Welcome to the first quarter 2017 Arista Networks financial results earnings conference call. During the call, all participants will be in a listen-only mode. After the presentation, we will conduct a question-and-answer session. Instructions will be provided at that time. As a reminder, this conference is being recorded and will be available for replay from the Investor Relations section at the Arista website following this call. I will now turn the call over to Mr. Charles Yager, Director of Investor Relations. Sir, you may begin.

Thank you, operator. Good afternoon, everyone, and thank you for joining us. With me on today's call are Jayshree Ullal, Arista Networks President and Chief Executive Officer, and Ita Brennan, Arista's Chief Financial Officer. This afternoon, Arista Networks issued a press release announcing the results for its fiscal first quarter 2017. If you would like a copy of the release, you can access it online at the company's website. During the course of this conference call, Arista Networks management will make forward-looking statements, including those related to our financial outlook for the second quarter of the 2017 fiscal year, industry innovation, our market opportunity, and the impact of litigation, which are subject to the risks and uncertainties that we discuss in detail in our documents filed with the SEC, specifically in our most recent Form 10-K and Form 10-Q, and which could also cause actual results to differ materially from those anticipated by these statements. These forward-looking statements apply as of today, and you should not rely on them as representing our views in the future. We undertake no obligation to update these statements after this call. Also, please note that certain financial measures we use on this call are expressed on a non-GAAP basis and have been adjusted to exclude certain charges. We have provided reconciliation of these non-GAAP financial measures to GAAP financial measures in our earnings press release. With that, I will turn the call over to Jayshree.

Thank you, Charles. Thank you, everyone, for joining us this afternoon for the first quarter of 2017 earnings call. I am pleased to report that we had a pretty good quarter, given our normal seasonality. We demonstrated our predictable and profitable growth with non-GAAP revenue of $335.5 million, as we grew 38.5% year over year. Non-GAAP earnings per share were $0.93 with an operating margin of 30.2%. Services contribution was higher at 13% of overall sales. From a geographic perspective, our customers in the Americas contributed 79% of total revenue, while the rest of our international theaters progressed steadily in the quarter. We delivered non-GAAP gross margins of 64.2% in our highly dynamic and competitive industry. Our top 10 customers included four verticals, namely, our cloud titans, our cloud specialty and service providers, and financial services. Our new customer acquisition continues to be healthy, made up mostly of leading high-tech enterprise customers. In terms of new introductions for the quarter, we began the year in February of 2017 with the introduction of Arista Data ANalyZers, short for DANZ. DANZ is a programmable state-driven data analysis architecture and software, bringing the next frontier of network packet broker telemetry. DANZ in 2017 is supported in Arista's popular 7150 and 7280R Leaf series as well as 7500R Universal Spine, and this coupled with CloudVision telemetry offerings, delivering any-to-any mirroring of network traffic up to 100-gigabit line rates. This is a compelling advantage of 10x to 60x over standalone products. This includes high-performance hybrid mode operation with traffic capture analysis filtering all in a compact footprint with low power and cost savings. This quarter we also announced the certification of Arista's 7000 Series from the Joint Interoperability [Test] Command, JITC, for inclusion in U.S. Department of Defense, DoD, approved product [indiscernible] (4:45). At Arista's…

Thanks, Jayshree, and good afternoon. This analysis of our Q1 results and our guidance for Q2 2017 is based on non-GAAP and excludes all non-cash stock-based compensation expenses and legal costs associated with the ongoing lawsuits. A full reconciliation of our selected GAAP to non-GAAP results is provided in our earnings release. Total GAAP revenues in Q1 were $335.5 million, up 38.5% year over year, and above our guidance of $320 million to $330 million. Demand in the quarter remained strong, reflecting continued broad-based adoption of our products. Service revenues represented approximately 13% of revenue, up from 12% last quarter. International revenues came in at $70.6 million, or 21% of total revenue, down from 23% in the prior quarter. We remain focused on expanding our international footprint, but you should expect our geographical revenue mix to fluctuate on a quarter-over-quarter basis depending on the timing of U.S. and international deployments. Overall gross margin in Q1 was 64.2%, down slightly from last quarter at 64.4%, and favorable to the midpoint of our guidance of 61% to 64%. This improvement versus guidance primarily reflected a higher than expected consumption of components sourced internationally during a previously open importation window. Operating expenses for the quarter came in at $113.9 million, up 8.4% from last quarter. R&D spending returned to a more typical 21.5% of revenue for the period, up from 19.1% last quarter. This reflects expected increases in prototype and NRE spending and continued head count growth. Sales and marketing expense remained at approximately 10% of revenues, down slightly from last quarter. Our operating income for the quarter was $101.3 million or 30.2% of revenue. Other income and expense for the quarter was a favorable $0.3 million. And our effective tax rate was 29.3%, resulting in net income for the quarter of $71.8…

