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]

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]

Core Insights - Extreme Networks reported a 15% year-over-year increase in revenue for Q1 fiscal 2026, marking the sixth consecutive quarter of sequential growth [1][4] - The company's SaaS Annual Recurring Revenue (ARR) rose by 24% year-over-year, indicating strong momentum in its subscription model [1][4] - The CEO highlighted improved execution, increasing customer demand, and interest in AI-powered networking solutions as key drivers of growth [2][4] Financial Performance - Total revenue for Q1 2026 was $310.2 million, up from $269.2 million in Q1 2025, reflecting a $41 million increase [4][6] - GAAP diluted EPS improved to $0.04, compared to a loss of $0.08 in the previous year [4][8] - Non-GAAP diluted EPS was $0.22, up from $0.17 year-over-year [4][8] Margins and Profitability - GAAP gross margin was 60.6%, down from 63.0% in the prior year [4][6] - Non-GAAP gross margin decreased to 61.3% from 63.7% year-over-year [4][8] - The company achieved a GAAP operating profit margin of 3.6%, compared to a loss margin of 1.8% in the previous year [4][8] Cash Flow and Liquidity - The ending cash balance was $209.0 million, a decrease of $22.7 million from the previous quarter but an increase of $49.5 million year-over-year [7][9] - Net cash for Q1 was $7.8 million, down from $51.7 million at the end of Q4 2025 [7][9] Business Outlook - For Q2 fiscal 2026, the company targets total net revenue between $309.0 million and $315.0 million [11][12] - The full-year fiscal 2026 revenue guidance is set between $1,247.0 million and $1,264.0 million [13] Recent Key Highlights - Significant wins include a major government contract in APAC and partnerships with various organizations to enhance their networking capabilities [7][8] - The deployment of Extreme's solutions in notable venues like the T-Mobile Center and Hyatt Regency Samarafushi Maldives showcases the company's expanding market presence [7][8]

Financial Data and Key Metrics Changes - Revenue for Q4 reached $307 million, representing a 20% year-over-year increase and marking the fifth consecutive quarter of sequential revenue growth [5][17] - SaaS ARR revenue accelerated to $208 million, up 24% year-over-year [5][18] - Earnings per share (EPS) for Q4 was $0.25, up 32% from $0.19 in the prior year quarter on an adjusted basis [17][22] - Non-GAAP gross margin was 62.3% in Q4, with operating margin at 15.2%, up from 13.5% in the prior year [21][22] Business Line Data and Key Metrics Changes - Product revenue for Q4 was $192 million, growing 26% year-over-year [18] - WiFi 7 products represented 30% of all wireless units sold, contributing to a second consecutive quarter of revenue growth in wireless products [18][19] - Total subscription and support revenue was $115 million, up 11% year-over-year [20] Market Data and Key Metrics Changes - APAC region saw significant growth, with major new customer wins leading to the largest bookings quarter ever in the region [19] - EMEA revenue grew 21% year-over-year, the highest level since early 2024 [19] - Americas revenue grew 4% year-over-year, with a strong pipeline for future growth [20] Company Strategy and Development Direction - The company is focused on moving upmarket and has seen robust demand across both wired and wireless network solutions [5][6] - The launch of the AI-powered Extreme Platform One is expected to drive future growth and customer interest [11][12] - The company is expanding its footprint in strategic markets, including significant wins in the Japanese government and high-density public venues [8][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustained customer demand based on strong funnel generation and pipeline growth [15][23] - The company anticipates a reacceleration of overall revenue growth for fiscal 2026, with guidance for revenue between $1.228 billion and $1.238 billion [24] - Management highlighted the positive impact of recent large customer wins and the competitive positioning of the company [15][42] Other Important Information - The company achieved a net cash position of $52 million, up $49 million from the previous quarter [22] - The company returned value to shareholders through a share repurchase of 1.5 million shares for a total of $25 million [21] Q&A Session Summary Question: Success in EMEA and APAC - Management noted gradual recovery in EMEA and expects continued momentum due to a stabilized political environment and unique opportunities in the region [26][27] Question: Impact of Pricing Stability - Management indicated minimal pull-forward orders due to stable pricing and product category exemptions from tariffs [29][30] Question: Contribution of Platform One - Management stated that while Platform One had limited availability, it is expected to significantly impact ARR bookings in the second half of the year [33][34] Question: MSP Partners Growth - Management described the MSP program as still in early stages but noted excitement around the fully automated billing platform and consumption model [37][39] Question: Competitive Landscape Post-HPE Juniper Merger - Management acknowledged increased inbound opportunities due to the HPE Juniper merger and changes in Cisco's partner program, which could benefit Extreme [59][63] Question: Gross Margin Outlook - Management expects product margins to improve, targeting a range of 58% to 60% in the future, driven by higher-margin products like WiFi 7 [70][71] Question: Demand Trends by Vertical - Government and education sectors account for about 40% of total revenue, with other verticals like retail, healthcare, and hospitality also contributing [72][73]

