Extreme Networks(US:EXTR)2025-10-29 13:02Financial 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]