Thank you, Ita. We are now going to move to the Q&A portion of the Arista earnings call. Due to time constraints, I'd like to request that everyone please limit themselves to a single question.

We will now begin the Q&A portion of the Arista earnings call, which also includes Marc Taxay, Arista's Senior Vice President and General Counsel, and Mark Foss, Arista's Senior Vice President for Global Operations and Marketing. Your first question comes from the line of Jess Lubert from Wells Fargo Securities. Your line is open.

Thanks for taking my question and congrats on another nice quarter. I wanted to actually try and squeeze two in here. But first, just on the outlook, it appears that your first half 2017 revenue has a chance to actually accelerate year over year. So I guess I just want to understand the breadth and the strength to what degree there's been any pull-forwarded business, if there's any reason to expect less than seasonal trends during the second half of the year? And then the second question, I think we're likely to get a final determination on the 945 case tonight. So, I just was hoping you could update us on where you are in the process of developing workarounds for the patents in that case and if they'll be submitted and embedded within EOS sometime soon. Thanks.

Hi, Jess. We'll try and answer one question, which one?

I guess just the business and the revenue outlook seasonality in the second half, and hopefully someone else will follow up on the 945 case and the workarounds.

You gave them a question to ask. I appreciate it, thank you. I'll get through as many of them as possible. So I think I said we're feeling very good, both about the Q2 guidance we've given and in general our customers' acceptance of our products. As I've often shared with you, visibility in the long term is always hard with our cloud customers, but in general their spending pattern continues. And their investment in CapEx in the foreseeable future, I can't speak to Q4, but I think we can look into the summer and say the trends continue like we're seeing in Q1 and our guidance for Q2. I think in general, what Arista is experiencing here, on one hand it's unique because we're such a strong supplier in cloud networking. On the other hand, it's also a strong reflection of our innovation and investment in our new products. And our new product uptake has been particularly strong. It was strong in Q4, where it was more than 20% of our revenue, and it continues to be strong and stronger in Q1 as well, and I expect that to continue in the second half too.

Your next question comes from the line of Jeff Kvaal from Nomura Instinet. Your line is open. Jeffrey Thomas Kvaal - Nomura | Instinet: Thanks very much, and let me follow up on Jess's question a bit. And that is could you perhaps, Jayshree, talk a little bit about the market segmentation? You have changed your terminology a little bit, and then you talked about service provider this quarter. Is that linked to the acceleration in revenues that you've been able to post over the last few quarters? Thank you.

Sure. As some of you who were with us at Analyst Day may recall, Arista has really now started talking about five verticals, not four. There are the cloud titans, which tend to be our largest customers, who are deploying over 1 million servers. There's a new category of Tier 2 or cloud specialty providers who could emerge to be cloud titans in the future that are making heavy investments in the cloud space and expect to be public and perhaps hybrid cloud providers. The service providers, which is really the classic definition of service providers, Tier 1, Tier 2, Tier 3, the financial services and rest of enterprise that tends to be highly adoptive. All five sectors generally contribute double-digit percentages to Arista's verticals. And, Mark Foss, do you want to add something more to that?

Sure. We don't usually give out specific breakdowns of the five segments. But we can rank them in terms of the order size for Q1. So in terms of size, the cloud titans was the number one segment for Q1. Number two was the service provider segment. Number three was the cloud specialty provider segment. Number four was the rest of enterprise. And last but not least, the fifth one was the financial services vertical.

