Arista Networks (ANET) shares tumbled 5.03% in pre-market trading on Wednesday, following the company's mixed first-quarter results and disappointing second-quarter outlook. The cloud networking company reported better-than-expected earnings per share but fell short on revenue expectations, causing investor concern.

For the first quarter, Arista Networks posted non-GAAP earnings of $0.65 per share, surpassing analyst estimates of $0.60. Revenue reached $2 billion, slightly missing the consensus forecast of $2.02 billion. However, the company's guidance for the second quarter raised red flags among investors. Arista projected Q2 revenue of $2.1 billion, below analyst expectations of $2.11 billion. More concerning was the company's warning that both gross margin and operating margin on a non-GAAP basis may decline in the second quarter, with non-GAAP gross margin expected to be around 63% and non-GAAP operating margin about 46%.

Despite the market's negative reaction, Arista Networks' CEO Jayshree Ullal remained optimistic, stating that AI, cloud, and enterprise customers continue to drive network transformation. The company also announced that its board had approved an additional $1.5 billion share repurchase plan, potentially aimed at boosting investor confidence. Nevertheless, the combination of mixed results, weak guidance, and margin pressure outweighed this positive development, leading to the significant pre-market decline.