Extreme Networks(US:EXTR)2025-10-29 13:00Financial 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]