Extreme Networks Q2 2026 Extreme Networks Inc Earnings Call | AllMind AI Earnings | AllMind AI
Q2 2026 Extreme Networks Inc Earnings Call
After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad to withdraw your question, press star 1 again.
I will now hand the call over to Stan kovler senior vice president.
Finance and corporate development Finn, please go ahead.
Thank you, operator. Good morning and welcome to the extreme Network. Second quarter fiscal year 2026 earnings conference call. I'm Stan cobbler senior Vice President of Finance and corporate development with me today are extreme networks, president and CEO, Ed, Meier cord and Executive Vice President, and CFO Kevin Rhodes.
We just distributed a press release and filed an AK detailing extreme networks Financial results for the second quarter of 2026.
A copy of the press release, which includes our gaap to non-gaap. Reconciliations. And our earnings presentation is available in the IR section at extreme networks.com.
Today's call and Q&A may include certain forward-looking statements based on current expectations about extremes future financial and operational results. Growth expectations, new product, introductions and strategies.
All Financial disclosures made on this, call will be on a non-gaap basis, unless stated. Otherwise, we caution you not to put undue Reliance on these forward-looking statements as they involve risks that can cause actual results to differ materially from those anticipated. By these statements
These risks are described in our risk factors in our 10K and 10q filings any forward-looking statements made on this call.
Reflect our analysis as of today. And we have no plans to update them except as required by law.
following our prepared remarks, we will take questions and now I will turn the call over to extremes president and CEO Ed meyercord
Thank you, Stan, and thank you all for joining us this morning.
The second quarter marked, our seventh straight quarter of Revenue, growth driven by strong demand for our AI powered platform, fueling share gains and double digit year growth.
Over the past 12 months, we've grown 3 times faster than our largest competitors in the Enterprise networking space highlighting. The fact that we're winning market share.
Our revenue is 318 million this quarter exceeding. Our guidance and a 14% year-over-year driven by continued competitive wins with large customers across all verticals.
Operator: Hello, thank you for joining us, and welcome to the Extreme Networks Q2 fiscal year 2026 financial results. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. To withdraw your question, press star one again. I will now hand the call over to Stan Kovler, Senior Vice President, Finance and Corporate Development. Stan, please go ahead.
Hello, thank you for joining us, and welcome to the Extreme Networks Q2 fiscal year 2026 financial results. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. To withdraw your question, press star one again. I will now hand the call over to Stan Kovler, Senior Vice President, Finance and Corporate Development. Stan, please go ahead.
Product Revenue, increase double digits year-over-year for the fourth consecutive quarter Cloud, subscription moment momentum. Lifted SAS are to 25% year-over-year growth landing at 227 million
And finally, we experience our strongest subscription, bookings on record with extreme platform 1 leading the way.
Speaker #1: If you would like to ask a question, please press star 1 on your telephone keypad. To withdraw your question, press star 1 again. I will now hand the call over to Stan Kovler, Senior Vice President, Finance and Corporate Development.
Our technology differentiation and the quality of our team's execution are driving growth. And enabling us to move up market and win larger Enterprise, networking projects.
Speaker #1: please go Stan, ahead.
Speaker #2: Thank you, Operator. Good morning, and welcome to the 2026 earnings conference call. I'm Stan Kovler, Senior Vice President of Finance and Corporate Development. With me today are EXTREME NETWORKS President and CEO, Ed Meyercord, and Executive Vice President and CFO, Kevin Rhodes.
Stan Kovler: Thank you, operator. Good morning, and welcome to the Extreme Networks Q2 fiscal year 2026 earnings conference call. I'm Stan Kovler, Senior Vice President of Finance and Corporate Development. With me today are Extreme Networks President and CEO, Ed Meyercord, and Executive Vice President and CFO, Kevin Rhodes. We just distributed a press release and filed an 8-K, detailing Extreme Networks financial results for the Q2 of 2026. A copy of the press release, which includes our GAAP to non-GAAP reconciliations and our earnings presentation, is available in the IR section at extremenetworks.com. Today's call and Q&A may include certain forward-looking statements based on current expectations about Extreme's future financial and operational results, growth expectations, new product introductions, and strategies. All financial disclosures made on this call will be on a non-GAAP basis, unless stated otherwise.
Stan Kovler: Thank you, operator. Good morning, and welcome to the Extreme Networks Q2 fiscal year 2026 earnings conference call. I'm Stan Kovler, Senior Vice President of Finance and Corporate Development. With me today are Extreme Networks President and CEO, Ed Meyercord, and Executive Vice President and CFO, Kevin Rhodes. We just distributed a press release and filed an 8-K, detailing Extreme Networks financial results for the Q2 of 2026. A copy of the press release, which includes our GAAP to non-GAAP reconciliations and our earnings presentation, is available in the IR section at extremenetworks.com. Today's call and Q&A may include certain forward-looking statements based on current expectations about Extreme's future financial and operational results, growth expectations, new product introductions, and strategies. All financial disclosures made on this call will be on a non-GAAP basis, unless stated otherwise.
This quarter, we closed 34 deals over a million dollars highlighting confidence and our differentiated technology and our ability to win in highly contested head-to-head competitive situations.
Our Innovation is translating into purpose-built solutions for larger more demanding.
Enterprise environments. Why are we winning?
Speaker #2: We just distributed a press release and filed an 8-K detailing Extreme Networks' financial results for the second quarter of 2026. A copy of the press release, which includes our GAAP and non-GAAP reconciliations, and our earnings presentation, is available in the IR section at extremenetworks.com.
Speaker #2: Today's call and Q&A may include certain forward-looking statements based on current expectations about Extreme's future financial and operational results, growth expectations, new product introductions, and strategies.
Competitors. Can't match the capabilities of our end-to-end campus fabric, which continues to be a major driver of large Enterprise wins differentiated by capabilities like zero touch provisioning sub-second, convergence and the creation of hyper segmented. Networks that hide IP addresses and thereby limit. The blast radius of lateral cyber attacks, a major security benefit,
For those of you who recall our investor day, a Fortune, 100 customer remarked, that what takes Cisco's, 6 hours, takes extreme 6 minutes and this is the power of our fabric.
Speaker #2: All financial disclosures made on this call will be on a non-GAAP basis unless stated otherwise. We caution you not to put undue reliance on these forward-looking statements, as they involve risks that can cause actual results to differ materially from those anticipated by these statements.
Stan Kovler: We caution you not to put undue reliance on these forward-looking statements as they involve risks that can cause actual results to differ materially from those anticipated by these statements. These risks are described in our risk factors in our 10-K and 10-Q filings. Any forward-looking statements made on this call reflect our analysis as of today, and we have no plans to update them except as required by law. Following our prepared remarks, we will take questions. And now I will turn the call over to Extreme's President and CEO, Ed Meyercord.
Stan Kovler: We caution you not to put undue reliance on these forward-looking statements as they involve risks that can cause actual results to differ materially from those anticipated by these statements. These risks are described in our risk factors in our 10-K and 10-Q filings. Any forward-looking statements made on this call reflect our analysis as of today, and we have no plans to update them except as required by law. Following our prepared remarks, we will take questions. And now I will turn the call over to Extreme's President and CEO, Ed Meyercord.
Speaker #2: These risks are described in our risk factors in our 10-K and 10-Q filings, and a forward-looking statement made on this call reflects our analysis as of today, and we have no plans to update them except as required by law.
Platform 1 is unique with a true agentic AI Core our AI agents can autonomously diagnose issues. Guide, resolution and provide clear actionable insights. Our platform is particularly useful in troubleshooting evidence collecting and solving complicated network issues, turning days and hours of work into minutes,
Speaker #2: Following our prepared remarks, we will take questions. And now I will turn the call over to Extreme's President and CEO, Ed.
Speaker #2: Meyercord: Thank you, Stan, and thank you.
Ed Meyercord: Thank you, Stan, and thank you all for joining us this morning. Q2 marked our seventh straight quarter of revenue growth, driven by strong demand for our AI-powered platform, fueling share gains and double-digit year-over-year growth. Over the past 12 months, we've grown 3 times faster than our largest competitors in the enterprise networking space, highlighting the fact that we're winning market share. Our revenue was $318 million this quarter, exceeding our guidance and up 14% year-over-year, driven by continued competitive wins with large customers across all verticals. Product revenue increased double digits year-over-year for the fourth consecutive quarter. Cloud subscription momentum lifted SaaS ARR to 25% year-over-year growth, landing at $227 million. And finally, we experienced our strongest subscription bookings on record, with Extreme Platform One leading the way.
Ed Meyercord: Thank you, Stan, and thank you all for joining us this morning. Q2 marked our seventh straight quarter of revenue growth, driven by strong demand for our AI-powered platform, fueling share gains and double-digit year-over-year growth. Over the past 12 months, we've grown 3 times faster than our largest competitors in the enterprise networking space, highlighting the fact that we're winning market share. Our revenue was $318 million this quarter, exceeding our guidance and up 14% year-over-year, driven by continued competitive wins with large customers across all verticals. Product revenue increased double digits year-over-year for the fourth consecutive quarter. Cloud subscription momentum lifted SaaS ARR to 25% year-over-year growth, landing at $227 million. And finally, we experienced our strongest subscription bookings on record, with Extreme Platform One leading the way.
Speaker #3: you all for joining us this morning. The second quarter marked our seventh straight quarter of revenue growth, driven by strong demand for our AI-powered platform, fueling share gains and double-digit year-over-year growth.
Speaker #3: Over the past 12 months, we've grown three times faster than our largest competitors in the enterprise networking space, highlighting the fact that we're winning market revenue is $318 million this share.
And No 1 delivery Solutions better than extreme and this is why we're the preferred Wi-Fi vendor for dense environments like the NFL and Major League Baseball stadiums, as well as large. Highly distributed environments, like, Kroger FedEx and other large retailers.
Speaker #3: quarter, exceeding our guidance and up 14% year-over-year driven by Our continued competitive wins with large customers across all verticals. Product revenue increased double digits year-over-year for the fourth consecutive quarter, cloud subscription momentum lifted SaaS ARR to 25% year-over-year growth, landing at $227 million.
Given this ongoing Innovation and strong competitive differentiation, we expect to accelerate our leadership position and continue to drive. Share gains.
In the quarter, we have several large wins across verticals and GEOS, including a multi-million dollar sale of platform 1 to a large retail customer to centrally manage their Network across 3,000 stores.
