Summary of Extreme Networks Investor Day Company Overview - **Company**: Extreme Networks (NasdaqGS:EXTR) - **Event**: 2025 Investor Day held on November 10, 2025 - **Public Status**: Company has been public for over 25 years since 1999 [1] Key Industry Insights - **Networking Industry**: The networking sector is experiencing growth and innovation, with a shift towards cloud and AI technologies [5][6] - **Market Dynamics**: 80% of S&P 500 companies reported good results, yet Extreme's stock fell 20% despite beating expectations, indicating market volatility [6] - **Competitive Landscape**: Competitors are creating tailwinds for Extreme, allowing it to gain market share [13][14] Financial Performance - **Growth Metrics**: - 15% year-over-year growth in the last quarter [34] - Projected double-digit product growth and overall revenue growth [19] - Earnings growth expected in the 20% range over the next five years [19] - **Annual Recurring Revenue (ARR)**: ARR is growing at a faster rate than overall revenue [34] Technology Differentiation - **Fabric Technology**: - Fabric technology is central to Extreme's differentiation, allowing seamless integration across various environments [51][59] - 90% less operational complexity compared to traditional IP Fabric [59] - **Wi-Fi 7 Adoption**: - Wi-Fi 7 constitutes 20% of the Wi-Fi business and is expected to drive a wireless refresh due to pent-up demand [15] - Transition to Wi-Fi 7 is anticipated to be more robust than previous generations [60] Strategic Initiatives - **AI and Platformization**: - Emphasis on AI integration and the development of Platform One to enhance service delivery and customer experience [29][30] - AI is seen as a key driver for automation and improved visibility in networking solutions [29] - **Customer Engagement**: - Focus on building relationships with larger customers, including government and enterprise sectors [18][19] - Success with large customers leads to increased brand recognition and further opportunities [19] Leadership and Team Development - **New Executives**: Introduction of new team members in key roles, including: - Nabil as President of AI platforms [7] - Monica Kumar as Chief Marketing Officer [9] - Anisha Vaswani as Chief Information Officer [10] - **Team Execution**: The quality of execution and collaboration among the team is highlighted as a significant strength [11] Market Opportunities - **Sector Penetration**: - Active engagement with various sectors including government, education, healthcare, and retail [15] - Notable projects include partnerships with the Japanese government and Kroger, showcasing Extreme's capabilities in complex environments [18][27] - **Emerging Trends**: - Increasing demand for cloud flexibility and data sovereignty among customers [27][55] - The need for robust cybersecurity measures and interoperability in complex networking environments [39][42] Conclusion - **Future Outlook**: Extreme Networks is positioned for continued growth with a strong focus on technology differentiation, customer engagement, and market expansion. The company aims to leverage its unique capabilities in fabric technology and AI to capture more market share and enhance customer experiences [34][56]

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 ...

Core Insights - Cybersecurity remains a top priority for enterprises, with budgets increasing by approximately 18% this year and global spending expected to exceed $280 billion by 2025 [2][3] Company Performance - Notable companies in the cybersecurity sector have shown strong performance: Zscaler up 79%, CrowdStrike up 54%, Cloudflare up 35%, Palo Alto Networks up 13%, and Okta up 19% [2] - Mixed results were observed for some companies, such as Fortinet, which did not perform as strongly [3][4] Market Trends - There is a noticeable separation between leading companies and those lagging behind, with platform-oriented companies gaining an edge [5][6] - Companies that are effectively acquiring others and expanding their service offerings are likely to outperform their competitors [5][7] Strategic Shifts - Palo Alto Networks is transitioning from a focus on firewalls and endpoint technology to a more integrated platform approach, which is enhancing its competitive position [6][7] - CrowdStrike is also evolving by expanding its services through acquisitions and R&D, moving beyond endpoint detection to include managed services [7][10] Customer Considerations - Customers are reconsidering their cybersecurity strategies, with some advocating for diversification among providers to mitigate risks associated with relying on a single vendor [9][10] - However, there is a trend towards selecting the best products from platform players, indicating a preference for comprehensive solutions [10] Acquisition Activity - The acquisition of Recorded Future by Mastercard for $2.65 billion highlights the trend of larger enterprises seeking to enhance their cybersecurity capabilities through strategic acquisitions [12][13] - Companies are looking for opportunities that extend their cybersecurity defenses beyond traditional boundaries, focusing on areas like threat intelligence and digital protection [13]

