Heightened uncertainty over global macroeconomic conditions and volatile supply-chain dynamics, amid ongoing tariff troubles, continues to be concerning for the participants of the Zacks Computer - Networking industry in the near-term. Fierce competition is an overhang on pricing power and margin expansion. Over the long term, participants are expected to receive a boost from momentum in cloud computing, network security, big data and cloud storage, as well as next-gen connectivity, amid the rapid adoption ...

Extreme Networks (NASDAQ:EXTR) is one of the 11 best communication equipment stocks according to hedge funds. On January 29, the price target on Extreme Networks (NASDAQ:EXTR) was reduced from $21 to $17 by UBS analyst David Vogt. The analyst reaffirmed his Neutral rating on the stock based on UBS’s stance to stay on the sidelines. This stance is based on the company’s mixed quarter two results. Mizuho Sees Long-Term Upside in CoreWeave (CRWV) Despite Near-Term Risks Copyright: hywards / 123RF Stock Pho ...

​Extreme Networks, Inc. (NASDAQ:EXTR) is one of the Best Small Cap Stocks Ready to Explode in 2026. On January 28, Extreme Networks, Inc. (NASDAQ:EXTR) reported results for its fiscal Q2 2026. The company grew its quarterly revenue by 14% year-over-year to $317.9 million. The non-GAAP EPS of $0.26 also came in ahead of the $0.21 EPS last year. ​Management noted that the fiscal Q2 2026 marked the seventh consecutive quarter of sequential growth. The quarterly revenue was driven by a 25.5% year-over-year i ...

Market Growth and Trends - The total addressable market (TAM) for networking solutions exceeded $42 billion in 2024, projected to grow at a CAGR of approximately 7%, reaching $59 billion by 2029[143]. - Cloud-managed networking solutions are expected to grow at a CAGR of approximately 15% through 2029, with AI Networking for the Campus forecasted to grow at a 72% CAGR over the next five years[143]. - Extreme's cloud networking segment is estimated to be a $15 billion market, growing at 15% annually over the next five years[146]. - The company aims to expand its technology foothold in the cloud networking segment, anticipating that cloud networking's compound annual growth rate will outpace that of on-premises managed networking[149]. Product and Service Innovations - Extreme Platform ONE, launched in July 2025, integrates networking, security, and AI solutions to reduce complexity for enterprises[134]. - The company aims to deliver significant productivity gains for IT teams by streamlining network design, deployment, management, and operations through AI capabilities[139]. - AI-driven insights and automation are key features of Extreme Platform ONE, allowing real-time adaptation to bandwidth spikes and security threats[146]. - The company offers a hybrid approach to cloud solutions, providing customers with options for public, private, or on-premises deployments[146]. - ExtremeCloud IQ conforms to ISO/IEC standards for data privacy and protection, ensuring compliance and security for customers[146]. - The company emphasizes a frictionless experience for secure hybrid work, integrating network, application, and device security into a single solution[146]. Financial Performance - Net revenues for Q2 fiscal 2026 reached $317.9 million, a 13.8% increase from $279.4 million in Q2 fiscal 2025[152]. - Product revenues increased by $25.5 million or 14.8% for the three months ended December 31, 2025, compared to the same period in fiscal 2025[150]. - Subscription and support revenues rose by $13.1 million or 12.2% for the three months ended December 31, 2025, compared to the same period in fiscal 2025[151]. - Total gross margin was 61.4% of net revenues, down from 62.7% in Q2 fiscal 2025[152]. - Operating income for Q2 fiscal 2026 was $13.0 million, slightly up from $12.7 million in Q2 fiscal 2025[152]. - Cash flows from operating activities were $36.1 million for the six months ended December 31, 2025, down from $40.1 million in the same period of the previous year[152]. Expenses and Cost Management - Research and development expenses increased by $2.6 million or 4.8% for the three months ended December 31, 2025, primarily due to higher personnel costs[157]. - Sales and marketing expenses rose by $9.4 million or 11.8% for the three months ended December 31, 2025, reflecting increased promotional activities[155]. - General and administrative expenses increased by $8.5 million or 32.7% for the three months ended December 31, 2025 compared to the same period in fiscal 2025[164]. Cash Flow and Financing - Cash and cash equivalents as of December 31, 2025 were $219.8 million, down from $231.7 million as of June 30, 2025[179]. - Net cash provided by operating activities for the six months ended December 31, 2025 was $36.1 million, compared to $40.1 million for the same period in 2024[186]. - Cash flows used in investing activities for the six months ended December 31, 2025 were $13.9 million, compared to $12.3 million for the same period in 2024[189]. - Cash flows used in financing activities for the six months ended December 31, 2025, were $34.0 million, primarily due to share repurchases of $12.0 million and tax payments of $14.5 million[190]. - The company repurchased 577,281 shares of common stock at a total cost of $12.0 million during the six months ended December 31, 2025[180]. Debt and Commitments - As of December 31, 2025, the company had $172.5 million of debt outstanding, with an average daily outstanding amount of $177.6 million during the quarter[194][199]. - The company had non-cancelable commitments to purchase $52.2 million of inventory as of December 31, 2025[195]. - Contractual commitments to suppliers amounted to $12.9 million due through fiscal year 2027[196]. - The company recognized foreign currency transaction net gains of $1.0 million for the six months ended December 31, 2025, compared to $1.4 million for the same period in 2024[206]. Interest and Currency Effects - Interest income for the three months ended December 31, 2025 was $1.1 million, an increase from $0.8 million in the same period of 2024[169]. - Interest expense decreased to $3.4 million for the three months ended December 31, 2025 from $4.2 million in the same period of 2024[171]. - The average interest rate on outstanding borrowings was 5.92% as of December 31, 2025[200]. - The company experienced a decrease in foreign currency effect on cash and cash equivalents due to changes in exchange rates[192]. - As of December 31, 2025, the company had foreign exchange forward contracts with a total notional principal amount of $68.4 million[202]. - Zero-cost collar contracts designated as cash flow hedges had a total notional principal amount of $55.1 million as of December 31, 2025[205].