Financial Data and Key Metrics Changes - Revenue for Q4 reached $307 million, representing a 20% year-over-year increase and marking the fifth consecutive quarter of sequential revenue growth [5][17] - SaaS ARR revenue accelerated to $28 million, up 24% year-over-year [5][17] - Non-GAAP EPS for Q4 was $0.25, up 32% from $0.19 in the prior year quarter [17][22] - Total revenue for the full fiscal year was $1.14 billion, growing 2% year-over-year [22] Business Line Data and Key Metrics Changes - Product revenue for Q4 was $192 million, growing 26% year-over-year [17][18] - WiFi 7 products represented 30% of all wireless units sold, contributing to a second consecutive quarter of revenue growth in wireless products [18][19] - Total subscription and support revenue was $115 million, up 11% year-over-year [20] Market Data and Key Metrics Changes - APAC region saw significant growth, with major new customer wins leading to the largest bookings quarter ever in the region [19] - EMEA revenue grew 21% year-over-year, the highest level since early 2024 [19] - Americas revenue grew 4% year-over-year, with a strong pipeline for future growth [20] Company Strategy and Development Direction - The company is focused on moving upmarket and has seen robust demand across both wired and wireless network solutions [5][6] - The launch of the AI-powered Extreme Platform One is expected to drive customer interest and enhance competitive positioning [11][12] - The company is investing in automation and differentiation to drive commercial success [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustained customer demand based on strong funnel generation and pipeline [15][22] - The company anticipates a reacceleration of overall revenue growth for fiscal 2026, with guidance for revenue between $1.228 billion and $1.238 billion [23] - Management noted that the competitive landscape is shifting due to mergers and changes in partner programs among competitors, creating opportunities for Extreme [52][60] Other Important Information - The company achieved a net cash position of $52 million, up $49 million from the previous quarter [22] - The company returned value to shareholders through a share repurchase of 1.5 million shares for a total of $25 million [21] Q&A Session Summary Question: Success in EMEA and APAC - Management noted gradual recovery in EMEA and expects momentum to continue due to stabilization in the political environment and unique opportunities in the German government [26][27] Question: Pricing Stability and Order Pull Forward - Management indicated minimal pull forward of orders due to product category exemptions from tariffs [29] Question: Contribution of Platform One to ARR Bookings - Management stated that while Platform One had limited availability, it is expected to contribute meaningfully in the second half of the year [34][35] Question: Growth of MSP Partners - Management described the MSP program as still in early stages but expects momentum to build with the new automated billing platform [38][40] Question: Competitive Environment Post HP Juniper Deal - Management highlighted increased opportunities due to the HP Juniper merger and Cisco's shift away from networking [52][56] Question: Gross Margin Outlook - Management expects product margins to improve, targeting a range of 58% to 60% in the future [67][68] Question: Demand Trends by Vertical - Government and education account for about 40% of total revenue, with other verticals like retail, healthcare, and hospitality also contributing [69][70]