Arista Networks, Inc. (ANET) September 10, 2026 Conference Transcript

Everyone, welcome to day three and the final session of Citi Global TMT Conference. We have definitely saved the best for the last. My name is Atif Malik. I cover U.S. semiconductors and networking equipment names. It's my pleasure to welcome Chantelle Brightup, Chief Financial Officer, as well as Tyson Lamoureux, Senior Vice President, Cloud and AI Networking at Arista. Welcome, guys.

Thanks so much. Thanks for having us.

I'll kick it off with my questions first. If you have a question, save it towards the end. We'll send the mic and you ask your question. Chantel, deferred revenue has been a hot topic this year on Arista. Arista consistently achieves strong revenue growth and has guided to 40% growth this year. And yet the complexities of AI use cases have resulted in strong growth in Arista's product deferred revenue. What is the right way for investors to think about Arista's growth? Is it the growth in the revenues plus the change in deferred revenues?

Yeah, I think it's a great question. We're super excited to, in the last earnings call, raised our revenue guidance to be 40% growth, $12.6 billion. So we're very excited to be able to deliver that kind of guidance. And so if we think about it, deferred revenue is a topic. I think that if we just level set what deferred revenue is, if we're talking about the product deferred revenue, that means equipment that's been shipped, invoiced, and cash collected, but we have acceptance criteria that keeps us kind of skin in the game with the customer to get to the kind of net results they want to get to. And if you think about what goes into here, it used to be the cloud. If you go back a couple of years to the cloud deployments were put in there, and now AI has basically put that on steroids from a complexity to your point. And so from a how to interpret a perspective, I think if you look at Arista, there's a few things I would keep my eye on. I would keep my eye on the P&L growth, what's happening in deferred revenue, but I wouldn't do a quarter over quarter kind of thing. I would do a trend over four quarters, maybe six quarters, because things will come in and out generally, you know, because it's an acceptance-based criteria. I would look at the purchase commitments, you know, and maybe what's sitting on the RPO table. And all four of those things kind of give you a picture of what's happening and what's to come. I think that from the perspective of deferred revenue as well, sometimes that people don't understand that some of these deployments can take 18 to 24 months till we hit the acceptance criteria. So it's important to understand the timing of how long this can be and when we would realize it from a P&L perspective.

Great. Chantal, just for perspective, how far are we into this current cycle, the deferred revenue, and how does it compare to what Arista experienced in prior cycles?

Yeah, so even though we're now going to be part of the S&P 100, we're only about 12 years old as a public company, right? And so we've had, I would say, two cycles, the cloud cycle and the AI cycle. And so what you're referring to, Atif, is during the cloud cycle, which is kind of the 2019, 2020, 2021, you saw deferred revenue raise because we had this deferred construct because we had the use case of cloud, 400 gig and then coming into 800 gig. And then we kind of went through a little bit of cloud and then AI took off. So this AI cycle is the second one. The cloud one was about three years. We're in, I would say, going into year two and a half to three on AI proper from a materiality perspective. But I think there's many years to come on this cycle. And so we'll have to see, because we're talking about scale up, scale out, scale across, training inference, front end, back end. We don't see AI going away anytime soon. So this cycle could be longer.

All right, with that, hopping out of the way, the next big topic has been the supply environment. Supply obviously remains challenging. And on your last results, You came out a lot strongly on supply. Where are you seeing the most pressure in the supply chain?

