Ita Brennan
Chief Financial Officer at Arista Networks
Thanks, Jayshree, and good afternoon. This analysis of our Q1 results and our guidance for Q2 '22 is based on non-GAAP and excludes all non-cash stock-based compensation impacts, certain acquisition-related charges and other nonrecurring items. A full reconciliation of our selected GAAP to non-GAAP results is provided in our earnings release.
Total revenues in Q1 were $877.1 million, up 31.4% year-over-year, and well above the upper end of our guidance of $840 million to $860 million. Our enterprise business continued to contribute healthily to our overall revenue growth in the first quarter, combined with accelerated shipments to our Cloud Titan customers, some of which were deferred. Supply remained constrained in the quarter with supplier de commits resulting in higher broker purchases and expedite fees in the period. Services and subscription software contributed approximately 19.2% of revenue in the first quarter, down from 21% in Q4.
International revenues for the quarter came in at $212.7 million or 24% of total revenue, down from an unusually high 29% in the fourth quarter of 2021. This decline in international mix primarily reflects some volatility with our global customers, including the deferral of some international cloud shipments in the period. Overall, gross margin in Q1 was 63.9%, above the midpoint of our guidance range of approximately 63% to 64%.
Operating expenses for the quarter were $225.3 million or 25.7% of revenue, up from last quarter at $206.2 million. R&D spending came in at $144.3 million or 16.5% of revenue, up from last quarter at $130.3 million. This primarily reflected increased headcount and higher new product introduction costs in the period.
Sales and marketing expense was $66.2 million or 7.5% of revenue, compared to 61.2 million last quarter, with the increased headcount and strong shipments driving higher variable compensation expenses for the period. As a reminder, we continue to benefit from lower COVID related travel and marketing expenses.
Our G&A costs came in at $14.8 million or 1.7% of revenue, consistent with last quarter. Our operating income for the quarter was $335.6 million or 38.3% of revenue. Other income and expense for the quarter was a favorable $3 million and our effective tax rate was approximately 20.7%. This resulted in net income for the quarter of $268.7 million or 30.6% of revenue. Our diluted share number was 319.7 million shares, resulting in a diluted earnings per share number for the quarter of $0.84, up approximately 35% from the prior year.
Now turning to the balance sheet, cash, cash equivalents and investments, ended the quarter at approximately $3.4 billion. We repurchased $136.2 million of our common stock during the first quarter at an average price of $116 per share. As a reminder, we have not repurchased approximately $209 million or 1.8 million shares against our October 2021, $1 billion board authorization. The actual timing and amount of future repurchases is dependent on market and business conditions, business requirements, stock price, acquisition opportunities and other factors.
Now turning to operating cash performance for the first quarter. We generated $217.1 million of cash from operations in the quarter, reflecting strong earnings performance combined with continued working capital investments. DSOs came in at 67 days, up from 58 days in Q4, reflecting the linearity of billings and growth in deferred revenue in the period. Inventory turns were consistent with last quarter at 1.7 times. Inventory increased to 694.2 million in the quarter, up from 650.1 million in the prior period, primarily reflecting higher component inventory.
Our purchase commitment number for the quarter was 4.3 billion, up from 2.8 billion in Q4. This significant increase in commitments largely represents orders for 2023 and beyond, reflecting overall strength in demand for those periods and our expectation that this long lead time supply environment continues. As a reminder, we continue to prioritize newer, early life cycle products for inclusion in these strategies in order to help mitigate the risk of excess or obsolescence.
Our total deferred revenue balance was 1.1 billion, up from $929 million in Q4. The majority of the deferred revenue balance was services related and directly linked the timing and term of service contracts, which can vary on a quarter-by-quarter basis. Approximately 327 million of this balance, up from 160 million last quarter, represents product deferred revenue, largely related to acceptance, clauses for new products, most recently, with our large cloud titan customers.
As a reminder, we remain in a period of significant new product introductions, combined with a healthy new customer acquisition rate and expanded use cases with existing customers. These trends have resulted in increased customer specific acceptance clauses and higher product deferred revenue amounts. Accounts payable days were 58 days, down from 63 days in Q4, reflecting the timing of inventory receipts and payments. Capital expenditures for the quarter were 14.9 million.
Now turning to our outlook for the second quarter and beyond. Our Analyst Day outlook for 2022, called for 30% year-over-year revenue growth, somewhat [Phonetic] balanced across our market sectors and heavily constrained by the supply environment. As we progress through 2022, demand metrics remain strong across the business but particular strength from our Cloud Titan, other cloud and enterprise customers. While we've added manufacturing capacity and component supply in response to this demand, supplier decommits make forecasting accelerated shipment momentum difficult. These decommits also have a negative impact on gross margin as we must turn to other sources to try to backfill decommitted components in the quarter. From a business model perspective, this means that in this supply constrained environment, any accelerated growth, while accretive to the bottom line, may come at the lower gross margin percentage due to increased cloud mix and additional expedite fees.
Turning specifically to Q2, we expect revenues of approximately $950 million to $1 billion, including approximately $50 million of cloud related deferred revenue recognition from the balance sheet. On the gross margin front, an expected healthy cloud mix in the quarter combined with 100 to 300 basis points of assumed expedite cost would result in gross margins of approximately 60% to 62%. As to spending and investments, we expect to continue to grow our investments in R&D and sales and marketing in line with our baseline investment plan.
With all of this is a backdrop, our guidance for the second quarter, which is based on non-GAAP results and excludes any non-cash stock-based compensation impacts and other non-recurring items is as follows. Revenues of approximately $950 million to $1 billion, gross margin of approximately 60% to 62% and operating margins of approximately 37% to 38%. Our effective tax rate is expected to be approximately 21%, with diluted shares on a post split basis of approximately 220 [Phonetic] million shares.
I will now turn the call back to Liz. Liz?