Extreme Networks, Inc. Q1 FY2026 earnings call

• First quarter marked sixth consecutive quarter of revenue growth and third straight quarter of double-digit year-over-year increases. Revenue reached $310M, up 15% y-o-y.
• Product revenue increased double digits y-o-y for third consecutive quarter. SaaS ARR up 24% y-o-y to $216M.
• Extreme Fabric driving growth, strong interest in Extreme Platform ONE with AI capabilities.
• WiFi 7 solutions adoption boosting network efficiency.
• Strong growth in commercial models, MSP program partners and bookings nearly doubling y-o-y.
• Wins in various regions and verticals, including government, sports arenas, healthcare, etc.
• Recognized as a leader in IDC 2025 market scape.
• Reduced emissions by 34% since 2021, cut office footprint in half, and aim to source 50% electricity from renewables and cut emissions by 50%.

Revenue reached $310 million, up 15% year-over-year. Product revenue was $194 million, growing 20% year-over-year. SaaS ARR grew 24% year-over-year to $216 million. Total subscription and support revenue was $116 million, up 9% year-over-year. Recurring revenue grew 8% year-over-year, representing 36% of total revenue. Product revenue grew for the sixth consecutive quarter, driving subscription attach and ARR growth.

• Second quarter FY 2026: revenue $309M - $315M; gross margin 61.4% - 62%; operating margin 13.4% - 14.6%; EPS $0.23 - $0.25.
• Full fiscal year 2026: revenue $1.247B - $1.264B, 10% y-o-y growth; SaaS ARR to grow in low 20% range; recurring revenue expected to be about 35% of total revenue.

• Component price increases, including memory, optics, copper, aluminum, etc., impacting gross margin.
• Industry-wide risks that could cause actual results to differ from forward-looking statements.

Q: Talk about component price increases hitting gross margin and plans to lift ASPs through Extreme Platform ONE or price increases.

A: Ed mentioned memory and optics prices shot up, they put in price increases to recover expenses, with mid-single-digit price increase and supply chain initiatives to drive gross margins back up. Kevin added they saw industry price increases and raised prices to recover costs, expecting average selling price increase on cloud applications like Platform ONE.

Q: About federal government shutdown and competitive environment against Cisco and Juniper.

A: Kevin said federal shutdown had little to no impact as market share in federal space is small and they've recently certified portfolio. Ed talked about HPE acquiring Juniper, hiring talent and channel confusion, and Cisco overhauling partner program creating opportunities for Extreme.

Q: Regarding Platform ONE commercial introduction, metrics, and TAM growth.

A: Ed said Platform ONE went GA at start of Q1, commercially selling but customers can still use previous apps, high adoption and excitement, early innings with metrics to be opened later. Kevin added adoption was ahead of expectations. Ed talked about TAM expanding with large wins, certifications opening federal markets, and commercial models gaining traction.

Q: Cisco's partnership with NVIDIA, countermeasure.

A: Ed said Extreme is leveraging AI technology for networking, focused on bringing AI to networking with Agentic platform and service agent, leading in this area.

Q: Gross margin, component prices, subscription side gross margin dynamics.

A: Ed and Kevin talked about actively engaged with suppliers, confident in current market conditions and recovery plans. Kevin explained subscription side had increased cloud spend upfront with Platform ONE but optimistic about future margins.

Q: Second quarter guide, pull forwards.

A: Kevin said no pull forwards on revenue side, bookings at end of quarter ahead of price increases but in backlog, still optimistic about Q2 growth.