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Fortinet and Qorvo Gain while ANET Sinks After-Hours

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Earnings season is well and truly underway. Tech stocks Qorvo (QRVO), Fortinet (FTNT), and Arista Networks (ANET) have just announced their quarterly results. Now let’s see how they performed compared to estimates—and what’s driving these stocks in after-hours trading.

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Qorvo and Fortinet gain over 8%

Semiconductor company Qorvo is up 8% in after-hours trading today. The company reported sales of $807 million in the fiscal second quarter of 2020 (for the fiscal year ending in March) with earnings of $1.52. In the prior-year period, Qorvo sales came in at $884.4 million, with earnings of $1.75. Analysts expected the company to post revenue of $754 million and EPS of $1.3.

In the December quarter, Qorvo forecast sales between $840 million and $860 million with EPS of $1.67. Analysts estimated sales of $758 million with earnings of $1.35 in the third quarter.

Qorvo expects to benefit from the shift to the 5G network and increasing demand in the RF (radio frequency) integration. Qorvo’s strong guidance, coupled with its solid Q2 earnings results, has driven the stock higher after-hours today.

Cyber security heavyweight Fortinet stock (FTNT) has gained 8% in after-hours at the time of writing. Fortinet reported third-quarter sales of $547.5 million with earnings of $0.67. In the prior-year period, Fortinet sales stood at $453.9 million with earnings of $0.49. Analysts expected the company to post revenue of $532.5 million and EPS of $0.56 in the September quarter.

Fortinet sales were driven by strong demand in the cloud and SD-WAN business verticals. Product sales rose 20% while Services sales were up 21% year-over-year. Total billings grew 19% to $626.6 million in Q3.

In the fourth quarter, Fortinet forecast sales between $595 million and $610 million with EPS between $0.69 and $0.71. Analysts estimated sales of $584.7 million with earnings of $0.64 in the December quarter.

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Arista Networks stock plummets 20%

Hardware networking company Arista Networks stock (ANET) has fallen 20% in after-hours today. The company reported third-quarter sales of $654.4 million with earnings of $2.69. In the prior-year period, ANET sales were at $563.3 million, with earnings of $2.11. This time around, Wall Street expected the company to post revenue of $653.25 million and EPS of $2.41.

So why did Arista Networks stock crash despite beating Wall Street estimates? The fall was because of Arista’s poor guidance. The company has forecast sales between $540 million and $560 million in the December quarter. This range was significantly lower than the analyst revenue estimate of $686.18 million.

Arista attributed the soft guidance to soft demand in the fourth quarter. CEO Jayshree Ullal stated, “In Q3 2019 we continued to see the adoption of our cloud networking technology in more diverse environments. While we expect a sudden softening in Q4 with a specific cloud titan customer, we are committed to a sustainable and strong foundation of long-term growth, innovation and profitability.”

The cloud titan mentioned might be Microsoft (MSFT). During Microsoft’s third-quarter call, the company stated that it has lowered its data center spending. ANET stock fell over 3% on October 24 after this Microsoft announcement.

MSFT had reduced spending in the second quarter as well. And this softness in demand has severely hurt ANET stock. According to this Motley Fool article, MSFT accounted for 27% of sales in 2018. The stock had fallen after its Q2 results in August 2019 as well. ANET is currently trading at $196, which is 41% below its record high.

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