Arista Networks, a company in the networking industry that just filed paperwork for an IPO, is worth watching.
Arista was founded in 2005 and has been gaining momentum since 2008, when it lured away one of Cisco’s top engineers, Jayshree Ullal, to be its CEO. Prior to Arista, Ullal ran Cisco’s bread-and-butter routing, switching business, leading it to $US10 billion in annual revenue. We’ve likened her to the “Marissa Mayer” of the networking world: famous and well-respected in her field.
Arista just filed paperwork with the SEC to become a public company. The company says it hopes to raise $US200 million.
But this IPO is worth watching for a number of reasons. For one, unlike many of the other enterprise IPOs in the works these days, Arista is already profitable. The company nearly doubled revenues from $US193.4 million in 2012 to $US361.2 million in 2013, and in that same time doubled profits, too, from $US21.4 million to $US42.5 million.
For another, it has some huge customers, particularly in the hot cloud-computing world. Arista makes an important piece of hardware for big corporate networks called a switch. One of its claims to fame is that the switch can be controlled through software, a big trend that is sweeping through the network industry. Such software-programmable networks have become critical for cloud computing. Arista names Facebook, Microsoft and Yahoo as customers as well as companies like Barclays, Citigroup and Morgan Stanley, Comcast, Equinix, ESPN and Rackspace.
If this IPO goes well, Ullal, who isn’t a co-founder, will profit nicely. She isn’t putting her shares up for sale, according to these documents, but she owns quite a big chunk: 7.5 million shares.
That’s second only to co-founder David Cheriton, the largest shareholder with 13.9 million shares owned by a trust in his name. He officially left the company this month and is working with another startup, Optumsoft.
Arista disclosed in its S1 that Optumsoft has sent a letter from a lawyer asking that Arista stop using some of its core technology, and a lawsuit might ensue.
But if that wrinkle with the former co-founder can be worked out, Arista has all the makings of a solid company poised to do well in the public markets.
An Arista spokesperson has no comment on the company’s relationship with its former co-founders. We’ve reached out to David Cheriton and will update when we hear back.
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