Arista Networks (NYSE: ANET) reported third-quarter revenue of $3.66 billion, up 58.5% from a year ago and above its own $3.3 billion guide. Shares rose about 8% in after-hours trading. Q3 grew 20.5% from Q2, but the Q4 guide of $3.9 billion to $4.0 billion implies only 7% to 9% more. Growth is set to slow sharply, and gross margin is already slipping. The guide matters more than the quarter. Arista sells to a few very large customers, and the release's risk list flags that concentration and volatile growth rates. Big customers order in lumps, so growth this fast is hard to hold, and the guide already points to a slowdown. Gross margin fell because mix shifted toward product sales, which earn less than services. Product was 87% of revenue. Operating margin still rose because operating expenses grew much more slowly than sales. The release gives no gross margin outlook.
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