Speaker #3: And finally, we experienced our strongest subscription bookings on record, with EXTREME Platform 1 leading the way. Our technology differentiation and the quality of our team's execution are driving growth and enabling us to move up market and win larger enterprise networking projects.
Baylor University, Henry, Ford Health, University Hospital, Birmingham NHS, and the Pittsburgh Steelers.
All leveraging extremes. Wi-Fi 7 Solutions.
Ed Meyercord: Our technology differentiation and the quality of our team's execution are driving growth and enabling us to move upmarket and win larger enterprise networking projects. This quarter, we closed 34 deals over $1 million, highlighting confidence in our differentiated technology and our ability to win in highly contested head-to-head competitive situations. Our innovation is translating into purpose-built solutions for larger, more demanding enterprise environments. Why are we winning? Competitors can't match the capabilities of our end-to-end campus fabric, which continues to be a major driver of large enterprise wins, differentiated by capabilities like zero-touch provisioning, subsecond convergence, and the creation of hyper-segmented networks that hide IP addresses and thereby limit the blast radius of lateral cyber attacks, a major security benefit.
Our technology differentiation and the quality of our team's execution are driving growth and enabling us to move upmarket and win larger enterprise networking projects. This quarter, we closed 34 deals over $1 million, highlighting confidence in our differentiated technology and our ability to win in highly contested head-to-head competitive situations. Our innovation is translating into purpose-built solutions for larger, more demanding enterprise environments. Why are we winning? Competitors can't match the capabilities of our end-to-end campus fabric, which continues to be a major driver of large enterprise wins, differentiated by capabilities like zero-touch provisioning, subsecond convergence, and the creation of hyper-segmented networks that hide IP addresses and thereby limit the blast radius of lateral cyber attacks, a major security benefit.
Speaker #3: This quarter, we closed 34 deals over $1 million, highlighting confidence in our differentiated technology and our ability to win in highly contested, head-to-head competitive situations.
TJ regional health and Kentucky and group Jolie Mall a large healthcare provider in Belgium. Complete modernization of their networks with extreme fabric to deliver. Reliable high-quality patient care.
Speaker #3: Our innovation is translating into purpose-built solutions for larger more demanding enterprise environments. Why are we winning? Competitors can't match the capabilities of our end-to-end campus fabric, which continues to be a major driver of large enterprise wins.
1 of the largest school districts in the United States selected extreme over Juniper after a head-to-head evaluation in a multi-million dollar. Full Network, refresh of wired, Wireless sd-wan. And importantly, our AI platforms.
Speaker #3: Differentiated by capabilities like zero-touch provisioning, subsecond convergence, and the creation of hypersegmented networks that hide IP addresses and thereby limit the blast radius of lateral cyber attacks.
NSK bioscience, a leading, South Korea, Korean biotech company deploying platform, 1 to support rapid growth across its expanded offices and new R&D centers.
We continue to see strong momentum across our commercial models with MSP Partners nearly doubling in Billings up more than 3 times year-over-year.
Speaker #3: A major security benefit. For those of you who recall our Investor Day, a Fortune 100 customer remarked that what takes Cisco six hours takes Extreme six minutes.
Ed Meyercord: For those of you who recall our Investor Day, a Fortune 100 customer remarked that what takes Cisco 6 hours, takes Extreme 6 minutes, and this is the power of our fabric. Platform One is unique, with a true agentic AI core. Our AI agents can autonomously diagnose issues, guide resolution, and provide clear, actionable insights. Our platform is particularly useful in troubleshooting, evidence collecting, and solving complicated network issues, turning days and hours of work into minutes. We're the only vendor that delivers true cloud choice, whether public, private, or hybrid, including sovereign cloud solutions. We meet the data residency, compliance, and security demands of regulated environments, unlike competitive solutions that are locked into public cloud only and expensive, purpose-built architectures.
Ed Meyercord: For those of you who recall our Investor Day, a Fortune 100 customer remarked that what takes Cisco 6 hours, takes Extreme 6 minutes, and this is the power of our fabric. Platform One is unique, with a true agentic AI core. Our AI agents can autonomously diagnose issues, guide resolution, and provide clear, actionable insights. Our platform is particularly useful in troubleshooting, evidence collecting, and solving complicated network issues, turning days and hours of work into minutes. We're the only vendor that delivers true cloud choice, whether public, private, or hybrid, including sovereign cloud solutions. We meet the data residency, compliance, and security demands of regulated environments, unlike competitive solutions that are locked into public cloud only and expensive, purpose-built architectures.
While poolable licensing enables msps to easily scale across devices, locations and customers.
Speaker #3: And this is the power of our fabric. Platform 1 is unique with a true agentic AI core; our AI agents can autonomously diagnose issues and guide resolution, and provide clear actionable insights.
In addition to product Innovation, we're helping Partners make more money with enhanced commercial terms.
Last week, we launched extreme partner first.
Speaker #3: Our platform is particularly useful in troubleshooting, evidence collecting, and solving complicated network issues—turning days and hours of work into minutes. We're the only vendor that delivers true cloud choice, whether public, private, or hybrid, including sovereign cloud solutions.
Speaker #3: We meet the data residency compliance and security demands of regulated environments unlike competitive solutions that are locked into public cloud only and expensive purpose-built architectures.
Our new partner program which simplifies deal registration delivers. Transparent pricing and rebates and embeds. AI directly into the partner experience. We help Partners access critical sales content in seconds, close deals, faster, and scale profitably with role-based dashboards, faster approvals, Real Time Field visibility and accelerator rewards Partners can make 20% more profit at extreme than our competitors.
Speaker #3: And no one delivers complex Wi-Fi solutions better than EXTREME. And this is why we're the preferred Wi-Fi vendor for dense environments like the NFL and Major League Baseball stadiums, as well as large highly distributed environments like Kroger, FedEx, and other large retailers.
Ed Meyercord: No one delivers complex Wi-Fi solutions better than Extreme, and this is why we're the preferred Wi-Fi vendor for dense environments like the NFL and Major League Baseball stadiums, as well as large, highly distributed environments like Kroger, FedEx, and other large retailers. Given this ongoing innovation and strong competitive differentiation, we expect to accelerate our leadership position and continue to drive share gains. In the quarter, we had several large wins across verticals and geos, including a multimillion-dollar sale of Platform One to a large retail customer to centrally manage their network across 3,000 stores, Baylor University, Henry Ford Health, University Hospitals Birmingham NHS, and the Pittsburgh Steelers, all leveraging Extreme's Wi-Fi 7 solutions, T.J. Regional Health in Kentucky and Groupe Jolimont, a large healthcare provider in Belgium, complete modernization of their networks with Extreme Fabric to deliver reliable, high-quality patient care.
No one delivers complex Wi-Fi solutions better than Extreme, and this is why we're the preferred Wi-Fi vendor for dense environments like the NFL and Major League Baseball stadiums, as well as large, highly distributed environments like Kroger, FedEx, and other large retailers. Given this ongoing innovation and strong competitive differentiation, we expect to accelerate our leadership position and continue to drive share gains. In the quarter, we had several large wins across verticals and geos, including a multimillion-dollar sale of Platform One to a large retail customer to centrally manage their network across 3,000 stores, Baylor University, Henry Ford Health, University Hospitals Birmingham NHS, and the Pittsburgh Steelers, all leveraging Extreme's Wi-Fi 7 solutions, T.J. Regional Health in Kentucky and Groupe Jolimont, a large healthcare provider in Belgium, complete modernization of their networks with Extreme Fabric to deliver reliable, high-quality patient care.
And we've dramatically simplified. The way customers are buying from us with a single bundled license that offers AI fabric hardware and security.
Platform, 1 keeps getting stronger with continuous updates, that materially increase customer value.
Today we're attracting highly sought-after Talent from across the industry and our retention remains at all-time highs.
Speaker #3: Given this ongoing innovation and strong competitive differentiation, we expect to accelerate our leadership position and continue to drive share gains. In the quarter, we had several large wins across verticals and GOs, including a multi-million-dollar sale of Platform 1 to a large retail customer to centrally manage their network across 3,000 stores, Baylor University, Henry Ford Health, University Hospital Birmingham NHS, and the Pittsburgh Steelers.
Recently, we were able to recruit top-level Talent from juniper who see tremendous opportunity at extreme including 2 at the SVP level leadership positions and Global Channel, enemy of sales.
Looking ahead, the strength of our funnel reflects a robust, demand environment across all our industry, verticals with double digit pipeline growth and state, local and education, and continued momentum across manufacturing health, care, and general Enterprise.
Speaker #3: All leveraging Extreme's Wi-Fi 7 solutions. TJ Regional Health in Kentucky and Group Jolimont, a large healthcare provider in Belgium, completed modernization of their networks with Extreme Fabric to deliver reliable, high-quality patient care.
On top of these Dynamics, a return of government spending in Europe, expansion and APAC and continued momentum. In America's underpin, these trends,
Speaker #3: One of the largest school districts in the United States selected EXTREME over Juniper after a head-to-head evaluation in a multi-million dollar full network refresh of wired, platforms.
Ed Meyercord: One of the largest school districts in the United States selected Extreme over Juniper after a head-to-head evaluation and a multimillion-dollar full network refresh of wired, wireless, SD-WAN, and importantly, our AI platforms. SK Bioscience, a leading South Korean biotech company, deploying Platform One to support rapid growth across its expanded offices and new R&D center. We continue to see strong momentum across our commercial models, with MSP partners nearly doubling, and billings up more than 3 times year-over-year. Our consumption-based billing eliminates upfront costs, while poolable licensing enables MSPs to easily scale across devices, locations, and customers. In addition to product innovation, we're helping partners make more money with enhanced commercial terms. Last week, we launched Extreme Partner First, our new partner program, which simplifies deal registration, delivers transparent pricing and rebates, and embeds AI directly into the partner experience.
One of the largest school districts in the United States selected Extreme over Juniper after a head-to-head evaluation and a multimillion-dollar full network refresh of wired, wireless, SD-WAN, and importantly, our AI platforms. SK Bioscience, a leading South Korean biotech company, deploying Platform One to support rapid growth across its expanded offices and new R&D center. We continue to see strong momentum across our commercial models, with MSP partners nearly doubling, and billings up more than 3 times year-over-year. Our consumption-based billing eliminates upfront costs, while poolable licensing enables MSPs to easily scale across devices, locations, and customers. In addition to product innovation, we're helping partners make more money with enhanced commercial terms. Last week, we launched Extreme Partner First, our new partner program, which simplifies deal registration, delivers transparent pricing and rebates, and embeds AI directly into the partner experience.
