The data center switch vendor's gross margin rose 320 bps Y/Y in Q2 to 67.9%. GM is expected to fall to 64%-66% in Q3.
GAAP opex (boosted by a $4.7M increase in stock compensation expense) rose 67% to $62.7M. One customer (likely Microsoft) made up over 10% of sales.
On the CC, Arista disclosed a partnership with VMware (NYSE:VMW) that covers the latter's virtualization and cloud management offerings, and (notably) also its NSX networking virtualization/SDN platform.
Arista and VMware have a common rival in Cisco, which towers over the data center switch market and is trying to counter NSX with its ACI/Insieme networking virtualization platform.
Whereas NSX is meant to manage 3rd-party switches, ACI is focused on controlling Cisco gear. Cisco argues its hardware/software integration yields better network and app visibility; critics argue it yields higher costs and more complexity.