ProductNarrow moat

Arista Networks (ANET) — moat facet

A very good hardware business priced as a software one, with a margin the largest buyers keep pushing down.

Product revenue is most of Arista and the part the market watches. It was $7,576.9 million in 2025, up 28.8%, which the filing puts down to higher shipments of switching and routing platforms across the customer base.1 Its cost was $2,978.7 million, a gross margin of about 60.7%.23

Product gross margin (%)62.7%201662.5%201760.9%201860.8%201959.0%202059.7%202157.7%202259.0%202360.9%202460.7%2025Arista Forms 10-K FY2018, FY2020, FY2022, FY2025
The hardware margin has drifted from about 63% to about 61% as the customers got bigger.

The line is the hardware plus the software that runs on it. The filing describes it as sales of switching and routing products and related network applications, with EOS, the operating system, sold as part of each box.4 Arista does not make its own silicon; the chips come from merchant suppliers, which is why about 39 cents of each product dollar goes on cost.56

The history is one of steady growth with one break. Product revenue was $991.3 million in 2016 and grew about 25.4% a year to 2025.789 It fell 9.4% in 2020, to $1,830.8 million; the filing says 2019 had included $125.1 million of deferred revenue recognised on customer acceptance, and that 2020 brought reduced sales to the larger customers and some supply constraints.10 It then grew 29.9% in 2021 and 56.3% in 2022.1112

The margin has drifted down as the customers got bigger. Product gross margin was about 62.7% in 2016, 57.7% in 2022 and 60.7% in 2025.13141516 In the June 2026 quarter it was about 59.8% against 62.3% a year earlier, as product cost rose 48.1% and product revenue 38.8%.1718

The latest quarter was the largest in the company's history. Product revenue was $2,605.2 million in the three months to 30 June 2026, and $4,916.5 million in the first half, up from $3,569.5 million.19 The next quarter's guidance, for the company as a whole, is about $3.3 billion.20

The verdict is that this line is a very good hardware business priced as a software one. The number to watch is its gross margin, about 59.8% in the latest quarter: if it keeps falling as volumes rise, the largest customers are capturing the scale.

Moat trajectory: Narrowing

Product gross margin fell to about 59.8% in Q2 2026 from 62.3% as product cost grew faster than product revenue.

The number that tests this moat
Moat Explorer calc
Product gross margin, latest quarter
About 59.8% in Q2 2026, from 62.3%

If it keeps falling as volumes rise, the largest customers are capturing the scale.