A major end of life, refresh cycle and changes to the partner program at. Cisco are creating a significant multi-year growth opportunity for extreme where billions in total addressable market and the HB Juniper merger is creating share gain Tailwind for us as well.
Speaker #3: And SK Wireless, SD-WAN, and Bioscience, a leading South Korean biotech company, are deploying Platform 1 to support rapid growth across its expanded offices and new R&D center.
These market trends, create openings for Extreme as new AI requirements, aging hardware and Next Generation Technologies. Like Wi-Fi 7 are driving customers to reassess their vendor Choice. Many are turning to extreme to modernize their Networks.
Speaker #3: We continue to see strong momentum across our commercial models, with MSP partners nearly doubling in billings, up more than three times year over year.
As it pertains to supply chain. Networking is Mission critical. It's not a nice to have
Speaker #3: Our consumption-based billing eliminates upfront costs, while MSPs can easily scale poolable licensing across devices, locations, and customers. In addition to product innovation, we're helping partners make more money with enhanced commercial terms.
And this is an industry phenomenon.
Speaker #3: Last week, we launched EXTREME Partner First, our new partner program which simplifies deal registration and delivers transparent pricing and rebates, and embeds AI directly into the partner experience.
Given our operational agility, we're confident in our ability to meet customer demand going forward.
Speaker #3: We help partners access critical sales content in seconds, close deals faster, and scale profitably with role-based dashboards, faster approvals, real-time deal visibility, and accelerated rewards.
Ed Meyercord: We help partners access critical sales content in seconds, close deals faster, and scale profitably with role-based dashboards, faster approvals, real-time deal visibility, and accelerated rewards. Partners can make 20% more profit at Extreme than our competitors. We've dramatically simplified the way customers are buying from us with a single bundled license that offers AI, fabric, hardware, and security. Platform One keeps getting stronger with continuous updates that materially increase customer value. Today, we're attracting highly sought after talent from across the industry, and our retention remains at all-time highs. Recently, we were able to recruit top-level talent from Juniper, who see tremendous opportunity at Extreme, including two at the SVP level, in leadership positions, in global channel and EMEA sales.
We help partners access critical sales content in seconds, close deals faster, and scale profitably with role-based dashboards, faster approvals, real-time deal visibility, and accelerated rewards. Partners can make 20% more profit at Extreme than our competitors. We've dramatically simplified the way customers are buying from us with a single bundled license that offers AI, fabric, hardware, and security. Platform One keeps getting stronger with continuous updates that materially increase customer value. Today, we're attracting highly sought after talent from across the industry, and our retention remains at all-time highs. Recently, we were able to recruit top-level talent from Juniper, who see tremendous opportunity at Extreme, including two at the SVP level, in leadership positions, in global channel and EMEA sales.
1 of the ways we've solved or component. Shortages has been a replacement strategy and the co era. For example, our teams are placed over 125 components in a year, 10x the normal rate and most recently we identified, and swapped out a new source of DDR memory, ddr4 memory chips. That broadcom has already qualified. Our teams are Nimble and get us in front of the Curve.
Speaker #3: Partners can make 20% more profit at EXTREME than our competitors. And we've dramatically simplified the way customers are buying from us with a single bundled license that offers AI, fabric, hardware, and security.
In the case of components scarcity, our size and scale can be an advantage as we are chasing lower volumes and can be more focused.
Speaker #3: Platform 1 keeps getting stronger with continuous updates that materially increase customer value. Today, we're attracting highly sought-after talent from across the industry, and our retention remains at all-time highs.
For the remainder of fiscal 26, we expect to continue to grow profit faster than Revenue with expected, profitability growth around 20% on Double Digit, Revenue growth, for the year.
Speaker #3: Recently, we were able to recruit top-level talent from Juniper, including two at the SVP level, who see tremendous opportunity at EXTREME in leadership positions and global channel sales.
We're set up with a solid foundation. Exiting. The second quarter with well, over 200 million of annualized, Evita at a healthy, net cash position. Now, let me turn the call over to Kevin to discuss Financial results and guidance.
Thanks guys, total revenue at 318 million dollars grew 14% year-over-year And exceeded the high end of our guidance range.
Speaker #3: Looking ahead, the strength of our funnel reflects a robust demand environment across all our industry verticals, with double-digit pipeline growth in state, local, and education, and continued momentum across manufacturing, healthcare, and general enterprise.
Ed Meyercord: Looking ahead, the strength of our funnel reflects a robust demand environment across all our industry verticals, with double-digit pipeline growth in state, local, and education, and continued momentum across manufacturing, healthcare, and general enterprise. On top of these dynamics, a return of government spending in Europe, expansion in APAC, and continued momentum in Americas underpin these trends. A major end-of-life refresh cycle and changes to the partner program at Cisco are creating a significant multi-year growth opportunity for Extreme, worth billions in total addressable market. The HP-Juniper merger is creating share gain tailwinds for us as well. These market trends create openings for Extreme, as new AI requirements, aging hardware, and next-generation technologies like Wi-Fi 7 are driving customers to reassess their vendor choice. Many are turning to Extreme to modernize their networks. As it pertains to supply chain, networking is mission critical. It's not a nice-to-have.
Looking ahead, the strength of our funnel reflects a robust demand environment across all our industry verticals, with double-digit pipeline growth in state, local, and education, and continued momentum across manufacturing, healthcare, and general enterprise. On top of these dynamics, a return of government spending in Europe, expansion in APAC, and continued momentum in Americas underpin these trends. A major end-of-life refresh cycle and changes to the partner program at Cisco are creating a significant multi-year growth opportunity for Extreme, worth billions in total addressable market. The HP-Juniper merger is creating share gain tailwinds for us as well. These market trends create openings for Extreme, as new AI requirements, aging hardware, and next-generation technologies like Wi-Fi 7 are driving customers to reassess their vendor choice. Many are turning to Extreme to modernize their networks. As it pertains to supply chain, networking is mission critical. It's not a nice-to-have.
And as Ed mentioned, this is our seventh consecutive quarter of Revenue growth.
Earnings per share of 26 Cents. Also seed at the high end of our guidance range.
Speaker #3: On top of these dynamics, a return of government spending in Europe, expansion in APAC, and continued momentum in America underpin these trends. A major end-of-life refresh cycle and changes to the partner program at Cisco are creating a significant multi-year growth opportunity for Extreme, where there are billions in total addressable market.
Earnings per share, Grew From 21 cents and the prior year quarter a 24%, year-over-year Improvement. So our profit growth rate outpaced, our Revenue growth rate by 10% as points.
Staff.
Related to 25% growth.
On a year-over-year basis. Driven by our success with platform, 1 subscription
Speaker #3: And the HP-Juniper merger is creating share gain tailwinds for us as well. These market trends create openings for Extreme, as new AI requirements, aging hardware, and next-generation technologies like Wi-Fi 7 are driving customers to reassess their vendor choice.
Apart from 1, bookings were well ahead even twice the amount of our Target resulting in accelerating year-over-year performance in subscription, bookings.
The expected acceleration and growth for the high margin subscription Revenue. We laid out at our investor day in November is playing out as expected.
We are excited about the continued growth, in our recurring Revenue base.
Speaker #3: Many are turning to Extreme to modernize their networks. As it pertains to supply chain, networking is mission-critical. It's not a nice-to-have. Everything our customers run depends on the network, which means demand remains strong even in a higher-cost environment.
Up 12% year-over-year and we have a strong pipeline for platform. 1 Sales.
Geographically. We had strong year-over-year Revenue growth across all regions.
Ed Meyercord: Everything our customers run depends on the network, which means demand remains strong, even in a higher cost environment. Net net, our experience and industry analyst shows low elasticity of demand for networking infrastructure, giving us price flexibility to protect our margins, and this is an industry phenomenon. Given our operational agility, we're confident in our ability to meet customer demand going forward. One of the ways we solve for component shortages has been a replacement strategy. In the COVID era, for example, our teams replaced over 125 components in a year, 10x the normal rate. Most recently, we identified and swapped out a new source of DDR memory, DDR4 memory chips that Broadcom has already qualified. Our teams are nimble and get us in front of the curve.
Everything our customers run depends on the network, which means demand remains strong, even in a higher cost environment. Net net, our experience and industry analyst shows low elasticity of demand for networking infrastructure, giving us price flexibility to protect our margins, and this is an industry phenomenon. Given our operational agility, we're confident in our ability to meet customer demand going forward. One of the ways we solve for component shortages has been a replacement strategy. In the COVID era, for example, our teams replaced over 125 components in a year, 10x the normal rate. Most recently, we identified and swapped out a new source of DDR memory, DDR4 memory chips that Broadcom has already qualified. Our teams are nimble and get us in front of the curve.
This speaks to our improved alignment between our go to market teams.
Speaker #3: Net-net, our experience and industry analysts show low elasticity of demand for networking infrastructure giving us price flexibility to protect our margins. And this is an industry phenomenon.
A robust demand environment for critical it infrastructure and our ability to Target larger Partners in deals across the globe. We continue to gain traction with new larger partners and Associated new customers when it comes to our new logo wins.
Speaker #3: Given our operational agility, we're confident in our ability to meet customer demand going forward. One of the ways we've solved for component shortages has been a replacement strategy.
Subscription and support Revenue reached 120 million dollars.
Of 12% year-over-year and up 3% sequentially.
Speaker #3: In the COVID era, for example, our teams replaced over 125 components in a year—10x the normal rate. And most recently, we identified and swapped out a new source of DDR4 memory chips that Broadcom has already qualified.
Our staff deferred revenue continues to grow to 334 million of 15% year-over-year. Increase
Overall, it's deferred recurring Revenue climbed to 628 million dollars in 9,000 year-over-year Improvement. We are pleased with the predictability that the time margin Revenue gives us
Speaker #3: Our teams are nimble and get us in front of the curve. In the case of component scarcity, our size and scale can be an advantage, as we are chasing lower volumes and can be more focused.
Ed Meyercord: In the case of component scarcity, our size and scale can be an advantage as we are chasing lower volumes and can be more focused. For the remainder of fiscal 2026, we expect to continue to grow profit faster than revenue, with expected profitability growth of around 20% on double-digit revenue growth for the year. We're set up with a solid foundation exiting Q2, with well over $200 million of annualized EBITDA at a healthy net cash position. Now let me turn the call over to Kevin to discuss financial results and guidance.