Your next question comes from the line of Mark Moskowitz from Barclays. Your line is open.

Guys, this is Dan Gaide for Mark. So you just mentioned that – or can you just talk about balancing the percent of components that you're going to be sourcing internationally and domestically and just how that impacts gross margin guide? Thank you.

Yes, Dan, I think very consistent with the dialogue that we've had over the last while, we've got a gross margin range of 60% to 65%. And we've always commented that in a world where we're using a balanced mix of components from the U.S. and from overseas that we would be in the middle of that range. So that lines up nicely with our guidance of 61% to 64%. So I think nothing new or different from what we've been saying on the gross margin front. We just see ourselves operating in that kind of balanced mix environment over the next coming quarters.

Your next question comes from the line of Mark Kelleher from D.A. Davidson. Your line is open. Mark Kelleher - D. A. Davidson & Co.: Great, thanks for taking the question. I'm going to follow up on that a little bit. Maybe you can give a little more puts and calls on your inventory during the quarter. I know the window was closed for most of it. You were sourcing from overseas. But the previous quarter you built a lot of inventory in the quarter. Should we expect a little bit lower on your gross margin range because of that inventory when the window was closed? And what are you expecting going forward? Are you still going to source internally?

I think it still comes back to that concept of having a mixed balance of sourcing from U.S. component drivers and then some components that will come out of inventory. So we very consciously put the infrastructure in place that we have U.S. manufacturing, U.S. sourcing, and we're going to be leveraging that plus any inventory that we have. So I think nothing new, nothing different here. Mark Kelleher - D. A. Davidson & Co.: So the window opening and closing doesn't matter really to you?

Obviously at this point, you can see the inventory that we have and we'll continue to leverage that. Mark Kelleher - D. A. Davidson & Co.: Okay, thanks.

Your next question comes from the line of Steve Milunovich from UBS. Your line is open.

Thank you. Could you comment on your Microsoft business in terms of either growth this quarter or growth you expect for the year? HP lost their server business there. And one potential read is that Microsoft is just slowing their procurement generally speaking. Are you seeing any of that?

Hi, Steve, Microsoft as a customer continues to be one of our top customers. Their business with us is strong. As I've always commented, it would be difficult to expect them to be the same customer concentration as they were last year, which was I think 16%. But a good guess is they will be in the 10% to 16% range this year.

Thanks.

Your next question comes from the line of Simon Leopold from Raymond James. Your line is open. Victor W. Chiu - Raymond James & Associates, Inc.: Hi, guys. This is Victor Chiu in for Simon. I wanted to ask you about some potential shifts possibly in the competitive landscape because Juniper has reported several quarters in a row now double-digit switching growth. And then just recently, they started breaking out the contributions from their cloud customers and that vertical, implying that they're making progress there and that's starting to become a more important vertical for them. So, I just wanted to ask if you've seen them more so than you have in the past. And then maybe just quickly, vice-versa, how your progress is with your routing platform?

No, they're both good questions. Thank you, Victor. We do not see any dramatic change in competitive pressures. Our dominant competitor continues to be Cisco. We do see Juniper in the service provider sector specifically when we are competing in routing. As you know, they're quite strong there. But no major change there expect our entry into routing has therefore made Juniper more visible for us in routing. Victor W. Chiu - Raymond James & Associates, Inc.: Great, thank you.

Your next question comes from the line of Hendi Susanto from Gabelli & Company. Your line is open.

Hi, Jayshree. HP is planning to shift away from its core legacy network products to selling Arista. Would you be able to share what our expectations should be on the partnership and whether or not it has fully ramped up at the moment?

Thank you, Hendi. As I said before, we have very strong executive involvement from both the CEO of HPE, Meg [Whitman] and the Executive Vice President, Antonio [Neri]. And mutual commitment to the partnership continues to be strong. But I think both companies would like to see more progress here and are still in the very early stages of this engagement. As I've always said, I expect to see better results in the second half of 2017 and 2018. And both teams are working hard to streamline the training, the process, the channels, and the customer reach. So, we're doing a lot of work, but the real results of this will be more apparent in 2017 and 2018.