Yeah, so we started the year, and I'm very transparent. Q1 was not our favorite call because we did have to talk about the supply chain environment, and I think that's what we're referring to. But we wanted to be honest and transparent. A lot of this pressure is coming from right at the top of the fab capacity, and I think anyone in the industry should be talking about there is tightness no matter where you sit in that hierarchy. But, you know, as we work through to the Q2 call coming into August, we did find some vendor arrangements with fab capacity, memory, you know. So those things I think we've sorted through 26 and 27. But you have whack-a-mole on some of the other component parts, PCBs, capacitors, et cetera. So there's things that are more peripheral short-term, and then there's structural things like fab capacity. But we feel very well positioned. You know, when we talk about purchase commitments now, Now, that's a year lead time for chips going into Q3 next year. So we're already talking that $9.6 billion at the Q2 and purchase commitments is already going into second half next year. So well-positioned, but I don't think anyone's out of the woods when it comes to the full supply chain for networking data centers generally. And can you remind us of any purchase commitments you've made to secure the supply? so we ended so we we've grown if you look like three quarters ago our purchase was about 3.6 and now we're at 9.6 at the end of q2 so over three quarters basically tripling it and that's leaning into demand we're seeing so you should see it as a demand it's getting some of these memory things sorted and then you know there's some things that are a little bit longer than 12 months but from that perspective we feel very good that the supply chain team learned a lot during COVID, learned a lot during, you know, the beginning of AI, got the contract manufacturing components sorted. So I think it's a demand signal at this point, and we feel very confident about that.

Awesome. Tyson, a lot has been said about the differences between AI traffic and AI networks versus classical cloud computing network, and Arista has developed its Etherlink portfolio to address the opportunity. What commonalities are there between Arista's classic cloud solutions in hardware and software versus the AI solutions.

Yeah, I think Chantel and I were talking about this a little bit earlier too. And Arista's heritage and foundation, we believe, really put us in a very well-suited position for the AI era. In a way, the company was born and bred to be prepared for the AI era. And so there are clear distinctions between cloud traffic, architectures, hierarchies, oversubscription, interface speed, upgrade cycles, refreshes, and how the compute is interconnected. AI is much more demanding. The traffic profiles are significant. They're very highly coordinated. The reliability is essential at every level of the piece of the infrastructure because you don't have the ability, at least with current generation AI technology, to provide, you know, ways of working around failures as easily as you do in cloud type primitives. So the demands are just very, very high here. And I think, you know, the commonality for us from the kind of where the company forged its foundation was rooted in reliability, security, performance and scalability. All of those dimensions are more critical for AI than they were even in cloud. I would highlight, too, in particular that kind of root around our heritage in hardware development, the ability to deal with latest generation, intercept latest generation technology, overcome very hard electrical engineering problems, signal integrity problems, power integrity issues, things that are exacerbated as you move up into faster link speeds as we're now kind of transitioning into the 1.6T generation. These are very difficult challenges. You're emitting a lot of heat because you're consuming so much power. So your ability to cool that and be power efficient is super critical. Something Arista has really, you know, kind of built its heritage again in hardware engineering around. So that lends itself very well for our Etherlink platform and AI fabrics. And then the software is another piece on the reliability side and the security side that's essential. You know, one of the things that's come to front of mind for a lot of people is in the last year really is Mythos and Glasswing and the notion of AI driven attack vectors and an ever increasing rate of security vulnerability discovery fixes, patching and this cycle that needs to, you know, basically run continuously now to keep your network secure. One of the benefits of our software is that it was built on a foundation of always staying up so you can patch the software, deploy it, and you can automate the entire workflow seamlessly so that your data plane is never interrupted. The network stays up. Traffic continues to transmit across the network. That gives us a real relative advantage against competitors as well as open NOS and other types of solutions. So we feel very good about that foundation that we've been able to carry forward into the AI era and get leverage out of it. And then that reliability aspect. I mean, if you're talking about reliability that is a full point better than the next best in the industry, that 1% improved availability translates in a very significant way when you start talking about amortizing availability across all of your accelerators, which are the lifeblood of AI. This is the biggest expense. This is what you're spending the most money on. You don't want that capital sitting around idle. You want putting to work. You want your high utilization. So the speeds and feeds, cutting-edge technology, reliability, and security story come together very, very well. So it served us well in cloud. I think it's serving us even better in AI.

Great. Historically speaking, you guys had concentration at two hyperscalers, and you've done a very nice job in diversification at the hyperscalers with potentially three or four this year, depending on how things shape. But the hyperscaler concentration is improving. On the non-hyperscaler side, the neoscalers and enterprise, can you talk about your adoption cycle over there?