Cyber Security Industry Overview - The cyber security sector has seen significant growth, with stocks like CrowdStrike and Zscaler up over 50% in the past year, while Palo Alto Networks has lagged behind [1][2] - The industry is expected to continue expanding due to increasing breaches and new regulatory requirements from governments [3][4] - Companies are shifting towards consolidation and seeking more value from service providers, moving away from using multiple tools [4][6] Company-Specific Insights - Palo Alto Networks is acquiring CyberArk to enhance its offerings, aiming to become a one-stop shop for clients' cyber security needs [5][6] - The focus in cyber security has shifted from merely preventing breaches to ensuring system availability, as downtime can cost companies tens of millions [10][11] - The demand for cyber security solutions remains strong despite macroeconomic challenges, driven by the necessity of IT budgets [9][10] Investment Strategies - A neutral trade strategy for CrowdStrike involves selling an iron condor, capitalizing on a range-bound movement with potential earnings of $375 per contract [15][17] - For Palo Alto Networks, a neutral to bullish trade is structured around the $200 support level, with potential earnings of $350 per contract and a 62% probability of profit [21][22]

Core Insights - Palo Alto Networks (PANW) achieved strong results in fiscal 2025, driven by an increase in customer adoption of its platforms and a record number of large platform deals in Q4 [1][11] Group 1: Platformization Strategy - The platformization strategy focuses on encouraging customers to adopt multiple products across network, cloud, and security operations, enabling larger customers to utilize the full security platform [2] - This strategy is contributing to faster growth and larger deals for the company [2] Group 2: Customer Growth and Revenue - In Q4 of fiscal 2025, customers with over $20 million in Next Gen Security (NGS) Annual Recurring Revenue (ARR) experienced a nearly 80% year-over-year increase, while those with over $5 million and $10 million in ARR grew by about 50% [3] - PANW added $490 million in NGS ARR during the quarter, with significant contributions from software firewalls, SASE, and XSIAM [4] - Key customer wins included a global consulting firm with a contract exceeding $100 million, a European bank with a $60 million deal, and a U.S. insurer with a $33 million multi-platform agreement [4] Group 3: Future Outlook - For fiscal 2026, the company anticipates a revenue growth of 14%, with NGS ARR expected to grow by 26-27% [6] - The Zacks Consensus Estimate for total revenues in fiscal 2026 is $10.42 billion, reflecting a year-over-year increase of 13% [6] Group 4: Competitive Landscape - Competitors like CrowdStrike and Zscaler are also expanding through platform growth and AI innovation, with CrowdStrike reporting $4.66 billion in ARR (20% growth) and Zscaler at $2.9 billion in ARR (23% growth) [7][8] Group 5: Valuation and Performance - PANW shares have increased by 20.8% year-to-date, outperforming the Zacks Security industry's growth of 14.6% [9] - The company trades at a forward price-to-sales ratio of 13.04X, slightly below the industry average of 13.23X [13] - Earnings estimates for fiscal 2026 and 2027 imply year-over-year growth of 13.5% and 13.2%, respectively, with upward revisions in estimates over the past 30 to 60 days [14]