Thank you.

Your next question comes from the line of Vijay Bhagavath from Deutsche Bank. Your line is open.

Thanks. Hi, Jayshree, Ita. You had solid results here. My question is on the 7500R, the routing portfolio. We have heard you have over 100 customers for the 7500R. So it would be very helpful to know. Are there any specific use cases in routing or end customer segments in cloud that this product is seeing demand? And roughly what percentage of those 100-plus customers are in product acceleration mode versus more in field trials? Thanks.

Thanks, Vijay. I expect to see 100 routing customers by this summer, so we're making very good progress to that. I would say we are over north of 70% of that goal. This is both the 7500R series as well as the 7280R, so both products and generally we classify it with the FlexRoute license. In terms of use cases, I think the biggest difference here is Arista is not a legacy router company. And what we're seeing is a lot of routing capabilities where most service providers are transforming from traditional traffic engineered routers to resemble more the cloud. So the cloud network aggregation and core for both Ethernet and IP is changing dramatically, especially with the migration in their backbones and migration to mobile 5G, as well as we're seeing a lot of content delivery networks and peering use cases. So I would say the new norm for SP networks is cloud networking, and that's where Arista is particularly shining and is bringing out its cloud heritage for routing.

Perfect, thank you.

Your next question comes from the line of Paul Silverstein from Cowen & Company. Your line is open. Fahad Najam - Cowen & Co. LLC: Hi, this is Fahad in for Paul. One quick question on your deferred revenue is up very nicely. Can you help us understand what's going on there? And then a bigger broader question for you, Jayshree. From here on, what are the greatest opportunities you see from here and what are the biggest risks?

I'll take the deferred revenue one quickly first. The growth you're seeing is partly just growth in services renewals based on the installed base. And then we did see some increase also in product deferred. And again, that's purely driven by the timing of shipments where we have acceptances or features that we need to deliver in the future. So again, nothing unusual there. It's just the normal ebb and flow of the business that happens to result in that growth in this quarter. Jayshree, do you want to take the...

No, I think you answered the question well. Thanks.

Your next question comes from the line of Simona Jankowski from Goldman Sachs. Your line is open. Simona K. Jankowski - Goldman Sachs & Co.: Yes, hi. Thank you. I just wanted to follow up. I think Ita, I heard you mentioned that you just received the 945 ruling. Other than the up to $10 million bond, can you just tell us a little more about what was in the ruling?

Marc, do you want to take that?

Sure, I'd be happy to take that one. So as Ita said, we did just receive the product termination notice. We actually haven't received the written opinion yet. We're going to get that tomorrow. So we'll know more once we actually get the opinion. But what we know today is that the ICC found that we infringed two out of the six patents that were asserted in that case. One is the '668 patent and the other is the '577 patent. We obviously were very glad that the commission sided with us on four out of the six but disappointed about the other two. As Ita also said, there was 5% bond that was stated in there, and I think we explained that. And at this stage, we really just need to take a look through the decision to see how it impacts our go-forward strategy. Simona K. Jankowski - Goldman Sachs & Co.: Thank you.

Your next question comes from the line of James Faucette from Morgan Stanley. Your line is open. James E. Faucette - Morgan Stanley & Co. LLC: Thank you very much. I wanted to ask about the opportunity within cloud titans. Jayshree, you talked about we should expect Microsoft maybe to come down a little bit, at least as a percentage of revenue. How do you see your opportunities more broadly and over the long run there? Do you feel like containerized EOS opens up a lot of incremental opportunity within the cloud titans? And I guess over the medium to long run, do you think that cloud titans will remain your biggest market vertical, or is there a point in which you think that others can overtake it? Thanks.