In the case of component scarcity, our size and scale can be an advantage as we are chasing lower volumes and can be more focused. For the remainder of fiscal 2026, we expect to continue to grow profit faster than revenue, with expected profitability growth of around 20% on double-digit revenue growth for the year. We're set up with a solid foundation exiting Q2, with well over $200 million of annualized EBITDA at a healthy net cash position. Now let me turn the call over to Kevin to discuss financial results and guidance.
9 Gap. Growth margin was 62% an increase of 70 basis points from the last quarter and at the high end of our guidance range, which we highlighted at our investor day,
Speaker #3: For the remainder of fiscal '26, we expect to continue to grow profit faster than revenue, with expected profitability growth of around 20% on double-digit revenue growth for the year.
Product marketing increased due to mitigating actions that we have taken to offset higher component costs including a price increase. We implemented last quarter,
Speaker #3: We're set up with a solid foundation, exiting the second quarter with well over $200 million of annualized EBITDA at a healthy net cash position.
Speaker #3: Now, let me turn the call over to Kevin to discuss financial results and guidance. Our guidance rate. Thanks, Ed. Total revenue at $318 million grew 14% year over year, and exceeded the high end of our guidance range.
higher support, margins were driven by improved product quality and lower warranty costs, and subscription margins also rose on higher Revenue, which also helped our mix
Our teams are doing a great job managing an Ever evolving. Supply chain environment, taking actions to mitigate component price increases and qualifying other third parties and continue to proactively secure our forward Supply needs.
In addition, we have the flexibility to further increase prices to offset any increases in memory or other components.
Kevin Rhodes: Guidance range. Thanks, Ed. Total revenue of $318 million grew 14% year-over-year and exceeded the high end of our guidance range. As Ed mentioned, this is our seventh consecutive quarter of revenue growth. Earnings per share of $0.26 also exceeded the high end of our guidance range. Earnings per share grew from $0.21 in the prior year quarter, a 24% year-over-year improvement. Our profit growth rate outpaced our revenue growth rate by 10 percentage points. SaaS ARR also accelerated to 25% growth on a year-over-year basis, driven by our success with Platform One subscriptions. Platform One bookings were well ahead, even twice the amount of our target, resulting in accelerating year-over-year performance in subscription bookings.
Kevin Rhodes: Guidance range. Thanks, Ed. Total revenue of $318 million grew 14% year-over-year and exceeded the high end of our guidance range. As Ed mentioned, this is our seventh consecutive quarter of revenue growth. Earnings per share of $0.26 also exceeded the high end of our guidance range. Earnings per share grew from $0.21 in the prior year quarter, a 24% year-over-year improvement. Our profit growth rate outpaced our revenue growth rate by 10 percentage points. SaaS ARR also accelerated to 25% growth on a year-over-year basis, driven by our success with Platform One subscriptions. Platform One bookings were well ahead, even twice the amount of our target, resulting in accelerating year-over-year performance in subscription bookings.
We are confident in our ability to meet customer demand and deliver critical networking products without disruption.
Speaker #3: And as Ed mentioned, this is our seventh consecutive quarter of revenue growth. Earnings per share of $2.06 also exceeded the high end of our guidance range.
1 item. I'd like to point out which is built into our guidance. This quarter is that we have several multi-million dollar deployments at large venues.
Speaker #3: Earnings per share grew from $21 in the prior year quarter, a 24% year-over-year improvement. So our profit growth rate outpaced our revenue growth rate by 10 percentage points.
These customers have asked extreme to run point on the installations with our Professional Services team.
Speaker #3: SaaS ARR also accelerated to 25% growth on a year-over-year basis, driven by our success with Platform-One subscriptions. Platform-One bookings were well ahead, even twice the amount of our target, resulting in performance in subscription accelerating year-over-year bookings.
The installation services carry a much lower margin profile than our traditional subscription and support margins. And we expect these implementation to impact our mix during that third and fourth quarter time frame.
We expected combination of the actions that we have taken and a Vigilant approach to supply chain planning to result in further improvement in our growth markets over time.
Speaker #3: The expected acceleration in growth for the high-margin subscription revenue we laid out at our Investor Day in November is playing out as expected. We are excited about the continued growth in our recurring revenue base, up 12% year-over-year, and we have a strong pipeline for Platform-One sales.
Kevin Rhodes: The expected acceleration in growth for the high-margin subscription revenue we laid out at our Investor Day in November is playing out as expected. We are excited about the continued growth in our recurring revenue base, up 12% year over year, and we have a strong pipeline for Platform One sales. Geographically, we had a strong year-over-year revenue growth across all regions. This speaks to our improved alignment between our go-to-market teams, a robust demand environment for critical IT infrastructure, and our ability to target larger partners in deals across the globe. We continue to gain traction with new, larger partners and associated new customers when it comes to our new logo wins. Subscription and support revenue reached $120 million, up 12% year over year and up 3% sequentially.
The expected acceleration in growth for the high-margin subscription revenue we laid out at our Investor Day in November is playing out as expected. We are excited about the continued growth in our recurring revenue base, up 12% year over year, and we have a strong pipeline for Platform One sales. Geographically, we had a strong year-over-year revenue growth across all regions. This speaks to our improved alignment between our go-to-market teams, a robust demand environment for critical IT infrastructure, and our ability to target larger partners in deals across the globe. We continue to gain traction with new, larger partners and associated new customers when it comes to our new logo wins. Subscription and support revenue reached $120 million, up 12% year over year and up 3% sequentially.
We're still very confident in our ability to achieve our long-term gross margins. All of 64% to 66%
Turning to the second quarter operating expenses, they were flat from last quarter at 149 million.
And down with the percentage of revenue from last quarter. And the last year, providing further operating Leverage
Speaker #3: Geographically, we have strong year-over-year revenue growth across all regions. This speaks to our improved alignment between our go-to-market teams, a robust demand environment for critical IT infrastructure, and our ability to target larger partners in deals across the globe.
This was despite higher than expected sales, submissions due to higher Revenue.
Operating margin was 16% up from 13.3% last quarter, and 14.7% in the prior year quarter.
Speaker #3: We continue to gain traction with new, larger partners and associated new customers when it comes to our wins. Subscription and support revenue reached $120 million in new logos, up 12% year-over-year and up 3% sequentially.
But I'm pleased to report that we generate 52.4 million dollars in adjusted demand up and our adjusted e-mail margin was 16 and 12.
3, generates 43 million dollars in free cash flow and the second quarter and continue to reduce inventory levels in Baseline. And this demonstrates our continued focus on working Capital Management.
Speaker #3: Our SaaS deferred revenue continued to grow to $334 million, a 15% year-over-year increase. Overall, deferred recurring revenue climbed to $628 million, a 9% year-over-year improvement.
Kevin Rhodes: Our SaaS deferred revenue continued to grow to $334 million, a 15% year-over-year increase. Overall, deferred recurring revenue climbed to $628 million, a 9% year-over-year improvement. We are pleased with the predictability that this high-margin revenue gives us. Non-GAAP gross margin was 62%, an increase of 70 basis points from the last quarter and at the high end of our guidance range, which we highlighted at our Investor Day. Product margin increased due to mitigating actions that we have taken to offset higher component costs, including a price increase we implemented last quarter. Higher support margins were driven by improved product quality and lower warranty costs, and subscription margins also rose on higher revenue, which also helped our mix.
Our SaaS deferred revenue continued to grow to $334 million, a 15% year-over-year increase. Overall, deferred recurring revenue climbed to $628 million, a 9% year-over-year improvement. We are pleased with the predictability that this high-margin revenue gives us. Non-GAAP gross margin was 62%, an increase of 70 basis points from the last quarter and at the high end of our guidance range, which we highlighted at our Investor Day. Product margin increased due to mitigating actions that we have taken to offset higher component costs, including a price increase we implemented last quarter. Higher support margins were driven by improved product quality and lower warranty costs, and subscription margins also rose on higher revenue, which also helped our mix.
Now turning to guidance.
We expect our third quarter Revenue to be in a range of 309 million to 314 million.
This reflects normal seasonality in our underlying business, which we expect to carry forward.
Speaker #3: We are pleased with the predictability that this high-margin revenue gives us. Non-GAAP gross margin was 62%, an increase of 70 basis points from last quarter and at the high end of our guidance range, which we highlighted at our Investor Day.
As I mentioned earlier, we expect third quarter growth, margins to be impacted by these, larger Professional Services. Deployments and therefore, gross, margins is expected to be in a range of 61% to 61.4%
Speaker #3: Product margin increased due to mitigating actions that we have taken to offset higher component costs, including a price increase we implemented last quarter. Higher support margins were driven by improved product quality and lower warranty costs.
We do expect improvements and and product growth margins in the third quarter and expected to carry forward for the remainder of the fiscal year.
Operating margin is expected to be in a range of 13.6% to 14.8% and earnings per share. On the third quarter is expected to be in a range of 23 cents to 25 cents.
Speaker #3: And subscription margins also rose on higher revenue, which also helped our mix. Our teams are doing a great job managing an ever-evolving supply chain environment, taking actions to mitigate component price increases and qualifying other third parties.
Our fully deleted Char count is expected to be around 136 million shares.
Kevin Rhodes: Our teams are doing a great job managing an ever-evolving supply chain environment, taking actions to mitigate component price increases and qualifying other third parties, and continue to proactively secure our forward supply needs. In addition, we have the flexibility to further increase prices to offset any increases in memory or other components. We are confident in our ability to meet customer demand and deliver critical networking products without disruption. One item I'd like to point out, which is built into our guidance this quarter, is that we have several multimillion-dollar deployments at large venues, which we will deliver during Q3 and Q4. These customers have asked Extreme to run point on the installations with our professional services team.
Our teams are doing a great job managing an ever-evolving supply chain environment, taking actions to mitigate component price increases and qualifying other third parties, and continue to proactively secure our forward supply needs. In addition, we have the flexibility to further increase prices to offset any increases in memory or other components. We are confident in our ability to meet customer demand and deliver critical networking products without disruption. One item I'd like to point out, which is built into our guidance this quarter, is that we have several multimillion-dollar deployments at large venues, which we will deliver during Q3 and Q4. These customers have asked Extreme to run point on the installations with our professional services team.
For the full fiscal year. 26, we expect guidance as far as
Speaker #3: And continue to proactively secure our forward supply needs. In addition, we have the flexibility to further increase prices to offset any increases in memory or other components.
Revenue is now increasing another 10 million dollars at the midpoint from our last quarter, to be in a range of 1,262 million to 1,270 billion dollars. The midpoint of this ring suggests 11% growth year-over-year,
Speaker #3: We are confident in our ability to meet customer demand and deliver critical networking products without disruption. One item I'd like to point out, which is built into our guidance this quarter, is that we have several multi-million-dollar deployments at large venues.