Core Insights - Palo Alto Networks (PANW) is experiencing strong momentum due to its platformization strategy, which encourages customers to adopt multiple products across network, cloud, and security operations [1] - The company is seeing significant growth in its Next Gen Security (NGS) Annual Recurring Revenue (ARR), particularly among large customers [2][4] Customer Growth and Revenue - In Q4 of fiscal 2025, customers with over $20 million in NGS ARR grew nearly 80% year-over-year, while those spending over $5 million and $10 million increased by about 50% [2][4] - NGS ARR reached $5.58 billion, moving closer to the long-term goal of $15 billion ARR by 2030 [4][9] - The Zacks Consensus Estimate for fiscal 2026 total revenues is $10.43 billion, indicating a year-over-year increase of 13% [4] Major Contracts and Market Trends - Significant contracts include a $100 million-plus deal with a global consulting firm, a $60 million deal with a European bank, and a $33 million multi-platform deal with a U.S. insurer [3][9] - Customers are shifting from fragmented security tools to a unified platform, indicating a willingness to invest significantly for better protection and simplified operations [3][4] Competitive Landscape - Competitors like CrowdStrike and Zscaler are also expanding through platform innovation, with CrowdStrike reporting $4.66 billion in ARR (20% growth) and Zscaler at $2.9 billion in ARR (23% growth) [5][6] Valuation and Earnings Estimates - Palo Alto Networks trades at a forward price-to-sales ratio of 12.7X, slightly above the industry average of 12.44X [10] - The Zacks Consensus Estimate for fiscal 2026 and 2027 earnings implies year-over-year growth of 12.9% and 13.6%, respectively, with upward revisions in estimates over the past 30 days [13]

Core Insights - The cybersecurity market is projected to grow at an annual rate of 12%, driven by increased spending on integrated security solutions as companies face more complex environments and tighter budgets [4][7]. Group 1: Market Trends - The cybersecurity market is expected to reach $270 billion, with firms planning to increase spending on cybersecurity products by 50% compared to general software products in the coming years [4]. - A trend towards "platformization" in cybersecurity products is emerging, as companies seek to integrate and simplify their cyber-defense structures [2][3]. Group 2: Company Performance - Palo Alto Networks is projected to have a revenue growth of 13.6% for the next year and a free cash flow margin of 38.3%, leading to an "Overweight" rating from Morgan Stanley [6][8]. - CrowdStrike is expected to achieve a revenue growth of 21.5% and a free cash flow margin of 31%, with an "Equal Weight" rating and a potential upside of 9% in the base case and 30% in the bull case [8]. Group 3: Investment Opportunities - Morgan Stanley identifies Palo Alto Networks, CrowdStrike, and Zscaler as key players poised for growth due to their comprehensive solutions across various security domains [1][2]. - The median projected revenue growth for the 15 software stocks to watch is 11.8%, with a median projected free cash flow margin of 26.6% [5].

Core Viewpoint - Palo Alto Networks is experiencing accelerated revenue growth driven by its investment in AI-powered cybersecurity products, positioning itself for a long-term boom in the market [1][2]. Group 1: Revenue Growth and Financial Performance - Palo Alto reported $2.5 billion in revenue for its fiscal 2025 fourth quarter, reflecting a 16% year-over-year increase, marking the second consecutive quarter of accelerating revenue growth [8]. - The annual recurring revenue (ARR) from its Next-Generation Security (NGS) segment increased by 32% to a record $5.6 billion, significantly contributing to the strong Q4 results [9]. - The company’s platform customers achieved a net revenue retention rate of 120%, indicating a 20% increase in spending year-over-year, with a nearly zero churn rate [11]. Group 2: AI Integration and Product Development - Palo Alto operates three cybersecurity platforms: cloud security, network security, and security operations, integrating AI into many products to enhance threat detection and incident response [4]. - The company launched the AI Access Security platform, which assesses the safety of over 4,000 generative AI applications, providing visibility for cybersecurity managers on AI software deployment [5][6]. - A new product, PAN-OS 12.1 Orion, was introduced to help enterprises prepare for vulnerabilities posed by quantum computing, showcasing Palo Alto's forward-thinking approach [7]. Group 3: Competitive Positioning and Market Strategy - The concept of "platformization" has strengthened Palo Alto's market position, allowing it to serve as a one-stop shop for cybersecurity needs, encouraging customers to consolidate their spending on its platforms [10]. - Palo Alto's NGS ARR is projected to potentially triple to $15 billion by fiscal 2030, driven by its strategic initiatives and platformization efforts [11]. - The company's price-to-sales (P/S) ratio of 14.1 is considered attractive compared to competitors like CrowdStrike, which has seen decelerating revenue growth [12][14].