Yeah, we're very excited about these other non-hyperscalar environments. So we talked about we do have two 10% customers that you're referring to. We do anticipate a third and potentially a fourth. So that diversification continues. From a NeoCloud perspective, the one thing, back to Tyson's commentary, the NeoClouds are looking for a few things. What makes them competitively advantage is their token cost optimization. And so they come to us to say, you have great experience both on AI front-end and back-end and cloud. Can you help us get to token optimization as quickly as possible with your fast portfolio? And so all the different architecture designs at TIFF help them get to their token cost optimization. If it's a fair fight in the sense of it's a best-of-breed conversation and it doesn't come down to commercial arrangements taking the customer in a different avenue, we have a very good chance of winning. Even some of the NeoCloud customers who have gone with a competitor, perhaps for different reasons, have come to us perhaps for their second installation because they realize the best of breed will get them to those token cost economics, which is how they stay in business. We're very excited in both local and international growth from that perspective. And enterprise, enterprise, I think, is just getting started. We have about 20%, 22% market share in data center. So even if we just continue doing classic data center, there's market share to go gain. But why else would enterprise want to accelerate their next refresh for us? back to the mythos environment if you think about where some of these enterprise players are they are very nervous about if they're currently with many different operating systems how they're going to get on this patching treadmill when it comes to making sure they're secure so we've had customers come to us that are new logos ahead of their refresh to say we're very interested in your eos because we only want to patch once and we want to make sure that it's done properly because we We have the lowest CVEs in the industry by a magnitude of 30x to 1. And then the other reason the enterprise is coming to us is just total cost of ownership. You know, with one EOS, with Cloud Vision, they can get rid of the 50 to 60 to 70 people, perhaps 200 they employ, just to always be constantly updating, taking the system down, repatching. So from a TCO perspective, enterprise is also very excited. So market share and TCO is the conversation there. And then you go to campus of the enterprise, right? At Campus, we have 5% market share going from $800 million, 25 to $1.25 billion in 26. That growth rate is definitely larger than the market growth rate. So that's a share gain story. And that'll be a long, slow rinse repeat that we're very excited. And we win Campus First deals, which is a great validation of our portfolio and our brand recognition. And so there's land and expand going back to the data center the other way. So there's lots to be excited about, I think, in those two categories.

Security seems to be a nice flywheel for you guys. Scale across AI applications have emerged rapidly and are expected to be approximately one-third of your AI mix. What is driving the growth in scale across and what could shift the scale across mix higher?

You want to start?

Sure, yeah.

I mean, I think, you know, I'll start probably with the back end of that, like what could drive it higher. constraints are driving a lot of this in general and there's some architectural choices and there's some desire to distribute data centers either because you can't get the power and data center space in a single facility that you'd like or you want some resiliency kind of built into your infrastructure so you choose to distribute but another big driver here is actually coming around not just driven by constraint but enforced constraints regulatory regime change and like top-down government initiatives. So I'd highlight like a good use case that really exemplifies it is if you look at South Korea, the government there is actually driving by policy distributed generation and local consumption of power. And so by its very nature, what's going to happen to the data center infrastructure inside of South Korea is it's not going to concentrate into a small set of locations or cities where all the capacity is kind of all your eggs are in one basket is actually going to distribute around the country. And naturally, that is going to drive much more demand for a scale across solution because your single largest facility is going to be capped effectively based on the local power available to it. And so as things federate, you naturally have to interconnect them and interconnect those clusters. That is something that can shift and change and shape the scale across TAM quite a lot. I think I'll let Chantel talk more broadly about the TAM and how we think about it.

