Aaron Rakers: Okay. Thank you.
Liz Stine: Thanks, Aaron.
Operator: Your next question comes from the line of Tal Liani with Bank of America. Your line is open.
Tal Liani: Hi. Jayshree, your tone is definitely better this quarter than last quarter, and you sound more confident in the numbers. And I want to understand if something changed in the last three months that made you more optimistic. I’m looking at the consensus estimates and it looks like the growth rate has been declining for four quarters from like 54% to about 20% next quarter. And then, it troughs at Q1, stays there and recovers after that. Do you agree that we are nearing kind of the end of the down adjustment to the growth rates and then it’s going to stabilize and go up from there? Or how do you look at the risks of that not materializing?
Jayshree Ullal: What do you think, Ita?
Ita Brennan: So, Tal, I think, look, we’ve been talking about kind of the growth decelerating as we move through the year, just because the comps are so high. I think if you look at the discussion we’ve had so far about ’24, and obviously there’s more to come next week, we’ve talked about double-digit growth. But again, we are expecting that there is some moderation on the cloud side of the business next year. So, I think within the bounds of kind of the plans that we’ve laid out and discussions that we’ve laid out, I think we’re executing well, right? We’re giving you some upside in the guide for ’23 and by default almost, some upside in ’24, right? So I think we’re executing well, but within the bounds of what we talked about. And we do believe that there’s moderation of cloud spending as we head into 2024.
Jayshree Ullal: And Tal, I think I need to focus on my tone and maybe sing a song or something, because I felt really [enthusiastic] (ph) last quarter and this quarter.
Ita Brennan: I would say she was pretty happy last quarter.
Jayshree Ullal: I’m a happy kind of gal at the moment.
Tal Liani: We read in between the lines, you know?
Jayshree Ullal: Thanks, Tal.
Liz Stine: Thank you, Tal.
Operator: Your next question comes from the line of Sebastian Naji with William Blair. Your line is open.
Sebastian Naji: All right, thanks for taking the question. I wanted to ask about the change in revenue breakdown and the inclusion of OCI in this new cloud titan and AI segment. Was this the result of the material change in Arista’s wallet share at Oracle, or is that business becoming a larger portion of revenue? Anything you can provide there?
Jayshree Ullal: Yeah, no, we don’t do it based on wallet share of Arista. We do it based on definition. So, I think OCI has become a meaningful top-tier cloud customer, and they belong in the cloud titan category in addition to their AI investments as well. So, for reasons of classification and definition, the change is very warranted. And yes, they happen to be a good customer of Arista. That’s nice as well.
Sebastian Naji: Got it. Okay. Thank you.
Liz Stine: Thank you.
Operator: Your next question comes from the line of Meta Marshall with Morgan Stanley. Your line is open.
Meta Marshall: Great, thanks. Jayshree or Anshul, maybe just some commentary on the tier-two and specialty providers, and just what you’re seeing in terms of other people kind of building out some of these AI clusters? You classify some of those customers as largely focused on back-end today and those represent opportunities going forward, or just kind of what the discussion is outside of the cloud titans amongst some of these other guys that are building very large networks? Thanks.
Anshul Sadana: Sure. Meta, this is Anshul. The tier-two cloud providers are doing exactly what the tier-one is doing, just at a smaller scale. So, the activity is out there. Many companies are trying to build these clusters, maybe not hundreds of thousands of GPUs, but thousands of GPUs together in their real estate if they can get them. But the designs that we’re working on with them, the type of sort of features, fine tuning is actually very, very similar to the cloud, just at a smaller scale. So, we’re very happy with that activity. And this is across the board. It’s very positive to see this in the ecosystem that it’s not limited to just four or five customers.
Jayshree Ullal: I think they’re also waiting for GPUs like everyone else is. So, there’s that common problem that we’re not the only one with lead time issues. But to clarify the comment on scale, Anshul and I are also seeing some very interesting enterprise projects against smaller scale. So, a lot of customers are trying AI for small clusters, not too different from what we saw with HPC clusters back in the day.
Anshul Sadana: Yeah.
Meta Marshall: Thank you.
Operator: Your next question comes from the line of Michael Ng with Goldman Sachs. Your line is open.
Michael Ng: Hey, good afternoon. Thank you very much for the question. I just had one on the OpEx outperformance in the quarter. We saw an unseasonal decline quarter-on-quarter, And I think you mentioned lower product introduction costs that may have helped R&D. I was just wondering if you could talk a little bit more about that aspect of it. Any way we should think about product introductions going forward to help us understand the trajectory of OpEx? Thank you.