Core Viewpoint - Top Wall Street analysts have revised their outlook on several prominent companies, indicating potential investment opportunities and shifts in market sentiment [1] Company Analysis - Analysts are considering buying META stock, suggesting a positive outlook for the company [1]

Core Insights - Extreme Networks reported its seventh consecutive quarter of revenue growth, driven by demand for its AI-powered networking platform and competitive wins [4] - The company raised its full-year revenue guidance, expecting profit growth to outpace revenue growth for fiscal 2026 [4][19] Financial Performance - For Q2, Extreme reported revenue of $318 million, a 14% increase year over year, and non-GAAP EPS of $0.26, up 24% from the prior year [3][6] - Non-GAAP gross margin was 62%, up 70 basis points sequentially, with an operating margin of 16%, an increase from 13.3% in the previous quarter [2][4] - Adjusted EBITDA was $52.4 million, representing a 16.5% margin [2] Recurring Revenue and SaaS Growth - Subscription and support revenue reached $120 million, up 12% year over year, while SaaS annual recurring revenue (ARR) grew 25% year over year to $227 million [1][6] - SaaS deferred revenue rose to $334 million, a 15% increase year over year, contributing to overall deferred recurring revenue of $628 million, up 9% year over year [1] Competitive Positioning and Market Strategy - The company achieved 34 deals over $1 million, indicating strong competitive wins across various verticals [7][10] - CEO emphasized the unique capabilities of Extreme Platform One, which features an "agentic AI core" for autonomous issue diagnosis and resolution [8] Customer and Partner Developments - Extreme's managed service provider partners nearly doubled, with billings increasing more than three times year over year [11] - The company launched the Extreme Partner First program to enhance deal registration and improve partner experience [11] Supply Chain and Pricing Strategy - Extreme implemented a 7% price increase, which management described as a "non-issue" for customer reactions, indicating low demand elasticity for critical networking solutions [13] - The company is qualifying alternative components to ensure supply chain resiliency and has the flexibility to increase prices if component costs rise [14] Guidance and Future Outlook - For Q3 fiscal 2026, revenue guidance is set between $309 million and $314 million, with gross margin expectations of 61% to 61.4% [17] - Full-year fiscal 2026 revenue guidance was raised to a range of $1.262 billion to $1.270 billion, implying approximately 11% year-over-year growth [18]

分组1 - Extreme Networks reported quarterly earnings of $0.26 per share, exceeding the Zacks Consensus Estimate of $0.24 per share, and showing an increase from $0.21 per share a year ago, resulting in an earnings surprise of +6.86% [1] - The company achieved revenues of $317.93 million for the quarter ended December 2025, surpassing the Zacks Consensus Estimate by 2.08%, and up from $279.36 million in the same quarter last year [2] - Over the last four quarters, Extreme Networks has surpassed consensus EPS estimates three times and topped consensus revenue estimates four times [2] 分组2 - The stock has underperformed, losing about 11.7% since the beginning of the year, while the S&P 500 has gained 1.9% [3] - The current consensus EPS estimate for the upcoming quarter is $0.25 on revenues of $308.2 million, and for the current fiscal year, it is $1.00 on revenues of $1.25 billion [7] - The Zacks Industry Rank for Computer - Networking is currently in the bottom 18% of over 250 Zacks industries, indicating potential challenges for stock performance [8]