We expect earnings per share in a range of 98 cents to a dollar and 2 cents and with that. I now turn the call over to the operator to begin to function and answer session.
We will now begin the question and answer session.
Speaker #3: Which we will deliver during the third and the fourth quarter. These customers have asked Extreme to run point on the installations with our professional services team.
Please press star 1 on your telephone keypad to withdraw your question. Please press star 1 again, please pick up your handset. When asking a question if you are muted locally, please remember to unmute your device please. Stand by while we compile the Q&A roster,
Speaker #3: Installation services carry a much lower margin profile than our traditional subscription and support margins, and we expect these implementations to impact our mix during that third and fourth quarter timeframe.
Kevin Rhodes: Installation services carry a much lower margin profile than our traditional subscription and support margins, and we expect these implementations to impact our mix during that Q3 and Q4 time frame. We expect the combination of the actions that we have taken and a vigilant approach to supply chain planning to result in further improvement in our gross margins over time. We're still very confident in our ability to achieve our long-term gross margin goal of 64% to 66%. Turning to the Q2 operating expenses, they were flat from last quarter at $149 million, and down as a percentage of revenue from last quarter and the last year, providing further operating leverage. This was despite higher than expected sales commissions due to higher revenue.
Installation services carry a much lower margin profile than our traditional subscription and support margins, and we expect these implementations to impact our mix during that Q3 and Q4 time frame. We expect the combination of the actions that we have taken and a vigilant approach to supply chain planning to result in further improvement in our gross margins over time. We're still very confident in our ability to achieve our long-term gross margin goal of 64% to 66%. Turning to the Q2 operating expenses, they were flat from last quarter at $149 million, and down as a percentage of revenue from last quarter and the last year, providing further operating leverage. This was despite higher than expected sales commissions due to higher revenue.
Your first question comes from the line of Mike Genevieve.
With rosenblat Securities. Mike. Your line is now open.
Speaker #3: We expect the combination of the actions that we have taken and our eventual approach to supply chain planning to result in further improvement in our gross margins over time.
Oh, great, thanks. Thanks very much. Uh, congratulations on the good quarter. Um, I think you guys gave some compelling metrics about.
Speaker #3: We're still very confident in our ability to achieve our long-term gross margins of 64% to 66%. Turning to the second quarter operating expenses, they were flat from last quarter at $149 million.
Speaker #3: And down at the percentage of revenue from last quarter and the last year, providing further operating leverage. This was despite higher than expected sales commissions due to higher revenue.
Speaker #3: Operating margin was 15%, up from 13.3% last quarter and 14.7% in the prior year quarter. I'm pleased to report that we generated $52.4 million in adjusted EBITDA, and our adjusted EBITDA margin was 16.5%.
Kevin Rhodes: Operating margin was 15%, up from 13.3% last quarter and 14.7% in the prior year quarter. I'm pleased to report that we generated $52.4 million in adjusted EBITDA, and our adjusted EBITDA margin was 16.5%. We generated $43 million in free cash flow in Q2 and continued to reduce inventory levels and days on hand. This demonstrates our continued focus on working capital management. Now turning to guidance. We expect our Q3 revenue to be in a range of $309 to 314 million. This reflects normal seasonality in our underlying business, which we expect to carry forward.
Operating margin was 15%, up from 13.3% last quarter and 14.7% in the prior year quarter. I'm pleased to report that we generated $52.4 million in adjusted EBITDA, and our adjusted EBITDA margin was 16.5%. We generated $43 million in free cash flow in Q2 and continued to reduce inventory levels and days on hand. This demonstrates our continued focus on working capital management. Now turning to guidance. We expect our Q3 revenue to be in a range of $309 to 314 million. This reflects normal seasonality in our underlying business, which we expect to carry forward.
About share game. Um can you talk about you know more about that though like you know the evidence uh that you use to show that you're gaining share and to prove that you're gaining share and uh also you know kind of restructuring uh that you did in the kind of the go to market model during the quarter. Whether that, you know had you know, you know, in terms of putting Norman charge and other types of restructuring, uh, you know, how you how you approach share gain, um, whether that had an impact in the quarter or whether that impact is uh is more in front of us. Thank you.
Uh, thanks, Mike. I'll I'll uh, I'll take that. Um,
Speaker #3: We generated $43 million in free cash flow in the second quarter, and continue to reduce inventory levels in days on hand. This demonstrates our continued focus on working capital management.
Speaker #3: Now, turning to guidance. We expect our third-quarter revenue to be in a range of $309 million to $314 million. This reflects normal seasonality in our underlying business, which we expect to carry forward.
Speaker #3: As I mentioned earlier, we expect third quarter gross margins to be impacted by these larger professional services deployments, and therefore gross margins are expected to be in a range of 61% to 61.4%.
Kevin Rhodes: As I mentioned earlier, we expect Q3 gross margins to be impacted by these larger professional services deployments, and therefore, gross margin is expected to be in a range of 61% to 61.4%. We do expect improvement in in product gross margin in the third quarter and expect it to carry forward for the remainder of the fiscal year. Operating margin is expected to be in a range of 13.6% to 14.8%, and earnings per share in the third quarter is expected to be in a range of $0.23 to $0.25. Our fully diluted share count is expected to be around 136 million shares.
As I mentioned earlier, we expect Q3 gross margins to be impacted by these larger professional services deployments, and therefore, gross margin is expected to be in a range of 61% to 61.4%. We do expect improvement in in product gross margin in the third quarter and expect it to carry forward for the remainder of the fiscal year. Operating margin is expected to be in a range of 13.6% to 14.8%, and earnings per share in the third quarter is expected to be in a range of $0.23 to $0.25. Our fully diluted share count is expected to be around 136 million shares.
Speaker #3: We do expect improvement in product gross margin in the third quarter, and expect it to carry forward for the remainder of the fiscal year.
Their businesses. They play a lot of other market segments, so it's, you know, it it could be difficult to get a dive in and really understand what's happening, you know, in the Enterprise Market, which is, which is where we play. So, uh, the analysts do a really nice job of, of, of getting the information and kind of zeroing in on, uh, how, you know, how how competition is performing, um, you know, where where we compete. And so, when I say, you know, we're we're growing at 3 times, the market we're using third-party industry data looking, you know, looking at at at uh, you know, the Enterprise.
Speaker #3: Operating margin is expected to be in a range of 13.6% to 14.8%, and earnings per share in the third quarter is expected to be in a range of $0.23 to $0.25.
Um Enterprise deployments, which is campus Enterprise data Etc, data center, Etc. So that that that's how we get the data. Um, in terms of
Speaker #3: Our fully diluted share count is expected to be around 136 million shares. For the full fiscal year '26, we expect guidance as follows: Revenue is now increasing another $10 million at the midpoint from our last quarter to be in a range of $1,262 million to $1,270 million.
Kevin Rhodes: For the full fiscal year 2026, we expect guidance as follows: Revenue is now increasing another $10 million at the midpoint from our last quarter to be in a range of $1,262 million to $1,270 million. The midpoint of this range suggests 11% growth year over year. We expect earnings per share in a range of $0.98 to $1.02. And with that, I'll now turn the call over to the operator to begin the question and answer session.
For the full fiscal year 2026, we expect guidance as follows: Revenue is now increasing another $10 million at the midpoint from our last quarter to be in a range of $1,262 million to $1,270 million. The midpoint of this range suggests 11% growth year over year. We expect earnings per share in a range of $0.98 to $1.02. And with that, I'll now turn the call over to the operator to begin the question and answer session.
Speaker #3: The midpoint of this range suggests 11% growth year over year. We expect earnings per share in a range of $0.98 to $1.02. And with that, I now turn the call over to the operator to begin the question and answer.
how we know we're winning, I think everybody here knows we compete every day head-to-head with at at now, HP, and Juniper is turning into HP and they've got their hands full, um, and then, uh, you know, Cisco. So we have Hands-On information of our competitive wins and win rates uh, and and we understand kind of how and why we're taking. We're taking share from that standpoint in terms of winning new customers from from those larger larger accounts to your point, my, uh, my the, the, um, you know, Norman has been in charge of Norman rice is, is is
Speaker #3: session. We will now begin the question
Operator: We will now begin the question and answer session. If you would like to ask a question, please press star one on your telephone keypad. To withdraw your question, please press star one again. Please pick up your handset when asking a question. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Mike Genovese with Rosenblatt Securities. Mike, your line is now open.
Operator: We will now begin the question and answer session. If you would like to ask a question, please press star one on your telephone keypad. To withdraw your question, please press star one again. Please pick up your handset when asking a question. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Mike Genovese with Rosenblatt Securities. Mike, your line is now open.
Speaker #2: and answer session. If you would like to ask a question, please press star one on your telephone keypad. To withdraw your question, please press star one again.
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That we put him in charge of sales. It's hard to believe it's been 2 years, uh, but he's brought a lot of discipline into the into the process in terms of how we forecast, um, driving accountability and then making a lot of changes in terms of the personnel and Leadership. And so, I would say we have more confident today than we, we we've ever had in our bookings Outlook. Our bookings forecast, um,
Speaker #2: Your first question comes from the line of Mike Genovese with Rosenblatt Securities. Mike, your line is now open.
Speaker #2: open. Oh,
Speaker #3: great. Thanks very much. Congratulations on the good quarter. I think you guys gave some compelling metrics about share gain. Can you talk about more about that though?
Mike Genovese: Great, thanks, thanks very much. Congratulations on the good quarter. I think you guys gave some compelling metrics about share gain. Can you talk about, you know, more about that, though? Like, you know, the evidence that you used to show that you're gaining share and to prove that you're gaining share. And, also, you know, kind of restructuring that you did in the go-to-market model during the quarter, whether that, you know, had, you know, in terms of putting Norm in charge and other types of restructuring, you know, how you approach share gain, whether that had an impact in the quarter or whether that impact is more in front of us. Thank you.
Michael Genovese: Great, thanks, thanks very much. Congratulations on the good quarter. I think you guys gave some compelling metrics about share gain. Can you talk about, you know, more about that, though? Like, you know, the evidence that you used to show that you're gaining share and to prove that you're gaining share. And, also, you know, kind of restructuring that you did in the go-to-market model during the quarter, whether that, you know, had, you know, in terms of putting Norm in charge and other types of restructuring, you know, how you approach share gain, whether that had an impact in the quarter or whether that impact is more in front of us. Thank you.