How it's calculated: (2,605.2 - 1,047.5) / 2,605.2 against (1,877.0 - 707.3) / 1,877.0.
Source: Arista Q2 2026 results release (Moat Explorer calc) ↗
References
  1. ReportedIt was $7,576.9 million in 2025, up 28.8%, which the filing puts down to higher shipments of switching and routing platforms across the customer base.
    Arista Networks Form 10-K FY2025 - statements of income 2023-2025: product revenue $5,029.5M/$5,884.0M/$7,576.9M and cost $2,061.2M/$2,299.0M/$2,978.7M; service revenue $830.7M/$1,119.1M/$1,428.8M and cost $168.7M/$212.8M/$258.3M; total revenue $9,005.7M; product revenue +28.8% on higher shipments of switching and routing platforms; service revenue +27.7% on initial and renewal support contracts; revenue definitions; dependence on merchant silicon — FY2023-FY2025 · publ. February 2026 · source ↗
  2. ReportedIts cost was $2,978.7 million, a gross margin of about 60.7%.
    Arista Networks Form 10-K FY2025 - statements of income 2023-2025: product revenue $5,029.5M/$5,884.0M/$7,576.9M and cost $2,061.2M/$2,299.0M/$2,978.7M; service revenue $830.7M/$1,119.1M/$1,428.8M and cost $168.7M/$212.8M/$258.3M; total revenue $9,005.7M; product revenue +28.8% on higher shipments of switching and routing platforms; service revenue +27.7% on initial and renewal support contracts; revenue definitions; dependence on merchant silicon — FY2023-FY2025 · publ. February 2026 · source ↗
  3. Moat Explorer calcIts cost was $2,978.7 million, a gross margin of about 60.7%.
    Moat Explorer calculation from Arista's Forms 10-K FY2018-FY2025 and the Q2 2026 release: gross margins by line, shares of revenue and gross profit, growth rates and compound growth — FY2016 to Q2 2026 · publ. 2026-09-23 · source ↗
  4. ReportedThe filing describes it as sales of switching and routing products and related network applications, with EOS, the operating system, sold as part of each box.
    Arista Networks Form 10-K FY2025 - statements of income 2023-2025: product revenue $5,029.5M/$5,884.0M/$7,576.9M and cost $2,061.2M/$2,299.0M/$2,978.7M; service revenue $830.7M/$1,119.1M/$1,428.8M and cost $168.7M/$212.8M/$258.3M; total revenue $9,005.7M; product revenue +28.8% on higher shipments of switching and routing platforms; service revenue +27.7% on initial and renewal support contracts; revenue definitions; dependence on merchant silicon — FY2023-FY2025 · publ. February 2026 · source ↗
  5. ReportedArista does not make its own silicon; the chips come from merchant suppliers, which is why about 39 cents of each product dollar goes on cost.
    Arista Networks Form 10-K FY2025 - statements of income 2023-2025: product revenue $5,029.5M/$5,884.0M/$7,576.9M and cost $2,061.2M/$2,299.0M/$2,978.7M; service revenue $830.7M/$1,119.1M/$1,428.8M and cost $168.7M/$212.8M/$258.3M; total revenue $9,005.7M; product revenue +28.8% on higher shipments of switching and routing platforms; service revenue +27.7% on initial and renewal support contracts; revenue definitions; dependence on merchant silicon — FY2023-FY2025 · publ. February 2026 · source ↗
  6. Moat Explorer calcArista does not make its own silicon; the chips come from merchant suppliers, which is why about 39 cents of each product dollar goes on cost.
    Moat Explorer calculation from Arista's Forms 10-K FY2018-FY2025 and the Q2 2026 release: gross margins by line, shares of revenue and gross profit, growth rates and compound growth — FY2016 to Q2 2026 · publ. 2026-09-23 · source ↗
  7. ReportedProduct revenue was $991.3 million in 2016 and grew about 25.4% a year to 2025.
    Arista Networks Form 10-K FY2018 - statements of operations 2016-2018: product revenue $991.3M/$1,432.8M/$1,841.1M, cost $369.8M/$538.0M/$720.6M; service $137.8M/$213.4M/$310.3M, cost $36.3M/$46.4M/$57.4M — FY2016-FY2018 · publ. February 2019 · source ↗
  8. ReportedProduct revenue was $991.3 million in 2016 and grew about 25.4% a year to 2025.
    Arista Networks Form 10-K FY2025 - statements of income 2023-2025: product revenue $5,029.5M/$5,884.0M/$7,576.9M and cost $2,061.2M/$2,299.0M/$2,978.7M; service revenue $830.7M/$1,119.1M/$1,428.8M and cost $168.7M/$212.8M/$258.3M; total revenue $9,005.7M; product revenue +28.8% on higher shipments of switching and routing platforms; service revenue +27.7% on initial and renewal support contracts; revenue definitions; dependence on merchant silicon — FY2023-FY2025 · publ. February 2026 · source ↗
  9. Moat Explorer calcProduct revenue was $991.3 million in 2016 and grew about 25.4% a year to 2025.
    Moat Explorer calculation from Arista's Forms 10-K FY2018-FY2025 and the Q2 2026 release: gross margins by line, shares of revenue and gross profit, growth rates and compound growth — FY2016 to Q2 2026 · publ. 2026-09-23 · source ↗