Core Insights - Palo Alto Networks (PANW) has launched a new prevention-first Application Security Posture Management (ASPM) module within its Cortex Cloud platform, aimed at mitigating risks before code deployment and supporting an open ecosystem of partners [1][12] - The ASPM module is integrated into Cortex Cloud, providing a unified view of application risks by correlating data from both native and third-party tools, enhancing the platformization strategy of Palo Alto Networks [2][12] - The Cortex Cloud platform combines various security functions, including cloud native application protection and AI-powered security operations, achieving FedRAMP High Authorization, indicating trust from the U.S. public sector [3] Financial Performance - In the fourth quarter of fiscal 2025, Palo Alto Networks reported a 25% year-over-year growth in combined Annual Recurring Revenue (ARR) for Cortex and Cloud, reflecting strong platform momentum [4][12] - The company achieved a net retention rate of 120% among platformized customers, with minimal churn, indicating customer loyalty and potential for future growth [4] - Significant growth was observed in large platform commitments, with customers generating over $5 million and $10 million ARR increasing by 50% year-over-year, and those above $20 million ARR rising by 80% year-over-year [5] Market Position and Competitors - The Zacks Consensus Estimate projects fiscal 2026 revenues for Palo Alto Networks at $10.5 billion, representing a year-over-year growth of 13.8% [6] - Competitors like CrowdStrike and SentinelOne are also expanding their platforms and leveraging AI innovations to enhance their market positions [7] - CrowdStrike's Charlotte AI is being developed as a key differentiator in automated cybersecurity, while SentinelOne reported a 24% year-over-year growth in ARR, driven by its AI-first platforms [8][9] Valuation and Earnings Estimates - Palo Alto Networks trades at a forward price-to-sales ratio of 11.52X, slightly below the industry's average of 11.93X, indicating a competitive valuation [14] - Earnings estimates for fiscal 2026 and 2027 imply year-over-year growth of 9.3% and 15.2%, respectively, with recent revisions showing an upward trend for fiscal 2026 and a downward trend for fiscal 2027 [17]

Core Viewpoint - Palo Alto Networks reported strong fiscal Q4 results and optimistic guidance, but the stock remains relatively stagnant, indicating potential for future growth if the upward momentum continues [1]. Group 1: Financial Performance - Fiscal Q4 revenue increased by 16% year over year to $2.54 billion, surpassing the company's forecast of $2.49 billion to $2.51 billion [6]. - Adjusted earnings per share (EPS) rose by 27% year over year to $0.95, exceeding guidance of $0.87 to $0.89 [9]. - Remaining performance obligations (RPO) grew by 24% year over year to $15.8 billion, above the forecast of $15.2 billion to $1.3 billion [8]. Group 2: Platformization Strategy - Palo Alto's "platformization" strategy, initiated 18 months ago, aims to transition customers from point solutions to integrated cybersecurity platforms, with a focus on the Strata network security platform [3][4]. - The number of platformization customers increased to 1,400 in fiscal Q4, up from 1,250 in fiscal Q3 and 900 a year ago, with a target of 2,500 to 3,500 customers by fiscal year 2030 [5]. - The strategy is expected to lead to larger deals and is now showing positive results as the initial revenue impact is diminishing [4][5]. Group 3: Growth Drivers - Next-generation security remains the primary growth driver, with annual recurring revenue (ARR) increasing by 32% to $5.58 billion [7]. - Artificial intelligence ARR surged by 2.5 times to $545 million, indicating strong demand for AI-driven security solutions [7]. - SASE ARR, part of the Prisma platform, climbed 35%, reflecting the growing importance of integrated networking and security solutions [8]. Group 4: Future Outlook - The company provided robust guidance for fiscal 2026, projecting revenue between $10.475 billion and $10.525 billion, with a revenue growth rate of 14% [10]. - Next-generation security ARR is expected to reach between $7 billion and $7.1 billion, with growth rates of 26% to 27% [10]. - The acquisition of CyberArk is anticipated to enhance Palo Alto's identity security offerings, although the market initially reacted negatively to the deal [11]. Group 5: Valuation Considerations - The stock trades at a forward price-to-sales ratio of 11.7 times fiscal 2026 estimates, which is considered high given the company's mid-teens revenue growth forecast [12]. - Concerns about the current valuation may hinder stock performance despite the company's operational strengths [13].