Arista Networks (ANET) shares tumbled in prolonged trading Thursday because the cybersecurity firm reported shrinking margins, despite profits that topped Wall Street’s expectations.

The cloud networking giant saw revenue grow 7% year-over-year to $1.81 billion, above the analyst consensus from Visible Alpha. Net income got here in at $747.9 million or $2.33 per share, up from $545.3 million or $1.72 per share a 12 months earlier and above projections.

Nevertheless, Arista’s gross margin within the third quarter was 64.2%, down barely from 64.9% 1 / 4 earlier. Within the fourth quarter, Arista said it expects gross margins to fall to between 63% and 64%.

Arista forecast fourth-quarter revenue of $1.85 billion to $1.9 billion, ahead of the consensus estimate compiled by Visible Alpha. Some investors could have had higher expectations. Ahead of Thursday’s results, Citi analysts had projected 28% growth within the fourth quarter, anticipating accelerating cloud spending driven by AI demand.

Arista also announced a four-for-one stock split, meant to make its stock accessible to more investors, with split-adjusted trading set to start out on Dec. 4. The corporate said its stockholders will receive three additional shares for each one share they hold. The split will reduce the value of every share by an element of 4, but won’t change the full value of investors’ holdings.

Shares of Arista fell greater than 7% in prolonged trading Thursday following the discharge. They were up about 83% for the 12 months through Thursday’s close.