Yeah, I'd be happy to. So we are revisiting our TAM generally. Like at the last analyst day in October 25, we gave you $105 billion TAM. A lot has changed even since less than one year ago. So we'll be revisiting scale up, scale across, and hopefully come back to you later this year with a revised TAM. So we see that expanding for all the reasons Tyson listed, but also to provide a framework perhaps to help the audience, just how this scale across kind of gets us to Arista being a good choice. We're very well positioned. And the customers we feel are looking for a combination of great software, operating system, hardware, and AI experience, because this isn't just a DCI. This is a DCI with a much more complicated structure and high, large clusters, right? So if you have AI experience, software, and hardware, I think that's what wins in scale across. And we don't feel our competitors have all three. Some might have DCI, some might have AI clusters, but we don't see any of them that have all three. And that's why we feel incredibly well positioned for scale across. And so wait to see on the TAM, but, you know, if the TAM increases, we're very excited about that.

Great. And then on the scale up, you know, the market has been waiting for Ethernet standards, but a consensus is emerging that scale up will be a huge opportunity. You know, Broadcom talks about Ethernet being a leading candidate. How do you see the mix between scale-out, scale-across, and scale-up evolving?

Well, I can talk about the mix, and then maybe we could talk a little bit about scale-up, or perhaps your questions will lead us there. So a lot of this depends on what timing we're talking about. So from scale-up, we have zero in our guidance and zero revenue for Arista for scale-up in 26. We feel that we'll start to get some kind of maybe trials and pilots similar to our InfiniBent Ethernet conversation later next year, because the ecosystem has to come together. This is Ethernet scale up is going to take some ecosystem parts coming together because it's a bit more complicated. So we're talking 28 is when we get the revenue there. That's why I say the percentage of will depend on the timing. Scale across, I imagine, will hop a little sooner because we'll see that 26, 27 and 28. So both will have great growth trajectories, but the timing of it, it makes it difficult to answer your relative perspective. We're hoping all three are running very well for us when we get to 28 when all three are online, let's say. But we'll have to see the timing of all those three, how they show up.

And then Tyson, can you touch on the XPO roadmap and when you guys intercept that in terms of revenues and how does that fit in this whole kind of NPO, CPO roadmap?

Yeah, yeah. We feel very good about the roadmap in general for our products and the base building blocks that we have in place for advancing our product portfolio, kind of generation over generation and to intercept NPO and CPO. I mean, we are we are customer driven in terms of our product roadmap. And so, you know, if customers want a CPO switch, they want an NPO switch, they have certain requirements that need to be fit. We're going to go build that switch for them. I think you've got some alignment right now with XPO and kind of the scale-up timing. There's some coincidence to that, but they're also not just purely time coincidental. There is form factor and bandwidth density that comes with scale-up. And so as the Ethernet standards around ESUN are ratified, you get chip production. Chip production leads to the ability to build a system. You're talking about very dense systems here. We're going to build a, you know, scale up solutions to, you know, kind of focus on customers who would like either co-packaged copper for lowest possible cost, but those are going to be constrained in terms of their reach because, you know, you've got a bandwidth kind of over distance problem. The longer your link is, the less bandwidth you can attain over it. That gives rise very nicely to, you know, an NPO solution, which is what our XPO architecture is focused on. The ecosystem is coming together very well. The module makers are building all kinds of products and they're going to come together very well in that time frame. It's a portfolio or a product that we think it fits very nicely in our portfolio through optionality, serviceability in the field, things that our customers are telling us they want. It's also going to help them start to get into that multi-rack high density scaling that they require that copper isn't going to reach into. So we see this as a nice kind of two, three generation solution that lands in between kind of copper running out of steam and when, you know, CPO can really be built at scale. But we expect some early adoption on CPO for sure. We're ready to build as soon as customers are telling us that they want it and need it. I think you'll find a pretty common adoption there, like early adopters really drive the front of it. There's a whole ecosystem that has to be built out. It's a completely different manufacturing technology and architecture. The supply chain has to come together for it. Yields are going to be very challenging in it very early on. So there's a lot of customers that are being pretty pragmatic about it in terms of their expectations of when they can intercept and what value it's going to create and when and when the costs are going to stabilize and the volumes are going to increase. So we like the roadmap we have right now, which is this continue copper as long as we can, bring NPO and XPO into the fray, build out a lot of the modularity in that generation to be able to then feed into CPO and then CPO coming on. So I think, you know, XPO early deployments, second half next year, really ramping in 28 and probably 12 months behind that is where we start to see some of that CPO ramp occur.