Um, with I would say top grades across the channel and our, our direct selling organization. Um, we also brought in Monica Kumar a couple years ago, our chief marketing officer who has done a phenomenal job overhauling our, our marketing team and efforts and you know, we've created very targeted, uh markets, we call them pods, we have 19 of them where we have our direct sales, team partnered with uh, localized event, marketing teams partnered with uh, Channel resources.
Speaker #3: The evidence that you used to show that you're gaining share and to prove that you're gaining share and also kind of restructuring that you model during the quarter, whether did in the kind of the go-to-market that had in terms of putting Norm in charge and other types of restructuring how you approach share gain.
Speaker #3: Whether that had an impact in the quarter, or whether that impact is more in front of us. Thank you.
Speaker #3: you. Thanks, Mike.
Uh, focused on, uh, events and activities that drive funnel, and then focused on how we drive and convert that funnel. So, it's a concerted effort, obviously, all this connected with our product teams, and our service and support teams, but working together. So we, we have 19 different pods that we forecast, uh, each quarter in terms of funnel Creation in terms of conversion, and obviously that gets down and ties to Bottoms Up. Bookings for a cash from our sales team. So we've come a long way. We have a lot
Kevin Rhodes: Thanks, Mike. I'll take that.
Ed Meyercord: Thanks, Mike. I'll take that.
Speaker #4: I'll take that. Yeah, we don't make up the numbers in terms of share gains. We use third-party analysts, and we look at 650 Group and Dell’Oro, etc.
Ed Meyercord: ... Yeah, we don't make up the numbers in terms of share gains. We use third-party analysts, and we look at, like, 650 Group and Dell'Oro Group, et cetera. You know, when you look at Extreme and you compare us to Cisco or, you know, now HPE, they have a lot of other businesses. They play in a lot of other market segments. So it's, you know, it could be difficult to, you know, dive in and really understand what's happening, you know, in the enterprise market, which is where we play. So the analysts do a really nice job of getting the information and kind of zeroing in on how competition is performing, you know, where we compete.
... Yeah, we don't make up the numbers in terms of share gains. We use third-party analysts, and we look at, like, 650 Group and Dell'Oro Group, et cetera. You know, when you look at Extreme and you compare us to Cisco or, you know, now HPE, they have a lot of other businesses. They play in a lot of other market segments. So it's, you know, it could be difficult to, you know, dive in and really understand what's happening, you know, in the enterprise market, which is where we play. So the analysts do a really nice job of getting the information and kind of zeroing in on how competition is performing, you know, where we compete.
Speaker #4: When you look at Extreme, and you compare us to Cisco or now HPE, they have a lot of other businesses they play in and a lot of other market segments.
A lot of confidence the confidence in in the demand, um, you know, Outlook and and um, you know, we're really confident in our ability to to take share and as we talked about move up Market, uh, we're excited about what we have in the funnel and that especially with some of these larger opportunities, um, that um, you know, would be, you know, meaningful share games for us at Xtreme.
Speaker #4: So, it could be difficult to dive in and really understand what's happening in the enterprise market, which is where we play. So, the analysts do a really nice job of getting the information and kind of zeroing in on how competition is performing.
Speaker #4: Where we compete, and so when I say we're growing at three times the market, we're using third-party industry data, looking at the enterprise deployments—which is campus, enterprise data, etc.
Ed Meyercord: And so when I say we, you know, we're growing at three times the market, we're using third-party industry data, looking, you know, looking at, you know, the enterprise enterprise deployments, which is campus enterprise data, et cetera, data center, et cetera. So that's how we get the data. In terms of how we know we're winning, I think everybody here knows we compete every day, head-to-head with now HP, and Juniper is turning into HPE, and they've got their hands full, and then, you know, Cisco. So we have hands-on information of our competitive wins and win rates, and we understand kind of how and why we're taking, we're taking share from that standpoint in terms of winning new customers from those larger accounts.
And so when I say we, you know, we're growing at three times the market, we're using third-party industry data, looking, you know, looking at, you know, the enterprise enterprise deployments, which is campus enterprise data, et cetera, data center, et cetera. So that's how we get the data. In terms of how we know we're winning, I think everybody here knows we compete every day, head-to-head with now HP, and Juniper is turning into HPE, and they've got their hands full, and then, you know, Cisco. So we have hands-on information of our competitive wins and win rates, and we understand kind of how and why we're taking, we're taking share from that standpoint in terms of winning new customers from those larger accounts.
Speaker #4: Data center, etc. So that's how we get the data in terms of how we know we're winning. I think everybody here knows we compete every day head to head with now HP and Juniper is turning into HPE and they've got their hands full.
Uh, great. That was such an extensive answer that I uh, you know, I almost feel hesitant to ask to follow up uh, you know, for for just, you know, for time sake and other analysts but I will I will ask a follow-up. Um which is, you know, I don't think that you guys, you know, mention if we looked at AI mentions on this conference call uh there probably weren't a ton of them. Um so in either you know, in terms of sort of you know a genetic offering or you know, Enterprise switching upgrade Cycles um and and confidence that that's going to happen. Um can you just talk about, you know, the importance of AI and what you're seeing uh you know from your offerings and from your customers activity uh related to Ai and then I'll pass it on. Thank you.
Speaker #4: And then Cisco. So we have hands-on information of our competitive wins and win rates, and we understand kind of how and why we're taking share from that standpoint in terms of winning new customers from those larger accounts.
Speaker #4: To your point, Mike, the Norman has been in charge of Norman Rice is we put him in charge of sales. It's hard to believe it's been two years but he's brought a lot of discipline into the process in terms of how we forecast, driving accountability.
Ed Meyercord: To your point, Mike, you know, Norman has been in charge of—Norman Rice is. We put him in charge of sales. It's hard to believe it's been two years, but he's brought a lot of discipline into the process in terms of how we forecast, driving accountability, and then making a lot of changes in terms of the personnel and leadership. And so I would say we have more confidence today than we've ever had in our booking outlook and our booking forecast, with, I would say, top grades across the channel and our direct selling organization. We also brought in Monica Kumar a couple of years ago, our chief marketing officer, who has done a phenomenal job overhauling our marketing team and effort.
To your point, Mike, you know, Norman has been in charge of—Norman Rice is. We put him in charge of sales. It's hard to believe it's been two years, but he's brought a lot of discipline into the process in terms of how we forecast, driving accountability, and then making a lot of changes in terms of the personnel and leadership. And so I would say we have more confidence today than we've ever had in our booking outlook and our booking forecast, with, I would say, top grades across the channel and our direct selling organization. We also brought in Monica Kumar a couple of years ago, our chief marketing officer, who has done a phenomenal job overhauling our marketing team and effort.
Speaker #4: And then making a lot of changes in terms of the personnel and leadership. And so, I would say we have more confidence today than we've ever had in our '14 outlook and our '14 forecast.
Speaker #4: With, I would say, top grades across the channel and our direct selling organization, we also brought in Monica Kumar a couple of years ago, our chief marketing officer, who has done a phenomenal job overhauling our marketing team and efforts.
Speaker #4: And we've created very targeted markets. We call them pods. We have 19 of them, where we have our direct sales team partnered with localized event marketing teams, partnered with channel resources, focused on events and activities that drive funnel, and then focused on how we drive and convert that funnel.
Ed Meyercord: You know, we've created very targeted markets. We call them pods. We have 19 of them, where we have our direct sales team partnered with localized event marketing teams, partnered with channel resources, focused on events and activities that drive funnel, and then focused on how we drive and convert that funnel. So it's a concerted effort. Obviously, all of this connected with our product teams and our service and support teams, but working together. So we, we have 19 different pods that we forecast each quarter in terms of funnel creation, in terms of conversion, and obviously, that gets down and ties to bottoms-up bookings forecast from our sales team. So we've come a long way.
You know, we've created very targeted markets. We call them pods. We have 19 of them, where we have our direct sales team partnered with localized event marketing teams, partnered with channel resources, focused on events and activities that drive funnel, and then focused on how we drive and convert that funnel. So it's a concerted effort. Obviously, all of this connected with our product teams and our service and support teams, but working together. So we, we have 19 different pods that we forecast each quarter in terms of funnel creation, in terms of conversion, and obviously, that gets down and ties to bottoms-up bookings forecast from our sales team. So we've come a long way.
Where they our AI sits at the core of the platform. And and it it it's something that gives us a real Advantage when we're having conversations today as people are contemplating AI, they want to look at players that have developed platforms. And this is again a place where our size becomes an advantage for extreme because of of the capabilities that we've built. Um, and then what we're going to be able to do in terms of integrating our network, uh, capabilities with ecosystem partners of our customers. When we start looking at, uh, AI agents, uh, creating an agent exchange, uh, creating the ability to create a workflows, um, and, and, and drive outcomes for customers. So we, we have, we've always been a leader in Cloud. Um, we've been a leader in AI kind of gen 1. If you will, uh, I'd say alongside a juniper mist and, and
Speaker #4: So it's a concerted effort. Obviously, all of this is connected with our product teams and our service and support teams, but working together. So we have 19 different pods that we forecast each quarter in terms of funnel creation, in terms of conversion, and obviously that gets down and ties to the bottoms-up bookings for cash from our sales team.
Speaker #4: So we've come a long way. We have a lot of confidence in the demand outlook, and we're really, as we talk about move-up, confident in our ability to take share.
Ed Meyercord: We have a lot of confidence in the demand, you know, outlook, and we're really confident in our ability to take share. And as we talk about move up market, we're excited about what we have in the funnel, and especially with some of these larger opportunities that you know would be you know meaningful share gains for us at Extreme.
We have a lot of confidence in the demand, you know, outlook, and we're really confident in our ability to take share. And as we talk about move up market, we're excited about what we have in the funnel, and especially with some of these larger opportunities that you know would be you know meaningful share gains for us at Extreme.
And moroi. But now we feel like we're in a position to pull ahead because we created this platform. And, and, and again, as I said, it's it's the only 1 with a pure agentic, AI Core and we think this is going to give us uh enhanced capabilities as we go go forward and so yeah, it's top of mind for customers everybody wants to know about it. Um this is an advantage for extreme. I will say we doubled our forecast for subscription bookings.
Speaker #4: And market, we're excited about what we have in the funnel, and especially with some of these larger opportunities that would be meaningful share gains for us at.
For extreme platform 1 which is our AI platform. So things are going really well, our sellers are, are having a great time with us out in the market.
Perfect, thanks again.
Thanks Mike.
Speaker #4: Extreme. Great.
