers before it can count the sale. On its calls it has said that new products shipped under customer-specific acceptance clauses sit in deferred revenue until the customer accepts them, periods the CFO put in February at 12 to 18 months for larger deployments, some as short as six. The balance rose from $1.66B in March 2024 to $6.87B in June 2026, and for most of that time faster than revenue: by June it was 2.26 times a quarter’s sales.

In the third quarter it fell $26M, to $6.84B, while revenue rose $622M. The current portion was flat, up $2M; the non-current portion fell $28M. According to call transcripts published by 404K Research and TradingKey, the CFO said product deferred revenue fell $86M, which implies about $60M of growth elsewhere, mainly service. The CFO pointed to “volatility of our product deferred revenue balances” and said Arista doesn’t guide the figure, but expects the year-end balance to be higher than a year earlier. It was $5.37B at the end of 2025.

One quarter doesn’t make a trend, and the decline is small. $26M is 0.4% of the balance. What changed is the direction: in each of the eleven quarters before, the balance rose, by as much as $973M. Revenue that comes out of deferred adds to a quarter’s sales without new deferrals behind it, so part of the 20% jump may be acceptances of earlier shipments; the release doesn’t split it.

The first fall after eleven rises

Change in total deferred revenue from the previous quarter end, $M, from Q4 2023.

0$250M$500M$750M$1BQ4 ’23Q4 ’23: deferred revenue +$311M+$311MQ1 ’24Q1 ’24: deferred revenue +$157M+$157MQ2 ’24Q2 ’24: deferred revenue +$456M+$456MQ3 ’24Q3 ’24: deferred revenue +$389M+$389MQ4 ’24Q4 ’24: deferred revenue +$284M+$284MQ1 ’25Q1 ’25: deferred revenue +$297M+$297MQ2 ’25Q2 ’25: deferred revenue +$973M+$973MQ3 ’25Q3 ’25: deferred revenue +$625M+$625MQ4 ’25Q4 ’25: deferred revenue +$686M+$686MQ1 ’26Q1 ’26: deferred revenue +$826M+$826MQ2 ’26Q2 ’26: deferred revenue +$667M+$667MQ3 ’26−$26MQ3 ’26: deferred revenue −$26M
0$250M$500M$750M$1BQ4 ’23Q4 ’23: deferred revenue +$311M+$311MQ1 ’24Q1 ’24: deferred revenue +$157MQ2 ’24Q2 ’24: deferred revenue +$456M+$456MQ3 ’24Q3 ’24: deferred revenue +$389MQ4 ’24Q4 ’24: deferred revenue +$284M+$284MQ1 ’25Q1 ’25: deferred revenue +$297MQ2 ’25Q2 ’25: deferred revenue +$973M+$973MQ3 ’25Q3 ’25: deferred revenue +$625MQ4 ’25Q4 ’25: deferred revenue +$686M+$686MQ1 ’26Q1 ’26: deferred revenue +$826MQ2 ’26Q2 ’26: deferred revenue +$667M+$667MQ3 ’26−$26MQ3 ’26: deferred revenue −$26M

Arista is buying ahead: inventory and commitments reached $14.6B

Inventory at quarter end (grey, from the releases) and purchase commitments to suppliers (as stated on each call, per third-party transcripts; not in the releases), $. The figure over each bar is the sum.

InventoryPurchase commitments
0$4B$8B$12B$16BQ3 ’25: inventory $2,156MQ3 ’25: purchase commitments $4.8B, as stated on the call$7.0BQ3’25Q4 ’25: inventory $2,247MQ4 ’25: purchase commitments $6.8B, as stated on the call$9.0BQ4’25Q1 ’26: inventory $2,380MQ1 ’26: purchase commitments $8.9B, as stated on the call$11.3BQ1’26Q2 ’26: inventory $2,535MQ2 ’26: purchase commitments $9.7B, as stated on the call$12.2BQ2’26Q3 ’26: inventory $3,210MQ3 ’26: purchase commitments $11.4B, as stated on the call$14.6BQ3’26
0$4B$8B$12B$16BQ3 ’25: inventory $2,156MQ3 ’25: purchase commitments $4.8B, as stated on the call$7.0BQ3’25Q4 ’25: inventory $2,247MQ4 ’25: purchase commitments $6.8B, as stated on the call$9.0BQ4’25Q1 ’26: inventory $2,380MQ1 ’26: purchase commitments $8.9B, as stated on the call$11.3BQ1’26Q2 ’26: inventory $2,535MQ2 ’26: purchase commitments $9.7B, as stated on the call$12.2BQ2’26Q3 ’26: inventory $3,210MQ3 ’26: purchase commitments $11.4B, as stated on the call$14.6BQ3’26

Commitments rose $1.7B in the quarter and inventory $675M, the largest quarterly rise in inventory in the series. Together they are about 3.7 times the fourth-quarter revenue outlook.

The 2026 outlook, raised at each call since February

Arista’s full-year 2026 revenue outlook as stated on each earnings call, $B (third-party transcripts). Nine months reported plus the Q4 outlook midpoint gives $13.35B.