Sure. Thanks, James. I think the cloud titans will always remain a big vertical. Whether it will be the biggest or not will depend on how the other verticals perform in the cloud space. There's no doubt in anyone's mind that workloads are moving to the cloud. And companies like Amazon, Azure, Google Platforms, I don't know I can list them all out for you, are doing very, very well, but so are the next tiers. So, I think there will be many consumption models in the cloud. And many customers of ours will be successful depending on the vertical stack or offerings they have. They may be different shapes and forms of clouds. So that brings me to your real question. The heart of your question is what about containerized EOS. Today, it's really an architecture and a technology for a handful of very sophisticated customers. These customers basically will be looking for different consumption models. And if you take an example like I've often shared on Microsoft, they have several tiers of Leaf and several tiers of Spine. And they may use our containerized EOS in some use cases and applications to the Leaf, but they may choose to keep the Spine highly, no pun intended, self-contained and well defined as it is now. So we don't expect massive shifts to containerized EOS in the near term, but we do expect containerized EOS to be an important consumption and packaging model for our cloud customers and sophisticated developers.

Your next question comes from the line of Rod Hall from JPMorgan. Your line is open.

Hi, guys. Thanks for the question. I just wanted to follow up again on the 945 ruling, the '688 and '577 patents. Can you guys comment on workarounds and just timeline on that, or should we be expecting the timeline to flow the same way that 944 did? And is there a possibility this all is done by the end of this year? Thanks.

Thanks, Rod. I'll let Marc answer it. But I think having been through this experience once with 944, we are more comfortable and familiar with the process as well as you are. So I think it will be very similar. We fully expect to have software and possibly hardware workarounds depending around the details once we read the patent. And it will be a process that tends to take six to 12 months. Is that about right, Marc?

That's right.

I think we won't know more (32:00) until we read more closely, so more as we know more.

Okay. Thanks, Jayshree.

Your next question comes from the line of Kulbinder Garcha from Credit Suisse. Your line is open. Kulbinder S. Garcha - Credit Suisse Securities (USA) LLC: Thank you for the question. Jayshree, it's a question on your cloud titans business. When I looked at and based upon the charts you gave at the analyst meeting, it looks like the next five customers, whoever they are, are probably collectively still smaller than Microsoft. I'm just looking at that. You've had business with them all, dealings I think for three or four years. So how does that market penetration relative to Microsoft being it just takes this long? And is the opportunity ahead of you or is the footprint and the opportunity there just a little bit smaller than maybe three or four or a few years ago? Just any commentary around the cloud titans, would you expect, for example, this year to grow faster than your overall company average?

Okay. Thanks, Kulbinder. I'll try and process your questions. There were multiple subplots in that question. First of all, the cloud titans are healthy. They're doing well, and I think they'll continue to do well. Many of these cloud titans we have now worked with an average of three to five years. So they know us. We're intimate with them. They've operationalized us. The cloud specialty providers and the service providers, both those are new categories who could potentially spend like the cloud titans, but we're anywhere from our first year to third year with them, so Arista are much newer to them and they to us. So depending on their success and where they're trying to be successful, I think they could be very large customers for us, perhaps even as large as some of the cloud titans. But they just aren't as far enough along with us or we with them. So I think... Kulbinder S. Garcha - Credit Suisse Securities (USA) LLC: I guess, Jayshree, my point is just in the cloud titans, not in either of the specialty providers, just in the cloud titans, Microsoft you're doing very well with. All of the rest of them, the five or so customers that are in there I guess, aren't as big as the Microsoft business yet despite you having business with those five customers for a number of years. So I'm talking about that specific opportunity. Has that taken longer to penetrate than you thought?

No, so I'll leave it at this. Several of them are in our top 10 customers, so they're doing quite well for us. But it is fair to say that of all the cloud titans, Microsoft is doing better than any of the others. For us and perhaps even in the industry, they and Amazon lead everyone. So I think you're just seeing the reflection of the industry trends on Arista customer trends. Kulbinder S. Garcha - Credit Suisse Securities (USA) LLC: Okay, thank you.

Sure.

Your next question comes from the line of Stanley Kovler from Citi Research. Your line is open.

