Listen Server, clients animations are jittery/laggy

I am not sure how to check for the connection quality, but both computers are on the same network (in the same room). As it’s a 1gb/s connection, I assume the ping is good.

The game is very simple as I just started it. The lag happens on an empty default map with just 2 players and only on the listen server. It runs smooth on the client.

Both computer have similar specs - quite high end machines.