0$4B$8B$12BFeb 2026Feb 2026: 2026 revenue outlook about $11.25B$11.25BMay 2026May 2026: 2026 revenue outlook about $11.5B$11.5BAug 2026Aug 2026: 2026 revenue outlook about $12.6B$12.6BNov 2026Nov 2026: 2026 revenue outlook about $13.3B$13.3B
0$4B$8B$12BFeb 2026Feb 2026: 2026 revenue outlook about $11.25B$11.25BMay 2026May 2026: 2026 revenue outlook about $11.5B$11.5BAug 2026Aug 2026: 2026 revenue outlook about $12.6B$12.6BNov 2026Nov 2026: 2026 revenue outlook about $13.3B$13.3B

The rest of the quarter

The quarter beat, and so did the outlook. Revenue of $3.66B compares with a consensus of about $3.33B (MarketBeat), and non-GAAP earnings per share of $1.20 with $1.08 expected and $0.77 a year earlier (as restated for a tax-method change). The non-GAAP gross margin was 64% and the operating margin 49.1%. The fourth-quarter outlook, $3.9–4.0B and $1.26–1.30 a share, is above the $3.60B the Street expected, per Phil Stock World. On the call, according to TradingKey’s transcript, Arista gave a first look at 2027: revenue growth of 38–40%.

The shares ended Tuesday’s regular session around $169.58 (MarketBeat) and rose as much as 15% after hours, per Phil Stock World; StockTitan’s hourly readings ran from 14.2% at 5 pm Eastern to 10.9% at 7 pm.

What this changes on 06.ai

  • Series lead: deferred revenue and purchase commitments at the AI networking and optics suppliers (Arista, Celestica, Lumentum, Coherent), quarterly. Arista’s deferred balance is the clearest public read on AI hardware shipped but not yet accepted; its first decline is worth tracking into the year-end figure management said would be higher than $5.37B.
  • Pack lead (009, AI compute demand): Arista’s 2027 growth outlook of 38–40% on its $13.3B outlook for 2026 is a networking-side check on the pack’s 2027 accelerator demand.

Sources and method

ItemFigureSource
Q3 2026 resultsRevenue $3,657.6M (Q3 2025 $2,308.3M); non-GAAP gross margin 64.0%; non-GAAP operating income $1,795.8M; non-GAAP EPS $1.20; deferred revenue $5,102.2M current and $1,737.3M non-current; inventory $3,209.8M; nine-month revenue; Q4 outlook $3.9–4.0B, non-GAAP operating margin 48–49%, EPS $1.26–1.30Arista 8-K, exhibit 99.1, Nov 3
Q2 2026Revenue $3,035.7M; deferred revenue $5,100.7M and $1,765.2M; inventory $2,535.3MArista, Aug 4
Earlier quartersQ1 2026Arista
Earlier quartersQ4 2025 and Q4 2024Arista
Earlier quartersQ3 2025Arista
Earlier quartersQ2 2025Arista
Earlier quartersQ1 2025Arista
Earlier quartersQ3 2024Arista
Earlier quartersQ2 2024Arista
Earlier quartersQ1 2024Arista
Earlier quartersDeferred revenue at Sep 30 and Dec 31, 2023Arista, Q3 2023
Q3 callProduct deferred revenue down $86M; acceptance clauses; purchase commitments $11.4B; 2026 revenue about $13.3B404K Research
Q3 call2026 outlook about $13.3B; 2027 growth 38–40%; AI networking about $3.5B in 2026TradingKey transcript
Earlier callsPurchase commitments $4.8B (Q3 2025) and $6.8B (Q4 2025); 2026 outlook $11.25B in February; acceptance periods of 12–18 months for larger deployments, some as short as sixThe Motley Fool transcript, Feb 12
Earlier callsPurchase commitments $8.9B (Q1 2026) and $9.7B (Q2 2026); 2026 outlook $12.6B in AugustNasdaq
Earlier calls2026 outlook $11.5B in MayTIKR
Consensus and pricesQ3 consensus revenue $3.33B, EPS $1.08; Nov 3 close $169.58MarketBeat
ConsensusQ4 consensus revenue $3.60BPhil Stock World
PricesUp 14.2% at 5 pm ET, 13.0% at 6 pm, 10.9% at 7 pmStockTitan

Deferred revenue is current plus non-current deferred revenue on each quarter-end balance sheet: $5,102M + $1,737M = $6,840M at September 30, against $6,866M at June 30, a change of −$26M. The streak counts quarter-on-quarter increases in that total from Q4 2023 (Sep 30, 2023: $1,195M) to Q2 2026. The multiple divides the balance by the same quarter’s revenue. Other deferred revenue is the total change less the call’s −$86M of product deferred revenue.

Purchase commitments and the full-year outlooks are as stated on earnings calls and reported in third-party transcripts and summaries; they are not in the releases. The 2026 estimate adds nine months of reported revenue ($9,402M) to the Q4 outlook midpoint ($3,950M). Consensus figures vary slightly by outlet ($3.33–3.34B for Q3 revenue).

Elsewhere on 06.ai

Wire reports are written within hours of the news, on a six-hour schedule. Each lists its sources and shows the arithmetic behind its figures. Not investment advice.