Yes, thank you. I just wanted to ask a question about linearity. In the first half of the year, it seems like you're benefiting from a little bit of pent-up demand, and your lead times have come in now with the backdrop of Q2. As we think about the rest of the year, there are going to be other demands for some of your customers as they begin to potentially shift spending to servers and those product cycles. Can you help us understand the ebb and flow of spending in the data center that you expect to impact between the server/storage and networking as we get through the year with some of the competing product cycles there that they have funds for? Thank you.

Sure, Stanley. First of all, we probably don't see the ebb and flows you're describing between server/storage as a purchase segment versus networking. At any given time, the networking component of our total data center is 10% to 15%, so the server and the storage is significantly higher. So we tend to have networking operational experts who plan the networking piece. So therefore, how it ties into ebbs and flows, the server and the storage spend usually occurs at or before the network comes in. That's how we have really seen it, and therefore the tie is more loosely coupled than you're stating. In terms of lead times, our lead times have become very predictable right now. So customers are able to plan better, and certainly they work with us on anything they need in the next and the forthcoming quarter. But anything beyond 16 weeks is difficult for us to get visibility from them on. And also, for their planning, they have to plan on that since some of our lead time components are that far out. So I would say one or two quarters, and generally 16 weeks is a good boundary condition for how they plan.

Your next question comes from the line of Erik Suppiger from JMP Securities. Your line is open.

Hi, congrats on a good quarter. Can you comment on the DANZ product? Did you see that gain momentum in the quarter? And you said that your advantage is 10x to 60x. Is that based on a cost advantage you can provide the customer, or can you discuss that in a little detail?

Sure. So we introduced the DANZ in February, and it's based on our new products, the 7280R, the 7500R, as well as the ongoing support we've had on DANZ in 7150. The reception has been very good. It's only been a quarter since we introduced the new features. But I will tell you, similar to routing, I expect to see 100 new customers in the first year of DANZ. However, the size of these deals vary depending on how much monitoring functionality they need in a small use case versus cap aggregation at 100-gigabit Ethernet type of capabilities in a larger scale use case. So we're seeing both. So in terms of competitive advantages, we're not trying to build cap aggregation as a sole monitoring product. Our emphasis is clearly high port density, the ability to run in switching, mode in parallel, so that customers can mix and match switching and DANZ in a common chassis, and routing in some cases, as well as the footprint and power and price/cost capability. So all of that is factoring into the 10x to 60x depending on which metric I'm looking at. The customers are very pleased with our system-wide focus of not just how do we do DANZ, but how do we do DANZ with our Leaf/Spine networking portfolio.

Your next question comes from the line of Ittai Kidron from Oppenheimer. Your line is open. Ittai Kidron - Oppenheimer & Co., Inc.: Thank you, congratulations on a great quarter, a clarification and a question for me. The clarification, when you say 20% from new products, can you just mention what those new products you include in that category? And then the question, Ita, your short-term deferred has doubled in two quarters, doubled. It's a little bit hard to think how growth in services contracts can really make up for that big of a jump. So clearly, a lot of customers – or very few customers are putting a lot of money up front with you. Is there any color you can give us that helps us profile those customers or the type of the use cases or the products for which these orders are going forward? Is there any way you could give us some color on what's being built up there? That would be great.

Yes, you guys, clearly, services is a piece of this. We have seen the product deferred grow. Some of it is linked to the new products and just an increase in the number of customers who have some acceptance terms around those new products. And the rest of it really is timing and timing of shipments in the quarter. If you look at the mix of customers in that group, it's across the customer base. There's nothing particular to any one of the verticals that Mark and Jayshree talked about earlier. It really is more tactical and in a lot of cases in terms of new products have an acceptance clause. And then depending on when you ship, that determines what that balance is. So, the balance is cycling as you go quarter to quarter, and it really is just a question of what do we ship and how do we ship in the quarter and how much of it ends up going to those customers and ending up in the deferred. So, I still encourage everybody to think about it more as a tactical balance as opposed to something that's strategically reflecting some shift at this point. Ittai Kidron - Oppenheimer & Co., Inc.: Okay, and what is included in the category of new products?

The R-Series routing products.

The 7280R and the 7500R are the primary ones. Ittai Kidron - Oppenheimer & Co., Inc.: Very good. Good luck, ladies.

