Stan Kovler SVP, Finance and Corporate Development Investor Day Welcome to 1 Disclaimer Non - GAAP Financial Measures Forward - Looking Statements This presentation contains forward - looking statements including statements regarding our business outlook; future operating and financial metrics and results; market conditions and global demand; customer adoption of our technologies, products and solutions; our product roadmap and innovation priorities; our go - to - market execution; and our ability to compet ...

Market Overview - The total addressable market (TAM) for networking solutions exceeded $42 billion in 2024, projected to grow at a 7% CAGR, reaching $59 billion by 2029[144]. - 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[144]. - Extreme's cloud networking segment is estimated to be a $15 billion market, growing at 15% annually over the next five years[147]. Product and Service Innovations - Extreme Platform ONE, launched in July 2025, integrates networking, security, and AI solutions to reduce complexity for enterprises[135][146]. - The company aims to deliver significant productivity gains for IT teams through AI-powered automation, improving agility and responsiveness[140][141]. - AI-driven insights and automation are key features of Extreme Platform ONE, allowing real-time adaptation to bandwidth spikes and security threats[147]. - The company is focused on simplifying and automating network management through fabric technologies, enhancing operational efficiency[147]. - The company offers flexible consumption options, including public, private, and hybrid cloud solutions, to meet diverse customer needs[147]. - ExtremeCloud IQ conforms to ISO/IEC standards for data privacy and is CSA STAR certified, ensuring robust security for cloud services[147]. - The company emphasizes a unified operations dashboard for real-time visibility into network usage, renewals, and support coverage[148]. Financial Performance - Net revenues for Q1 fiscal 2026 reached $310.2 million, a 15.2% increase from $269.2 million in Q1 fiscal 2025[154]. - Product revenues increased by $31.8 million or 19.6% to $194.0 million, driven by strong demand and higher bookings[151]. - Subscription and support revenues rose by $9.3 million or 8.7% to $116.2 million, attributed to increased adoption of cloud network management solutions[152]. - Total gross profit was $188.0 million, representing a gross margin of 60.6%, down from 63.0% in the prior year[154]. - Operating income improved to $11.3 million compared to an operating loss of $4.7 million in Q1 fiscal 2025[154]. Cash Flow and Expenses - Cash and cash equivalents decreased to $209.0 million as of September 30, 2025, down from $231.7 million as of June 30, 2025[154]. - Research and development expenses increased by $3.3 million or 6.1% to $57.8 million, primarily due to higher personnel costs[159]. - Sales and marketing expenses rose by $7.5 million or 9.3% to $88.9 million, driven by increased personnel and sales commission costs[161]. - General and administrative expenses decreased by $7.4 million or 20.3% to $29.2 million, mainly due to lower legal costs[163]. - Interest income increased to $1.2 million from $0.8 million, reflecting higher interest earned on cash accounts[167]. - The company reported a net cash used in operating activities of $14.0 million for the three months ended September 30, 2025, compared to a net cash provided of $18.6 million for the same period in 2024[181]. Shareholder Actions and Commitments - The company repurchased 577,281 shares at a total cost of $12.0 million during the three months ended September 30, 2025, with an average price of $20.79 per share[175]. - The company had $199.4 million of debt outstanding as of September 30, 2025, with quarterly installments due through fiscal year 2028[189]. - The company had non-cancelable commitments to purchase $48.8 million of inventory as of September 30, 2025[190]. - The company had $188.0 million available under the 2025 Repurchase Program as of September 30, 2025[175]. - The average daily outstanding debt amount for the quarter ended September 30, 2025, was $188.9 million, with a high of $205.0 million and a low of $180.0 million[194]. - The company recognized foreign currency transaction net gains of $0.9 million for the three months ended September 30, 2025[197]. - The company had contractual commitments of $15.1 million due through fiscal year 2027 as of September 30, 2025[191].