And do you guys have a view in terms of the mix of ESAN versus UA-Link? Like, where is this kind of market going?

Well, we see, again, we're still learning about the TAM in the market because it's a fairly new thing. But preliminary views, I would say just from a framework perspective, we see this starting off as three segments within scale up. We see the proprietary, which you could put NB-Link and UA-Link. we see probably some sort of commodity white box play for the lower value add needed. And then we see value add Ethernet, which is where we will play. And so two things to think about. One is if you have an overall TAM, how much does the Ethernet part start at? And is there eventually a journey similar to proprietary to open standard Ethernet? You could say NBLink or UALink to Ethernet. Is that a journey where that starts to shift over time? And that's how we're starting the framework of this.

Great. Let me pause it and see if there are any questions in the audience. If you have a question, please raise your hand.

Thanks. You touched on optical a bit in your discussion of XPO, MPO, CPO. Is vertical integration something that you're considering given the rising importance of optical networking?

Well, we are super, you know, we have deep conviction, I should say. We're super engaged on making sure that ecosystem comes together. I think we're going to be pretty prudent about vertical integration where we feel like we can really add value. I don't think it's really something that we want to do to go spend time, energy, effort, CapEx, R&D, resources, defraying kind of our focus on building products just to be another commodity provider. So in a world where we're talking about like XPO and XPO modules, we think that's a really rich ecosystem. And I don't think we really see a need, but if a customer comes to us and say, they really think that there's value in being able to come to a single source, they believe that they are going to gain significant benefit out of offloading a bunch of test, qualification, verification work to us, rather than taking it on themselves. They want to kind of simplify their supply chain so they can focus elsewhere. We're going to be open to those conversations. I mean, that'll factor into like, what do we stick on the roadmap, when, where, and Unsurprisingly, like we built up a very competent team in the optical domain because it's so essential you know connectivity and connectors are so essential uh as we continue to step through the greater speeds and into next gen platforms so we feel well positioned from like an engineering product perspective there's something to build there there's a there there like we can go do it but um uh nothing hard committed at this point i think it's something we'll continue to to discuss a lot internally keep listening to customers and and uh you know i think you'll learn about if we choose to do something like when we're ready to launch it because we don't tend to pre-announce anything but question yeah thanks taking the question can you talk to i know it's early but

like scale up ethernet does the soft your value add obviously is software it's a big part of the pitch does the software requirements do they go up do they change maybe just talk to that is the ecosystem different what value can you bring to it maybe talk to that bit yeah i think if you went back in time maybe 12 months there was a lot of like momentum around the notion that scale up is really just a big fat dumb pipe and therefore there's not really much value to add.

You know, this is going to be a great white box play. I think there are, you know, white box companies out there who have definitely said, we think this is a great opportunity for us. I think the reality is, is everyone's kind of recognizing like reliability and security are just as essential in scale up as they are anywhere else. Like if you're losing, you know, GPU workload time or accelerator workload time, because your network is down, your scale-up network is unreliable, you don't have the telemetry you need to debug issues, even after the silicon is shipped and, you know, the ESUN spec is ratified and you've got a purpose-built product in place, you know, that's going to be kind of a deal-breaker for customers. So I do think EOS and our software advantage is meaningful there. I think, you know, the feature set is definitely smaller. You know, you're seeing kind of a shrinkage in terms of, like, breadth of capabilities. And so, you know, the question is going to become like, how much do the features and differentiation matter? You know, it's a breadth versus depth kind of question. But I think, you know, I'm gaining personal kind of deeper conviction every day that the security story is going to be really credible here for us and much better than a lot of our competitors. And if you look at the OpenNOS ecosystem, you know, you're subjected to long delays, self-discovery on vulnerability, fixes, reviews, reporting regimes that are dictated, you know, kind of by a governance model. There's no test infrastructure readily available to everyone. You've got to do it yourself. So these are real challenges for anyone who wants to go down the white box route, no matter where they're going to deploy it. You've got to be really committed if you want to do that. If you think about the total kind of expansion of the TAM and scale up with Ethernet specifically over time, it's going to be a variety of different types of customers. It's not just the hyperscalers. It's not just the most sophisticated types of customers. I think we're going to see that represent a lot of the customers we're working with now. And I think a lot of the things that are leading to wins for us now will lead us to wins in that domain as well.