Your next question comes from tour, zilberman from the Bank of America.
Mike Genovese: Great. That was such an extensive answer that I, you know, I almost feel hesitant to ask a follow-up, you know, for just, you know, for time's sake and other analysts, but I will. I will ask a follow-up. Which is, you know, I don't think that you guys, you know, mention-- if we looked at AI mentions on this conference call, there probably weren't a ton of them. So in either, you know, in terms of sort of, you know, agentic offerings or, you know, enterprise switching upgrade cycles, and confidence that that's gonna happen, can you just talk about, you know, the importance of AI and what you're seeing, you know, from your offerings and from your customers' activity, related to AI? And then I'll pass it on. Thank you.
Michael Genovese: Great. That was such an extensive answer that I, you know, I almost feel hesitant to ask a follow-up, you know, for just, you know, for time's sake and other analysts, but I will. I will ask a follow-up. Which is, you know, I don't think that you guys, you know, mention-- if we looked at AI mentions on this conference call, there probably weren't a ton of them. So in either, you know, in terms of sort of, you know, agentic offerings or, you know, enterprise switching upgrade cycles, and confidence that that's gonna happen, can you just talk about, you know, the importance of AI and what you're seeing, you know, from your offerings and from your customers' activity, related to AI? And then I'll pass it on. Thank you.
Speaker #3: That was such an extensive answer that I almost feel hesitant to ask a follow-up for just for time's sake and other analysts. But I will ask a follow-up.
Tour. Your line is now open.
Great. Hey guys, good morning. Uh maybe going back on the share game. Uh, question.
Speaker #3: Which is, I don't think that you guys mentioned, if we looked at AI mentions on this conference call, there probably weren't a ton of them.
When we look at the, when when you look at the opportunity that you're seeing from these competitive, displacements, are you coming in all at once? Replacing both the Wi-Fi piece and the switching piece.
Speaker #3: So in either, in terms of sort of agentic offerings or enterprise switching upgrade cycles, and confidence that that's going to happen, can you just talk about the importance of AI and what you're seeing from your offerings and from your customers' activity related to AI?
Or are you seeing it start in 1 area? Kind of Landing in 1 or the other and then further expanding
and then I have a follow-up.
Yeah, tour. It's, you know, each each project, you know, we'll have a life of its own. So, you know, we'll we'll have a unique opportunity because we're the only player that can can provide data sovereignty.
Speaker #3: And then I'll pass it on. Thank you.
Speaker #3: you. Sure.
Ed Meyercord: Sure. Well, look, AI, you know, continues to be top of mind for all of our customers. Everyone's trying to figure out, hey, what's the use case for AI? You know, how can I use the modern AI technology, you know, in, in my environment to drive better business outcomes? And we're all over that. You know, we had our AI summit in Major League Baseball headquarters in, in the fall, with a great, great response. You know, we're probably the only networking vendor that has an agentic AI platform, where our AI sits at the core of the platform. And it's something that gives us a real advantage when we're having conversations today.
Ed Meyercord: Sure. Well, look, AI, you know, continues to be top of mind for all of our customers. Everyone's trying to figure out, hey, what's the use case for AI? You know, how can I use the modern AI technology, you know, in, in my environment to drive better business outcomes? And we're all over that. You know, we had our AI summit in Major League Baseball headquarters in, in the fall, with a great, great response. You know, we're probably the only networking vendor that has an agentic AI platform, where our AI sits at the core of the platform. And it's something that gives us a real advantage when we're having conversations today.
Speaker #4: Well, look, AI continues to be top of mind for all of our customers. Everyone's trying to figure out, 'Hey, what's the use case for AI? How can I use modern AI technology in my environment to drive better business outcomes?'
So Cloud Choice becomes an issue in Germany where a customer has uh data sovereignty requirements and we bring a unique solution uh with our Cloud choice. So the lead in becomes Cloud choice. You know, interestingly you know our fabric over SD Wan won the day with a Japanese government uh and the huge wins that we've had over there. So it was really
Speaker #4: And we're all over that. We had our AI summit in Major League Baseball headquarters in the fall with a great, great response. We are probably the only networking vendor that has a agentic AI platform where our AI sits at the core of the platform.
Speaker #4: And it's something that gives us a real advantage when we're having conversations today. As people are contemplating AI, they want to look at players that have developed platforms.
Ed Meyercord: As people are contemplating AI, they wanna look at players that have developed platforms, and this is, again, a place where our size becomes an advantage for Extreme because of the capabilities that we've built, and then what we're going to be able to do in terms of integrating our network capabilities with ecosystem partners of our customers, when we start looking at AI agents, creating an agent exchange, creating the ability to create workflows, and drive outcomes for customers. So we have. We've always been a leader in cloud. We've been a leader in AI, kind of gen one, if you will. I'd say alongside of Juniper Mist and Meraki.
As people are contemplating AI, they wanna look at players that have developed platforms, and this is, again, a place where our size becomes an advantage for Extreme because of the capabilities that we've built, and then what we're going to be able to do in terms of integrating our network capabilities with ecosystem partners of our customers, when we start looking at AI agents, creating an agent exchange, creating the ability to create workflows, and drive outcomes for customers. So we have. We've always been a leader in cloud. We've been a leader in AI, kind of gen one, if you will. I'd say alongside of Juniper Mist and Meraki.
Speaker #4: And this is, again, a place where our size becomes an advantage for Extreme, because of the capabilities that we've built and then what we're going to be able to do in terms of integrating our network capabilities with ecosystem partners of our customers when we start looking at AI agents, creating an agent to create exchange, creating the ability to build workflows and drive outcomes for customers.
About the differentiation of our fabric technology and the fact that we were able to bring fabric over the wide area network with sd-wan to create this unique solution that none of our competitors could replicate and therefore it opened up the channel and opened up huge opportunities in Japan. The the hottest technology for us today is our fabric. Uh, we everybody has an IP Fabric in the industry, um, uh, and and IP fabrics for data centers. That's great. Nobody has a fabric for campus, uh, that's layer 2, and that's what we have. And so when we get into Beauty contests where customers, let's look at the Cisco, refresh. And now it's time to upgrade the network. And now our customer says, all right, well, let's bring in a few other competitors. People are are, are blown away. My comment. What takes Cisco's, 6 hours? Takes extreme 6 seconds. That is a real quote, from a Fortune 100 customer.
Speaker #4: So, we've always been a leader in cloud. We've been a leader in AI—kind of Gen 1, if you will. I'd say alongside a Juniper Mist and Meraki.
Speaker #4: Now we feel like we're in a position to pull ahead because we've created this platform. And again, as I said, it's the only one with a pure agentic AI core.
Ed Meyercord: Now we feel like we're in a position to pull ahead because we've created this platform, and again, as I said, it's the only one with a pure agentic AI core, and we think this is gonna give us enhanced capabilities as we go forward. And so, yeah, it's top of mind for customers. Everybody wants to know about it. This is an advantage for Extreme. I will say, we doubled our forecast for subscription bookings for Extreme Platform One, which is our AI platform. So things are going really well. Our sellers are having a great time with this out in the market.
Now we feel like we're in a position to pull ahead because we've created this platform, and again, as I said, it's the only one with a pure agentic AI core, and we think this is gonna give us enhanced capabilities as we go forward. And so, yeah, it's top of mind for customers. Everybody wants to know about it. This is an advantage for Extreme. I will say, we doubled our forecast for subscription bookings for Extreme Platform One, which is our AI platform. So things are going really well. Our sellers are having a great time with this out in the market.
The the agility and the speed of of of, of turning up Network and provisioning network as well as the delivery of service is, well, as the resiliency of the platform. Um the ability to greet networks in a network again this is, you know, Miami Dade County, you know, we I can go across to, you know huge government uh customers around the world. Huge manufacturers Health Care Providers when we get into a head-to-head competition. You know we physically show
Customers what we can do and let them play with the technology.
Speaker #4: And we think this is going to give us enhanced capabilities as we go forward. And so, yeah, it's top of mind for customers. Everybody wants to know about it.
Speaker #4: This is an advantage for Extreme. I will say we doubled our forecast for subscription bookings for Extreme Platform One, which is our AI platform.
Uh, and and our our competitors can't replicate it. So all of a sudden extreme goes from maybe a distant third or fourth, you know, right into contention as a finalist and our teams are doing a great job, executing, and, and, and winning in some of these competitive projects.
Got it.
Follow up.
Speaker #4: So things are going really well. Our sellers are having a great time with this out in the
Speaker #4: market. Perfect.
Eric Martinuzzi: Perfect. Thanks again.
Michael Genovese: Perfect. Thanks again.
Speaker #3: Thanks again.
Speaker #1: Thanks,
Kevin Rhodes: Thanks, Mike.
Kevin Rhodes: Thanks, Mike.
Speaker #5: Your next question comes
Operator: Your next question comes from Tomer Zilberman, from the Bank of America. Tomer, your line is now open.
Operator: Your next question comes from Tomer Zilberman, from the Bank of America. Tomer, your line is now open.
Speaker #5: from Tomer Zilberman Mike. from the Bank of America. Tomer, your line is now open.
Prices. You, you started talking about it last quarter and I think in between or maybe it was it was last quarter, you implemented a mid single digit price increase. So my question is, how did customers first, how do customers react to that? Um, and since we've seen memory prices continue to Rise, um,
Speaker #6: Great. Hey, guys. Good morning. Maybe going back on the share gain question, when we look at the when you look at the opportunity that you're seeing from these competitive displacements, are you coming in all at once and the switching piece?
Tomer Zilberman: Great. Hey, guys. Good morning. Maybe going back on the share gain question. When we look at the opportunity that you're seeing from these competitive displacements, are you coming in all at once, replacing both the Wi-Fi piece and the switching piece? Or are you seeing it start in one area, kind of landing in one or the other and then further expanding? And then I have a follow-up.
Tomer Zilberman: Great. Hey, guys. Good morning. Maybe going back on the share gain question. When we look at the opportunity that you're seeing from these competitive displacements, are you coming in all at once, replacing both the Wi-Fi piece and the switching piece? Or are you seeing it start in one area, kind of landing in one or the other and then further expanding? And then I have a follow-up.
You know what, what's the signal for another price and create and um are you seeing any uh, decommits from suppliers?
Speaker #6: Or are you replacing both the Wi-Fi piece? Are you seeing it start in one area, kind of landing in one or the other, and then further expanding?
