Anshul Sadana: Sure. Tim, the engagement with other cloud titans who are customers — our customers is still very positive. They’re good customers, as many of you know, in routed layers, backbone, WAN use cases as well. In the next week, we’ll touch a little bit more on the whole build versus [by topic] (ph).
Liz Stine: Thanks, Tim.
Operator: Your next question comes from the line of James Fish with Piper Sandler. Your line is open.
James Fish: Hey, ladies, and Anshul, great quarter. Just on the product side, you guys released a new 25 gig offering recently. I guess what’s been the early feedback? What kind of differentiates down there? And Jayshree, just to clarify here, when you talk about that double-digit growth rate for next year and years beyond, are you talking about a multi-year CAGR or for ’24 specifically and then for ’25 and ’26 and beyond? Just trying to clarify here. Thanks.
Jayshree Ullal: All right. Okay. Well, Anshul, you want to answer the product question first?
Anshul Sadana: Sure. James, the recent announcement was the launch of our 25 gig ultra-low latency switches. These are the 7130 series. And now the whole world can upgrade the high-frequency trading infrastructure going from 10 to 25. That’s very, very low latency. You’re talking about, with cross point technology, you’re talking about 7 nanoseconds. But we also now introduce layer 2, layer 3 features at about 100 to 130 nanoseconds.
Jayshree Ullal: And Anshul, just to put this in perspective, back in the day, it used to be 500 nanoseconds, right?
Anshul Sadana: That’s right. It only keeps going down.
Jayshree Ullal: Yeah, faster than the speed of light. And James, just to give you a clarification, I was saying as a company, Ita and myself, Anshul, we’re aiming for at least double digits in ’24 and years beyond, but I wasn’t making any forecasts for exact numbers.
James Fish: Helpful. Thanks.
Liz Stine: Thank you, James.
Operator: Your next question comes from the line of Ittai Kidron with Oppenheimer. Your line is open.
Ittai Kidron: Thanks, ladies. Quick question on gross margin. Nice improvements there. Ita, maybe you can go into the details of how much room is there more to go? And I’m just kind of wondering with your customers now looking at your excellent financials and your recovering gross margins, what are the odds that pricing pressures start coming back? Something you probably have not seen much in the last couple of years since COVID, now that margins are normalizing, could prices come down potentially, perhaps even for the — more specifically, to the larger customers of yours?
Jayshree Ullal: Ittai, I’ll just start by saying prices are always coming down. As we go from one feed factor to another, between the SerDes technology and the density, the dollar per gigabit is always coming down. So, pricing pressure doesn’t change independent of our growth margin. We’re always in competitive deals. Where the value really comes in, and again, as I alluded to this, is CapEx versus OpEx. We expect pricing to be reasonably stable, but we expect the operational cost to be significantly advantageous with Arista technology. The total, the TCO, because of singular cloud vision, because of our software-driven approach, because of the fact that we have single-digit vulnerabilities while our industry peers have 100 to 500 of them in a given five-year factor, these are all now paying — customers and enterprises especially are very fatigued with the poor quality of our competitors and are paying a lot of attention to that and willing to pay for that quality.
Anshul Sadana: Ittai, as Jayshree mentioned, I want to emphasize this. The market is very competitive and it has been ever since we started. The gross margin that we report is not the reason why customers try to negotiate price and the gross margin is simply a result of what we’ve been executing on. I think the [indiscernible].
Ittai Kidron: Very good, thank you.
Liz Stine: Thank you, Ittai.
Operator: Your next question comes from the line of Simon Leopold with Raymond James. Your line is open.
Simon Leopold: Thanks for taking the question. I wanted to see if you would be able — willing to comment on your customer concentration year-to-date. I appreciate it can be lumpy quarter-to-quarter, but given sort of where you were in 2022, I’d just like to get a better understanding of what essentially the progress has been in 2023. And in that context, how big is enterprise as a percent of revenue this year, year-to-date versus where it was last year? Thank you.
Jayshree Ullal: Simon, we’re very proud of our customers, even if they’re concentrated, we love it. And as you know, the last year, we had some outsized concentration. If I recall the numbers, Meta was at 26% and what was Microsoft, Ita?
Ita Brennan: Microsoft was 17%.
Jayshree Ullal: 16% or 17%. While we expect, due to many of the CapEx news you’ve seen and shift in AI spending, that it’s possible they come down, but they’re still going to be very strong north of 10% contributors to our 2023 results. And we continue to — even as the denominator may get larger in the forthcoming years, we continue to look at them as two very important and strategic customers for us.
Liz Stine: Thanks, Simon.
Operator: Your next question comes from the line of David Vogt with UBS. Your line is open.