Okay, thanks, Ittai.

Thank you. It isn't often you get to say congrats to ladies only.

Your next question comes from the line of Jason Ader from William Blair. Your line is open. Jason N. Ader - William Blair & Co. LLC: Hello. I just wanted to follow up on the deferred revenues. Ittai asked about the jump that you've had. Ita, what should we expect in the second half for deferred revenues after the strength that you've seen over the last couple quarters? Should we expect the deferred revenue balance to continue to grow at the same rate?

I'm not going to try to guide the deferred revenue balance. It's tough enough to guide the revenues. I think as we see some of the new products become more mature, that's when we may see some decline on that. But again, in the context of at least on our current guidance, we're not factoring that in. So, I know it's interesting and intriguing, but really it is more tactical in terms of what's in that balance. So, it will move around, and again I wouldn't read too much into it. Jason N. Ader - William Blair & Co. LLC: Thank you.

Your next question comes from the line of Aaron Rakers from Stifel. Your line is open. Aaron Rakers - Stifel, Nicolaus & Co., Inc.: Yes, thank you for taking the question and also congratulations, ladies. I hate to do this, but I'm going to go back to the deferred discussion. I think as we look forward and you see the short-term deferred build so much, I'm curious of how you think the contribution of your total services revenue will grow relative to total revenue over time. And then also more importantly, where do you think the gross margin of the services business could go?

Yes, Ita, go ahead.

I think the services revenue has been growing as a percentage of total revenue over time at a nice, steady growth rate. We've seen it go from 11% to 12% to 13%. And I think it can continue to do that, but it's going to be at that steady pace. What's your entitlement, could it be as much as 15% from pure services, maybe, but that will take time. The growth, the margins on the services side, it's a little chunky in that the cost structure tends to be fixed and going in blocks. But it's probably – right now it's probably operating and it's as high as we would expect to see it operate. But you could see some chunkiness in the gross margin if we have to put in a new piece of infrastructure to support something. Aaron Rakers - Stifel, Nicolaus & Co., Inc.: And you guys don't quantify the product deferred. Is that correct?

We don't split it out.

We split it into long-term and short-term.

Long-term and short-term, but we don't break it out between services and products. Aaron Rakers - Stifel, Nicolaus & Co., Inc.: Okay, thank you.

Your next question comes from the line of Alex Kurtz from Pacific Crest. Your line is open.

Thanks. Thanks for taking the quick question here. Just on the 945 results, I was wondering if you could give us a quick refresher on inter-party PTAB process, the review of the '577 patent and the timing of that and what the strategy could be now that you've learned the fate of the 945 patents?

Sure. So yes, there are two IPRs that have been instituted on the '668 and the '577 patents, which were the patents that were found to have been infringed in the 945. There were hearings that were held at the PTAB in March, and the final decisions by the PTAB will be issued by June 11. So from a timing standpoint, as you probably know, there's a 60-day review period – presidential review period following the issuance of the final determination of the ITC. So that should come out to July 3, so the PTAB decisions will come out several weeks before that. At this stage, obviously we've been evaluating, as I said a moment ago, our design-around strategy. We are obviously preparing that strategy in the event that we were to lose the IPRs. And as I said, we just received the final determination, so we have to go through the actual written opinion to see how that flows through. But certainly, our plan would be based upon our review of that. We have several different options that we're evaluating, and we'll have something together before the end of presidential review period.

Marc, is there an appeals process to the IPRs, or is it just that's the final decision when that comes out and there's no follow-on to that process?

There is an appeal process, like everything else. There would be an appeal I think to the Federal Circuit. But once those – assuming for a moment that the IPRs that were instituted actually that we prevailed, the view to the ITC as I understand it would be that they'd be considered in effect. And the order wouldn't apply to us.

Got it, thank you.

This concludes the Arista Q1 2017 earnings call. I also want to mention that we have posted a presentation that provides additional information on our fiscal results, which you can access on the Investors section of our website. Thank you to everyone for joining us today.

Thank you for joining, ladies and gentlemen. This concludes today's call. You may now disconnect.