Core Viewpoint - Extreme Networks, Inc. (NASDAQ:EXTR) experienced a significant decline in stock price despite reporting strong earnings, indicating that the market may have already priced in expectations for performance amid the AI boom [1]. Financial Performance - The company reported a net income of $5.6 million for the quarter, a turnaround from a net loss of $10.5 million in the same period last year [2]. - Total net revenues increased by 15 percent year-over-year, reaching $310 million compared to $269 million [3]. - The company has achieved six consecutive quarters of revenue growth and three straight quarters of double-digit year-over-year gains, indicating a positive trend in market share [4]. Future Outlook - For the second quarter, Extreme Networks is targeting total net revenues between $309 million and $315 million, with earnings per share projected to be between $0.03 and $0.06 [5]. - The annual recurring revenue (ARR) has increased by 24 percent year-over-year, reflecting growing momentum in the subscription model [4].

Group 1 - The article does not provide any specific content related to a company or industry [1]

Group 1 - The article does not provide any specific content or key points related to a company or industry [1]

Core Insights - Extreme Networks reported strong financial results for Q1 of fiscal 2026, beating analyst expectations for both revenue and earnings, yet the stock fell approximately 16% [1][2] Financial Performance - Revenue increased by 15% year over year to $310.2 million, driven by product sales, while adjusted earnings per share (EPS) rose 29% to $0.22, surpassing average analyst estimates [2] - Software-as-a-service (SaaS) annual recurring revenue reached $216.2 million, reflecting a 24.2% increase from the previous year [2] Margins and Outlook - Adjusted gross margin decreased to 61.3% from 63.7% in the prior-year period, indicating some weakness in profitability [5] - The company anticipates revenue growth to slow to approximately 12% in Q2 and 10% for the full fiscal year, which may be causing concern among investors [5][7] Strategic Developments - Extreme Networks secured significant customer wins in Q2, including a large government client in the Asia-Pacific region, and noted strong bookings for the Extreme Platform ONE [4] - The introduction of a new service agent is expected to enhance network management and support, potentially driving future growth and market share expansion [4] Valuation Considerations - The stock is trading at around 18 times forward adjusted earnings, which does not appear overly expensive, but the company's growth challenges are noteworthy [6]

Company Performance - Extreme Networks reported quarterly earnings of $0.22 per share, matching the Zacks Consensus Estimate, and an increase from $0.17 per share a year ago [1] - The company posted revenues of $310.25 million for the quarter ended September 2025, exceeding the Zacks Consensus Estimate by 4.90%, compared to $269.2 million in the same quarter last year [2] - Over the last four quarters, Extreme Networks has surpassed consensus EPS estimates three times and topped revenue estimates four times [2] Stock Movement and Outlook - Extreme Networks shares have increased approximately 27.1% since the beginning of the year, outperforming the S&P 500's gain of 17.2% [3] - The company's earnings outlook is crucial for assessing future stock performance, with current consensus EPS estimates at $0.25 for the coming quarter and $1.02 for the current fiscal year [4][7] - The estimate revisions trend for Extreme Networks was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] Industry Context - The Computer - Networking industry, to which Extreme Networks belongs, is currently ranked in the bottom 37% of over 250 Zacks industries, which may impact stock performance [8] - Cisco Systems, a competitor in the same industry, is expected to report quarterly earnings of $0.98 per share, reflecting a year-over-year change of +7.7%, with revenues projected at $14.78 billion, up 6.8% from the previous year [9]