Financial Data and Key Metrics Changes - Total revenue for Q2 Fiscal Year 2026 was $318 million, representing a 14% year-over-year increase and exceeding guidance [15][23] - Earnings per share (EPS) was $0.26, up from $0.21 in the prior year quarter, marking a 24% year-over-year improvement [15][21] - SaaS ARR grew by 25% year-over-year, reaching $227 million, driven by strong demand for Platform One subscriptions [5][15] - Non-GAAP gross margin increased to 62%, up 70 basis points from the previous quarter [17][21] Business Line Data and Key Metrics Changes - Product revenue increased double digits year-over-year for the fourth consecutive quarter, indicating strong demand across all verticals [5][15] - Subscription and support revenue reached $120 million, up 12% year-over-year [16] - Platform One bookings were significantly ahead of targets, contributing to accelerating year-over-year performance in subscription bookings [15][21] Market Data and Key Metrics Changes - The company has seen strong revenue growth across all regions, indicating improved alignment between go-to-market teams and robust demand for IT infrastructure [16] - The company closed 34 deals over $1 million, showcasing confidence in its technology and ability to win competitive situations [7][9] - The company is experiencing strong momentum in the EMEA region, with expectations for government spending to return, which could serve as a tailwind for future growth [56] Company Strategy and Development Direction - The company is focused on leveraging its AI-powered platform to drive growth and market share, with a unique agentic AI core that differentiates it from competitors [8][34] - The company aims to capitalize on the ongoing innovation in networking technology, particularly with the introduction of Wi-Fi 7 and cloud choice solutions [9][12] - The company is enhancing its partner program to simplify deal registration and improve profitability for partners, which is expected to drive further growth [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the demand environment, citing low elasticity of demand for networking infrastructure, which allows for price flexibility [13] - The company anticipates continued revenue growth, with expectations of profitability growth around 20% on double-digit revenue growth for the year [14][21] - Management highlighted the importance of operational agility in navigating supply chain challenges and maintaining customer demand [13][18] Other Important Information - The company has implemented a price increase of 7%, which has not significantly impacted customer demand, indicating resilience in pricing [44][46] - The company is actively seeking alternative sources for components to mitigate supply chain issues, demonstrating a proactive approach to operational challenges [47] Q&A Session Summary Question: Evidence of Share Gain - Management uses third-party analysts to track market share and has seen growth at three times the rate of competitors, indicating strong performance in the enterprise networking space [26][27] Question: AI's Importance - AI remains a top priority for customers, and the company is positioned to leverage its unique AI platform to drive better business outcomes [32][34] Question: Competitive Displacement - The company is often replacing both Wi-Fi and switching components in competitive displacements, showcasing its unique solutions [40] Question: Customer Reaction to Price Increases - Customers have shown resilience to price increases, with networking being a non-negotiable need for organizations [44][46] Question: EMEA Sales Strength - The company has not yet fully benefited from regulatory changes regarding data sovereignty but anticipates positive impacts in the future [55][56] Question: Professional Services Margins - Professional services have lower margins compared to subscription services, impacting overall margin profiles in the short term [78][80] Question: Future Pricing Impact - Management expects pricing adjustments to positively impact margins in the future, particularly as product margins improve [88][90]

