Extreme Networks(US:EXTR)2026-01-28 14:00Financial Data and Key Metrics Changes - Total revenue for Q2 2026 was $318 million, representing a 14% year-over-year increase and exceeding guidance [14] - Earnings per share (EPS) rose to $0.26, a 24% improvement from $0.21 in the prior year quarter [14] - Non-GAAP gross margin increased to 62%, up 70 basis points from the previous quarter [16] - Adjusted EBITDA was $52.4 million, with an adjusted EBITDA margin of 16.5% [19] Business Line Data and Key Metrics Changes - Product revenue increased double digits year-over-year for the fourth consecutive quarter [4] - SaaS ARR grew by 25% year-over-year, reaching $227 million [4] - Subscription and support revenue reached $120 million, up 12% year-over-year [15] Market Data and Key Metrics Changes - The company experienced strong revenue growth across all regions, indicating robust demand for critical IT infrastructure [15] - The company closed 34 deals over $1 million, showcasing its ability to win large enterprise projects [5] - The company noted strong momentum in the EMEA region, with record sales attributed to regulatory requirements around data sovereignty [52] Company Strategy and Development Direction - The company aims to accelerate its leadership position in the market, driven by innovation and competitive differentiation [7] - The introduction of the Extreme Partner First program aims to enhance partner profitability and streamline deal registration [9] - The company is focused on moving upmarket and winning larger enterprise networking projects, leveraging its unique technology [5] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the demand environment, citing low elasticity of demand for networking infrastructure [11] - The company anticipates continued growth in profit faster than revenue, with expected profitability growth of around 20% [12] - Management highlighted the importance of AI in customer conversations and the company's unique agentic AI platform as a competitive advantage [30] Other Important Information - The company is actively managing supply chain challenges and has implemented a replacement strategy for components [11] - The company expects to see a significant multi-year growth opportunity due to competitive displacements in the market [10] Q&A Session Summary Question: Evidence of share gain and impact of restructuring - Management uses third-party analysts to track share gains and has confidence in their booking outlook due to recent restructuring efforts [24][26] Question: Importance of AI in offerings - AI is a top priority for customers, and the company believes its agentic AI platform provides a competitive edge [30][32] Question: Competitive displacements and project scope - Projects vary in scope, with some starting in one area and expanding to others, leveraging unique solutions like data sovereignty [36][38] Question: Customer reaction to price increases - Customers have shown resilience to price increases, and the company plans to evaluate further price adjustments as needed [42][44] Question: Impact of professional services on margins - Professional services have lower margins compared to subscription services, affecting overall margin mix in the short term [75][78] Question: Long-term growth expectations - Management is optimistic about continued double-digit growth in 2027, driven by market share gains and improved solutions [66][70]