Financial Data and Key Metrics Changes - Revenue reached $310 million, up 15% year-over-year, marking the sixth consecutive quarter of revenue growth and the third straight quarter of double-digit year-over-year increases [4][12] - Earnings per share (EPS) was $0.22, up 29% from $0.17 in the prior year [12] - SaaS Annual Recurring Revenue (ARR) grew 24% year-over-year to $216 million [4][12] - Total bookings increased by 21% year-over-year, reflecting strong customer demand [13] Business Line Data and Key Metrics Changes - Product revenue was $194 million, growing 20% year-over-year and achieving six sequential quarters of product revenue growth [13] - Subscription and support revenue totaled $116 million, up 9% year-over-year, with total recurring revenue growing 8% year-over-year [14] - Non-GAAP gross margin was 61.3%, impacted by industry-wide increases in component costs [15] Market Data and Key Metrics Changes - Strong performance was noted in Asia-Pacific and EMEA regions, with significant new customer wins [14] - 36 customers spent over $1 million with the company in the quarter, up from 34 last quarter and 27 in the prior year [14] Company Strategy and Development Direction - The company is focused on expanding its footprint in government sectors and enhancing its technology offerings, particularly with Extreme Fabric and Extreme Platform One [6][9] - The introduction of Extreme Platform One is expected to drive future growth, with positive customer feedback noted [5][10] - The company aims to achieve a revenue growth rate of 10% for the full fiscal year 2026, with a focus on large opportunities and increasing market share [11][17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in recovering gross margins through price increases and operational efficiencies [15][20] - The company anticipates continued growth in SaaS ARR and recurring revenue, with a target of 35% of total revenue from recurring sources in fiscal 2026 [17] - Management highlighted the competitive landscape, noting opportunities arising from disruptions among larger competitors [27][29] Other Important Information - The company has been recognized for its corporate responsibility efforts, reducing emissions by 34% since 2021 [11] - The company plans to host an AI Summit to discuss future innovations and strategies [10] Q&A Session Summary Question: Can you talk more about component price increases impacting gross margins? - Management acknowledged rising prices in memory and optics, indicating plans for price increases to recover costs [20][21] Question: What is the impact of the federal government shutdown on your business? - Management stated that the shutdown has had little to no impact, with opportunities opening up in the federal market due to recent certifications [24][25] Question: How is the competitive environment with Cisco and Juniper? - Management noted confusion in the market due to acquisitions and changes in partner programs, presenting opportunities for the company [27][29] Question: Can you provide metrics on Extreme Platform One's commercial introduction? - Management indicated that it is early for metrics but noted high adoption and excitement about the platform [36][38] Question: What are the long-term gross margin targets? - Management maintained a long-term target of 64% to 66% gross margins, with expectations for recovery from current levels [62][65]

Financial Data and Key Metrics Changes - Revenue reached $310 million, up 15% year-over-year, marking the sixth consecutive quarter of revenue growth and the third straight quarter of double-digit year-over-year increases [4][12] - Earnings per share (EPS) was $0.22, up 29% from $0.17 in the prior year [12] - SaaS Annual Recurring Revenue (ARR) grew 24% year-over-year to $216 million [4][12] - Total bookings increased by 21% year-over-year, reflecting strong customer demand [13] Business Line Data and Key Metrics Changes - Product revenue was $194 million, growing 20% year-over-year and achieving six consecutive quarters of product revenue growth [13] - Subscription and support revenue totaled $116 million, up 9% year-over-year, with total recurring revenue growing 8% year-over-year, representing 36% of total revenue [14] - Non-GAAP gross margin was 61.3%, impacted by industry-wide increases in component costs [15] Market Data and Key Metrics Changes - Strong performance was noted in Asia-Pacific and EMEA regions, with significant new customer wins contributing to growth [14] - 36 customers spent over $1 million with the company in the quarter, up from 34 last quarter and 27 in the prior year [14] Company Strategy and Development Direction - The company is focused on expanding its market share through innovative technology solutions, including Extreme Fabric and Extreme Platform ONE, which leverage AI for enhanced networking capabilities [4][5] - The company aims to achieve a revenue growth target of 10% for the fiscal year 2026, with a strong emphasis on SaaS ARR growth in the low 20% range [11][17] - The company is positioning itself as a strategic alternative to incumbents, particularly in the public sector and hospitality markets [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to recover gross margins through price increases and operational efficiencies [15][20] - The company anticipates continued growth in large opportunities and believes fiscal 2026 will mark an inflection point in its growth trajectory [11] - Management highlighted the competitive landscape, noting confusion among competitors as an opportunity for the company to gain market share [28][70] Other Important Information - The company has been recognized as a leader in the 2025 MarketScape by IDC, highlighting its unique technology and deployment flexibility [5] - The company is committed to corporate responsibility, having reduced emissions by 34% since 2021 and aiming for 50% renewable electricity sourcing [11] Q&A Session Summary Question: Can you talk more about component price increases impacting gross margins? - Management acknowledged rising prices in memory and optics, implementing price increases to recover costs, with expectations to improve gross margins over time [20][21] Question: What is the impact of the federal government shutdown on your business? - Management indicated that the shutdown had little to no impact, with opportunities opening up in the federal market due to recent certifications [25] Question: How is the competitive environment with Cisco and Juniper? - Management noted confusion in the market due to HPE's acquisition of Juniper and Cisco's partner program overhaul, creating opportunities for the company [27][29] Question: What metrics do you have for Extreme Platform ONE's commercial introduction? - Management stated that it is early to present metrics but noted high adoption and excitement about the capabilities of Platform ONE [38][39] Question: What are the long-term gross margin targets? - Management maintained a long-term gross margin target of 64%-66%, with expectations for recovery in the near term [63][66]