Financial Data and Key Metrics Changes - Total revenue for Q2 fiscal year 2026 was $318 million, representing a 14% year-over-year increase and exceeding guidance [15][23] - Earnings per share (EPS) was $0.26, up from $0.21 in the prior year quarter, marking a 24% year-over-year improvement [15][21] - SaaS ARR grew 25% year-over-year, reaching $227 million, driven by strong demand for Platform ONE [5][15] - Non-GAAP gross margin increased to 62%, up 70 basis points from the previous quarter [17][21] Business Line Data and Key Metrics Changes - Product revenue increased double digits year-over-year for the fourth consecutive quarter [5] - Subscription and support revenue reached $120 million, up 12% year-over-year [16] - Deferred recurring revenue climbed to $628 million, a 9% year-over-year improvement [17] Market Data and Key Metrics Changes - The company experienced strong revenue growth across all regions, indicating improved alignment between go-to-market teams and robust demand for IT infrastructure [16] - The company noted a return of government spending in Europe and expansion in APAC, contributing to positive market dynamics [12] Company Strategy and Development Direction - The company is focused on leveraging its AI-powered platform to drive growth and market share, with a strong emphasis on innovation and technology differentiation [5][9] - The introduction of the Extreme Partner First program aims to enhance partner profitability and streamline the sales process [10][11] - The company anticipates significant growth opportunities due to competitive displacements and a major end-of-life refresh cycle in the industry [12][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the demand environment, citing low elasticity of demand for networking infrastructure, which allows for price flexibility [13] - The company expects to grow profit faster than revenue, with anticipated profitability growth of around 20% on double-digit revenue growth for the year [14] - Management highlighted the importance of AI in customer discussions and the unique advantages of their agentic AI platform [32][34] Other Important Information - The company has successfully navigated supply chain challenges by implementing a replacement strategy and qualifying alternative sources for components [13][47] - The company is set to deliver several multimillion-dollar deployments in Q3 and Q4, which may impact gross margins due to lower-margin professional services [19][21] Q&A Session Summary Question: Evidence of Share Gain - Management uses third-party analysts to track share gains, noting that they are growing three times faster than competitors in the enterprise networking space [26][27] Question: AI Importance - AI is a top priority for customers, and the company is positioned to leverage its unique agentic AI platform to drive better business outcomes [32][34] Question: Competitive Displacement - The company often replaces both Wi-Fi and switching components in projects, with unique solutions that competitors cannot replicate [40][41] Question: Customer Reaction to Price Increases - Customers have shown resilience to price increases, with demand for networking infrastructure remaining strong despite rising costs [44][46] Question: EMEA Sales Strength - The company has seen strong sales in EMEA, with expectations for continued growth driven by data sovereignty requirements and government spending [55][56] Question: Professional Services Margins - Professional services have lower margins compared to subscription services, impacting overall margin profiles during large installations [77][80]

Financial Data and Key Metrics Changes - Total revenue for Q2 2026 was $318 million, representing a 14% year-over-year increase and exceeding guidance [14] - Earnings per share (EPS) rose to $0.26, a 24% improvement from $0.21 in the prior year quarter [14] - Non-GAAP gross margin increased to 62%, up 70 basis points from the previous quarter [16] - Adjusted EBITDA was $52.4 million, with an adjusted EBITDA margin of 16.5% [19] Business Line Data and Key Metrics Changes - Product revenue increased double digits year-over-year for the fourth consecutive quarter [4] - SaaS ARR grew by 25% year-over-year, reaching $227 million [4] - Subscription and support revenue reached $120 million, up 12% year-over-year [15] Market Data and Key Metrics Changes - The company experienced strong revenue growth across all regions, indicating robust demand for critical IT infrastructure [15] - The company closed 34 deals over $1 million, showcasing its ability to win large enterprise projects [5] - The company noted strong momentum in the EMEA region, with record sales attributed to regulatory requirements around data sovereignty [52] Company Strategy and Development Direction - The company aims to accelerate its leadership position in the market, driven by innovation and competitive differentiation [7] - The introduction of the Extreme Partner First program aims to enhance partner profitability and streamline deal registration [9] - The company is focused on moving upmarket and winning larger enterprise networking projects, leveraging its unique technology [5] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the demand environment, citing low elasticity of demand for networking infrastructure [11] - The company anticipates continued growth in profit faster than revenue, with expected profitability growth of around 20% [12] - Management highlighted the importance of AI in customer conversations and the company's unique agentic AI platform as a competitive advantage [30] Other Important Information - The company is actively managing supply chain challenges and has implemented a replacement strategy for components [11] - The company expects to see a significant multi-year growth opportunity due to competitive displacements in the market [10] Q&A Session Summary Question: Evidence of share gain and impact of restructuring - Management uses third-party analysts to track share gains and has confidence in their booking outlook due to recent restructuring efforts [24][26] Question: Importance of AI in offerings - AI is a top priority for customers, and the company believes its agentic AI platform provides a competitive edge [30][32] Question: Competitive displacements and project scope - Projects vary in scope, with some starting in one area and expanding to others, leveraging unique solutions like data sovereignty [36][38] Question: Customer reaction to price increases - Customers have shown resilience to price increases, and the company plans to evaluate further price adjustments as needed [42][44] Question: Impact of professional services on margins - Professional services have lower margins compared to subscription services, affecting overall margin mix in the short term [75][78] Question: Long-term growth expectations - Management is optimistic about continued double-digit growth in 2027, driven by market share gains and improved solutions [66][70]