Chantel, last year I said you're making ETA proud. This year I'm going to say you're making ETA more than proud. because in the last two years, since you joined the company, the Arista's operating margins have expanded impressively by 100 basis points. How do you think about the balance between investing in the business, innovation, in a high-cost commoditized environment? Are there areas that you are targeting for more operational efficiencies?

Yeah, I think if you look at our – so thank you. Let me start with thank you. I hope I've made Ida proud of the transition. I think that from the perspective of, if you think about our guidance, so we're guiding, you know, basically a 62 to 64 gross margin and 48 range, that's almost a rule of 90. So I don't know if we're looking for more operational gains. However, there is a lot of operational leverage, which will come through depending on the mix of products. When you think about our 40% revenue growth this year, we do not need to scale the same rate in the sense of our operating costs. So there is expansion, to your point. And so I think we'll continue to see where we grow and how we grow and how much more operational efficiency we can get. But we do get a lot of leverage from the area Tyson has specifically with the kind of cloud Titan space, neoclouds, et cetera. So we'll have to wait and see. But even if I keep the same ratios, you know, nine, we'd like to be obviously innovation forward. That's our goal. So if you think about R&D is usually 8% to 10% of revenue. If we grow 40%, that gives Ken a whole lot more just pure dollars to go play with, right? And so we feel comfortable that same sort of range, sales and marketing, 5% to 7%, G&As, and amazingly 1% or less, you know, because we only have one P&L in the whole company. So we're a very elegant business model. So there is room for expansion over time. And so we'll have to wait and see. But it's a great business model that way, I think.

On the topic of pricing and kind of value-based pricing, how are you guys thinking about the value-based pricing in this environment where the memory costs are going higher and the lead time is also stretching?

I think that our philosophy is to be as transparent as possible. And so what do I mean by that? So we try to measure a few times and cut once. So we try to see what's going on with components and memory being one of them, et cetera. Anything we can see, try to sweep it in and do one price increase. And we did that earlier this year. I'm talking for the majority. But we didn't do just, hey, everyone gets 7% and we're done because that's very easy. We went through and said, OK, who has a higher percentage of memory in your BOM? We're not going to price your backlog because you've already committed those purchase orders. And so we're like, hey, if you have something that's related to an increase we see, we can explain to you, we have to raise your price increase to at least keep us margin neutral. We're not looking to accrete margin because we've seen that in some of the other people in the industry, the companies showing accretion due to them. I don't think that's how we want to work with our customers. So we'll be transparent where it's applicable to the bomb. We'll have the commercial conversation and the commercial conversation will weed out how much of that increase we get to keep. And we'll keep doing it that way. And so we'll see as we go into 27 if something else is needed. But we just try to be transparent so that, you know, it's clear the pass-through sort of mentality, I would say.

First, let's talk about the other businesses. At this conference last year, you talked about some of Arista's measured efforts to diversify revenue, including tapping into the federal sector and investing in Arista's international business. Can you update us on some of these diversification efforts?

Yeah, I think we're still, we talk a lot about AI and a lot about cloud titans and neoclouds, but there are a lot of people who show up every day to make sure that the less sexy, boring, slower growth things are happening. And so part of this is, you know, international. Fed, I think, is a very nascent for Arista, given where we are. So Fed role is an opportunity, not just in the Americas, across the world, I would say, from a public sector perspective. But when you talk about geographies like EMEA, EMEA last quarter had 36% growth, which was a great growth quarter for Paul Jordan, the leader there. And that's a combination of the large customers flowing through the region. But also when you get to that kind of growth, it's in region for the region with enterprise, neocloud, et cetera. So we're seeing some good traction there. You know, we're winning new logos at enterprise and campus. We're seeing a lot of great neoclouds, for example, in EMEA. So it's a focus of attention. We dedicate headcount and growth from a go-to-market perspective, lean a bit more into channel partners. And so that's a slow, steady growth. And the rinse-repeat for the APAC region, who also has a leader that's within a year coming from Microsoft, which he's a great leader there, too. So very excited. I think it's, again, back to what are the growth trajectories for Arista. International is definitely one over the next 10 or 15 years that has a lot of room to grow.