Financial Data and Key Metrics Changes - Revenue reached $310 million, up 15% year-over-year, marking the sixth consecutive quarter of revenue growth and the third straight quarter of double-digit year-over-year increases [4][13] - Earnings per share (EPS) was $0.22, up 29% from $0.17 in the prior year [13] - SaaS Annual Recurring Revenue (ARR) grew 24% year-over-year to $216 million [4][14] - Total bookings increased by 21% year-over-year, reflecting strong customer demand [15] Business Line Data and Key Metrics Changes - Product revenue was $194 million, growing 20% year-over-year and achieving six sequential quarters of product revenue growth [15][16] - Total subscription and support revenue was $116 million, up 9% year-over-year [16] - Recurring revenue grew 8% year-over-year, representing 36% of total revenue [16] Market Data and Key Metrics Changes - Strong performance was noted in Asia-Pacific and EMEA regions, with significant new customer wins [16] - 36 customers spent over $1 million with the company in the quarter, up from 34 last quarter and 27 in the prior year [16] Company Strategy and Development Direction - The company is focusing on technology innovation, with strong interest in the new Extreme Platform One and Wi-Fi 7 solutions [5][10] - The company aims to expand its footprint in government sectors and enhance its offerings with new sovereign cloud capabilities [6][7] - The company is positioning itself as a strategic alternative to incumbents, particularly in public sector and hospitality markets [16] Management's Comments on Operating Environment and Future Outlook - Management expects revenue growth to accelerate to 10% for the remainder of fiscal 2026, driven by large opportunities and increasing win rates [12] - The company is optimistic about its growth trajectory, with expectations of continued strong performance in SaaS ARR and new commercial models [12][39] Other Important Information - Non-GAAP gross margin was 61.3%, impacted by industry-wide increases in component costs, but expected to recover over time [17] - The company has implemented price increases to mitigate higher costs and drive margin recovery [17][22] Q&A Session Summary Question: Can you talk more about component price increases affecting gross margins? - Management acknowledged rising prices in memory and optics and mentioned plans for a mid-single-digit price increase to recover costs [21][22] Question: What is the impact of the federal government shutdown on the business? - Management indicated that the shutdown had little to no impact on their business, with opportunities opening up in the federal market due to recent certifications [24][25] Question: How is the competitive environment with Cisco and Juniper? - Management noted confusion in the market due to HPE's acquisition of Juniper and Cisco's partner program overhaul, creating opportunities for the company [26][27] Question: What is the status of Extreme Platform One's commercial introduction? - Management reported high adoption and excitement about the capabilities of Extreme Platform One, with metrics expected to be shared in future updates [32][34] Question: What are the long-term gross margin targets? - Management maintained a long-term gross margin target of 64% to 66%, with expectations of recovery from current tactical challenges [50][52]