  10. ReportedIt fell 9.4% in 2020, to $1,830.8 million; the filing says 2019 had included $125.1 million of deferred revenue recognised on customer acceptance, and that 2020 brought reduced sales to the larger customers and some supply constraints.
    Arista Networks Form 10-K FY2020 - statements of operations 2018-2020; product revenue down $190.3M (9.4%) in 2020, 2019 having included $125.1M of deferred product revenue recognised on acceptance, with reduced sales to larger customers and COVID-19 supply constraints; service revenue +24.9% — FY2018-FY2020 · publ. February 2021 · source ↗
  11. ReportedIt then grew 29.9% in 2021 and 56.3% in 2022.
    Arista Networks Form 10-K FY2022 - statements of income 2020-2022: product revenue $1,830.8M/$2,377.7M/$3,716.1M, cost $750.0M/$958.4M/$1,573.6M; service $486.7M/$570.3M/$665.2M — FY2020-FY2022 · publ. February 2023 · source ↗
  12. Moat Explorer calcIt then grew 29.9% in 2021 and 56.3% in 2022.
    Moat Explorer calculation from Arista's Forms 10-K FY2018-FY2025 and the Q2 2026 release: gross margins by line, shares of revenue and gross profit, growth rates and compound growth — FY2016 to Q2 2026 · publ. 2026-09-23 · source ↗
  13. ReportedProduct gross margin was about 62.7% in 2016, 57.7% in 2022 and 60.7% in 2025.
    Arista Networks Form 10-K FY2018 - statements of operations 2016-2018: product revenue $991.3M/$1,432.8M/$1,841.1M, cost $369.8M/$538.0M/$720.6M; service $137.8M/$213.4M/$310.3M, cost $36.3M/$46.4M/$57.4M — FY2016-FY2018 · publ. February 2019 · source ↗
  14. ReportedProduct gross margin was about 62.7% in 2016, 57.7% in 2022 and 60.7% in 2025.
    Arista Networks Form 10-K FY2022 - statements of income 2020-2022: product revenue $1,830.8M/$2,377.7M/$3,716.1M, cost $750.0M/$958.4M/$1,573.6M; service $486.7M/$570.3M/$665.2M — FY2020-FY2022 · publ. February 2023 · source ↗
  15. ReportedProduct gross margin was about 62.7% in 2016, 57.7% in 2022 and 60.7% in 2025.
    Arista Networks Form 10-K FY2025 - statements of income 2023-2025: product revenue $5,029.5M/$5,884.0M/$7,576.9M and cost $2,061.2M/$2,299.0M/$2,978.7M; service revenue $830.7M/$1,119.1M/$1,428.8M and cost $168.7M/$212.8M/$258.3M; total revenue $9,005.7M; product revenue +28.8% on higher shipments of switching and routing platforms; service revenue +27.7% on initial and renewal support contracts; revenue definitions; dependence on merchant silicon — FY2023-FY2025 · publ. February 2026 · source ↗
  16. Moat Explorer calcProduct gross margin was about 62.7% in 2016, 57.7% in 2022 and 60.7% in 2025.
    Moat Explorer calculation from Arista's Forms 10-K FY2018-FY2025 and the Q2 2026 release: gross margins by line, shares of revenue and gross profit, growth rates and compound growth — FY2016 to Q2 2026 · publ. 2026-09-23 · source ↗
  17. ReportedIn the June 2026 quarter it was about 59.8% against 62.3% a year earlier, as product cost rose 48.1% and product revenue 38.8%.
    Arista Networks Q2 2026 results release (Exhibit 99.1, 4 August 2026) - product revenue $2,605.2M against $1,877.0M, service $430.5M against $327.8M; six months product $4,916.5M against $3,569.5M, service $828.2M against $640.1M; cost of product $1,047.5M against $707.3M, cost of service $77.9M; deferred revenue $5,100.7M current and $1,765.2M non-current; Q3 2026 revenue guidance ~$3.3B — Q2 2026 · publ. 4 August 2026 · source ↗
  18. Moat Explorer calcIn the June 2026 quarter it was about 59.8% against 62.3% a year earlier, as product cost rose 48.1% and product revenue 38.8%.
    Moat Explorer calculation from Arista's Forms 10-K FY2018-FY2025 and the Q2 2026 release: gross margins by line, shares of revenue and gross profit, growth rates and compound growth — FY2016 to Q2 2026 · publ. 2026-09-23 · source ↗
  19. ReportedProduct revenue was $2,605.2 million in the three months to 30 June 2026, and $4,916.5 million in the first half, up from $3,569.5 million.
    Arista Networks Q2 2026 results release (Exhibit 99.1, 4 August 2026) - product revenue $2,605.2M against $1,877.0M, service $430.5M against $327.8M; six months product $4,916.5M against $3,569.5M, service $828.2M against $640.1M; cost of product $1,047.5M against $707.3M, cost of service $77.9M; deferred revenue $5,100.7M current and $1,765.2M non-current; Q3 2026 revenue guidance ~$3.3B — Q2 2026 · publ. 4 August 2026 · source ↗
  20. ReportedThe next quarter's guidance, for the company as a whole, is about $3.3 billion.
    Arista Networks Q2 2026 results release (Exhibit 99.1, 4 August 2026) - product revenue $2,605.2M against $1,877.0M, service $430.5M against $327.8M; six months product $4,916.5M against $3,569.5M, service $828.2M against $640.1M; cost of product $1,047.5M against $707.3M, cost of service $77.9M; deferred revenue $5,100.7M current and $1,765.2M non-current; Q3 2026 revenue guidance ~$3.3B — Q2 2026 · publ. 4 August 2026 · source ↗
Sources
Generated September 23, 2026