Good to know. And on the campus market, you have talked about having a growing traction in that market, winning new customers. First of all, where are we in the campus going to refresh cycle?

Well, I think that there are some peers in the industry who have let us know there's a big refresh cycle going on. So we're very excited about that. you know we're we're fairly we're only five percent market share so I think you look at us going to 1.25 billion where I think we're coming in exactly when you're seeing a lot of refreshes start you know it's a five seven maybe nine year journey for the customer so coming in right when they're starting to do their next cycle which is super exciting and that was just if we were talking about just the normal portfolio but then you can layer on you know some of the conversations on them getting ready for inference which we've talked about right Tyson so customers who are coming to us ahead of a refresh cycle or coming to us from a competitor because they're interested in how we can help them get ready for inference. They're worried about some of the security with the mythos glass wing environment. So many factors drawing them to us. We're winning campus first deals, like I was mentioning earlier. So a lot to be excited about. We feel we have the right portfolio. VeloCloud's done very well integrating from an SD-WAN perspective, you know, coming into like a full year now with the company. So we're pretty excited. But that's a high volume, low dollar, multi, probably decade, excuse me, growth.

Then I know Jayshree and Todd, they've talked about the go-to market in terms of product versus go-to market. And where are we in that stage?

You know, I think that sometimes, because we still have, we're 12 years post-IPO, we had a large cloud kind of start to the company, we got into enterprise. And so we're not a heavy go-through-channel-market-to-customers company. We continue to go direct, fulfill-through-the-channel majority-wise, and we're continuing to fund it that way. But back to the international, where it's probably most important, we have, with Todd Nightingale, doubled down on who are the 10 most impactful kind of players we need to work with and how do we cultivate those relationships. So we're very excited by what we're seeing there. And I think you're just seeing it just grow into their enterprise legs from that perspective. So it still stays in that 5% to 6% of revenue, but that gives us a lot of dollars each year to invest. So enterprise headcount or go-to-market, we've definitely been investing in. So more to come.

And then software is a percentage of the total business. How do we look at that number over time?

Do you want to describe maybe how the larger customers go through their software purchases? Because it doesn't really change over time, right? It stays at this 18%, 19% because it's part of the operating system that goes with it to the customers.

So yeah, I mean, it's for our hyperscale customers. I mean, they've got a mix of things where they deploy like Arista Blue Box, and they're going to run their own NOS or some kind of open NOS for certain use cases that are better well commoditized. And then they're, they're mission critical, you know, kind of high capacity, high demand workloads, they rely on EOS, but like part of that, that transaction, you know, includes not just software in form of licensing, but also support, right. Right. And so we have, you know, kind of single transactions that we do at the beginning of the life cycle every time. But as they're incrementally deploying and growing with that growth comes additional license and additional support fees that come in. And then if they get to the end of the life, they want to keep the equipment around their support renewals that kick at that point as well. So it's a little bit more of a derivative is kind of how I think about it than its own unique business model and with independent drivers and independent growth factors. And so you should generally just, I think, you know, and Chantel can correct me if I'm wrong, but I think you're just going to kind of see as our numbers grow, the software kind of revenue grows pretty linearly with it.

Yeah, it stays in this, to your point, 18% range, 18 to 20. It's not that we have a software division that goes and sells it independently. It's part of what we deliver in totality to the customer at this point.

Sounds good. We're almost out of time. Chantel and Tyson, thank you for coming to the City Conference.

Yeah, thank you for having us.

Thank you so much.