Speaker #6: have a And then I
Speaker #6: follow-up. Yeah,
Ed Meyercord: Yeah, Tomer, it's, you know, each project, you know, will have a life of its own. So, you know, we'll have a unique opportunity because we're the only player that can provide data sovereignty. So cloud choice becomes an issue in Germany, where a customer has data sovereignty requirements, and we bring a unique solution with our cloud choice. So the lead-in becomes cloud choice. You know, interestingly, you know, our fabric over SD-WAN won the day with the Japanese government and the huge wins that we've had over there. So it was really about the differentiation of our fabric technology and the fact that we were able to bring fabric over the wide area network with SD-WAN to create this unique solution that none of our competitors could replicate, and therefore it opened up the channel and opened up huge opportunities in Japan.
Ed Meyercord: Yeah, Tomer, it's, you know, each project, you know, will have a life of its own. So, you know, we'll have a unique opportunity because we're the only player that can provide data sovereignty. So cloud choice becomes an issue in Germany, where a customer has data sovereignty requirements, and we bring a unique solution with our cloud choice. So the lead-in becomes cloud choice. You know, interestingly, you know, our fabric over SD-WAN won the day with the Japanese government and the huge wins that we've had over there. So it was really about the differentiation of our fabric technology and the fact that we were able to bring fabric over the wide area network with SD-WAN to create this unique solution that none of our competitors could replicate, and therefore it opened up the channel and opened up huge opportunities in Japan.
Speaker #4: Tomer, each project will have a life of its own. So, we'll have a unique opportunity because we're the only player that can provide data sovereignty.
Speaker #4: So cloud choice becomes an issue in Germany, where a customer has data sovereignty requirements, and we bring a unique solution with our cloud choice.
Yeah. Uh tell me a great question and I yeah we you know we're well aware that that, you know, supply chain and and component availability is top of mind for everybody out there. Um yeah, we implemented the price increase earlier 7% price increase and I can say you know it's like a tree falling in the forest, a a total non-issue. You know, I mentioned the price in elasticity of networking. Yeah. If you think about an organization, think about your organization, um, there's, you know, there's there's no discussion about whether or not you need a network, uh, and that you need a modern network with modern networking tools. So, this is true for, for all of our customers. So it's kind of a non-negotiable. So, um,
Speaker #4: So the lead-in becomes cloud choice. Interestingly, our fabric over SD-WAN won the day with a Japanese government. And the huge wins that we've had over there.
Speaker #4: So it was really about the differentiation of our fabric technology and the fact that we were able to bring fabric over the wide area network with SD-WAN to create this unique solution that none of our therefore, it opened up the channel and opened up huge competitors could replicate.
I'd say our customers are very resilient from a pricing perspective. Um, going forward, we we will um, evaluate price increases as we go forward and and use that, you know, where we need to. We're very good at it as a company. And I'd say, we're very good at it as an industry. Uh, specifically, you know, meeting demand for things like ddr4 memory. Um,
Speaker #4: Opportunities in Japan. Today is our—the hottest technology for us: fabric. Everybody has an IP fabric in the industry. And IP fabrics are data centers.
Ed Meyercord: Yeah, the hottest technology for us today is our fabric. We, everybody has an IP fabric in the industry, and, and IP fabrics for data centers, that's great. Nobody has a fabric for campus, that's Layer 2, and that's what we have. And so when we get into beauty contests where customers, let's look at this Cisco refresh, and now it's time to upgrade the network, and now a customer says, "All right, well, let's bring in a few other competitors." People are blown away. My comment, what takes Cisco 6 hours, takes Extreme 6 seconds. That is a real quote from a Fortune 100 customer.
Yeah, the hottest technology for us today is our fabric. We, everybody has an IP fabric in the industry, and, and IP fabrics for data centers, that's great. Nobody has a fabric for campus, that's Layer 2, and that's what we have. And so when we get into beauty contests where customers, let's look at this Cisco refresh, and now it's time to upgrade the network, and now a customer says, "All right, well, let's bring in a few other competitors." People are blown away. My comment, what takes Cisco 6 hours, takes Extreme 6 seconds. That is a real quote from a Fortune 100 customer.
Speaker #4: That's great. Nobody has a fabric for campus. get into beauty That's layer two. we have. And so when we And that's what contests, where customers, let's look at the Cisco Refresh and now it's time to upgrade the network, and now a customer says, "All right, well, let's bring in a few other competitors." People are blown away.
I I I believe size is an advantage for extreme here. Uh, first of all we have a very, very strong team at the same team that we've had going back into the co era and, you know, supply chain disruption is normal for us and our business. And so our teams uh, are are are very strong. Uh, we have excellent vendor relationships. So I'd say we get out in front of these things before our competitors, um, size is an advantage, we're solving, for fewer problems. We're solving for Enterprise, networking switches, and access points. Our competitors have much bigger portfolios that they're trying to solve for
Speaker #4: My comment, what takes Cisco six hours takes Extreme six seconds. That is a real quote from a Fortune 100 customer. The agility and the speed of turning up network and provisioning network, as well as the delivery of service, as well as the resiliency of the platform, the ability to create networks in a network.
Ed Meyercord: The agility and the speed of turning up network and provisioning network, as well as the delivery of service, as well as the resiliency of the platform, the ability to create networks in a network. Again, this is, you know, Miami-Dade County. You know, we can go across to, you know, huge government customers around the world, huge manufacturers, healthcare providers. When we get into a head-to-head competition, you know, we physically show customers what we can do and let them play with the technology, and our competitors can't replicate it. So all of a sudden, Extreme goes from maybe a distant third or fourth, you know, right into contention as a finalist, and our teams are doing a great job executing and winning in some of these competitive projects.
The agility and the speed of turning up network and provisioning network, as well as the delivery of service, as well as the resiliency of the platform, the ability to create networks in a network. Again, this is, you know, Miami-Dade County. You know, we can go across to, you know, huge government customers around the world, huge manufacturers, healthcare providers. When we get into a head-to-head competition, you know, we physically show customers what we can do and let them play with the technology, and our competitors can't replicate it. So all of a sudden, Extreme goes from maybe a distant third or fourth, you know, right into contention as a finalist, and our teams are doing a great job executing and winning in some of these competitive projects.
And then what we need? What we're chasing for is, is, is lower volume. So, in a way, it's, it's easier for us to get our hands on it. So, these are some points that that allow us to be kind of resilient. And that environment, I'll give you an example with ddr4, uh, memory chips.
We're working with a vendor and yes, price is. You are going up, we talked about, you know, raising price
Speaker #4: Again, this county I can go across is Miami-Dade, to huge government customers around the world, huge manufacturers, healthcare providers. When we get into a head-to-head competition, we physically show customers what we can do.
but we talked about how we can find other sources of supply, and we were able to unlock
ddr4 chips, uh, that had been um,
Speaker #4: And let them play with the technology. And our competitors can't replicate it. So all of a sudden, Extreme goes from maybe a distant third or fourth right into contention as a finalist.
Speaker #4: And our teams are doing a great job executing and winning in some of these competitive projects.
Tomer Zilberman: Got it. Maybe as a follow-up, talking about memory prices. You started talking about it last quarter, and I think it was last quarter, you implemented a mid-single-digit price increase. So my question is, how did customers react to that? First, how did customers react to that? And since we've seen memory prices continue to rise, you know, what's the signal for another price increase? And, are you seeing any decommitments from suppliers?
Tomer Zilberman: Got it. Maybe as a follow-up, talking about memory prices. You started talking about it last quarter, and I think it was last quarter, you implemented a mid-single-digit price increase. So my question is, how did customers react to that? First, how did customers react to that? And since we've seen memory prices continue to rise, you know, what's the signal for another price increase? And, are you seeing any decommitments from suppliers?
Speaker #6: Maybe as a follow-up, talking about Got it. memory prices, you started talking about it last quarter. And I think in between, or maybe it was last quarter, you implemented a mid-single-digit price increase.
Speaker #6: So my question is, how did customers first—how did customers react to that? And since we've seen memory prices continue to rise, what's the signal for another price increase?
Uh, designed and developed for another industry and and they were actually aging inventory for another industry. We were able to pull in the chip, bring it to our vendor, uh bring it to broadcom work closely with them and they certify the Chip. And that opened up a new source of supply. For example of memory, that's the kind of thing that extreme does that I think is a little different from our competitors. And so our teams are out there. Uh, very creative, finding ways to replace components and and find alternative sources of Supply. Yeah, in the market. And again, our size is someone of an advantage for us to meet demand.
Thank you.
Speaker #6: And are you seeing any decommittments from suppliers?
Your question comes from Ryan Coons from meet him in Co Ryan, your line is now open.
Speaker #4: Yeah, Tomer, great question. And we're well aware that supply chain and component availability is top of mind for everybody out there. Yeah, we implemented the price increase earlier—a 7% price increase.
Ed Meyercord: Yeah. Tomer, great question, and yeah, we, you know, we're well aware that, you know, supply chain and component availability is top of mind for everybody out there. Yeah, we implemented the price increase earlier, 7% price increase, and I can say, you know, it's like a tree falling in the forest, a total non-issue. You know, I mentioned the price inelasticity of networking. If you think about an organization, think about your organization, there's, you know, there's no discussion about whether or not you need a network, and that you need a modern network with modern networking tools. So this is true for all of our customers, so it's kind of a non-negotiable. So, I'd say our customers are very resilient from a pricing perspective.
Ed Meyercord: Yeah. Tomer, great question, and yeah, we, you know, we're well aware that, you know, supply chain and component availability is top of mind for everybody out there. Yeah, we implemented the price increase earlier, 7% price increase, and I can say, you know, it's like a tree falling in the forest, a total non-issue. You know, I mentioned the price inelasticity of networking. If you think about an organization, think about your organization, there's, you know, there's no discussion about whether or not you need a network, and that you need a modern network with modern networking tools. So this is true for all of our customers, so it's kind of a non-negotiable. So, I'd say our customers are very resilient from a pricing perspective.
Speaker #4: And I can say it's like a tree falling in the forest. A total non-issue. I mentioned the price any elasticity of networking if you think about an organization, think about your organization, there's no discussion about whether or not you need a network.
Great, thanks. Uh, nice quarter, guys and nice to hear the Outlook, um, hanging in their strong. Um, maybe unpacking the, the ARR bit the cloud ARR, uh, in the quarter a bit. Can we talk about, you know, put some takes where you're seeing, you know, strength and uh, in selling subscription and areas you're still working on within, uh, within that sales process?
Yeah. That that that thanks Ryan. I mean the the the strength has been with platform 1.
Right, and I mentioned that, you know, we we don't disclose our internal plans but we had an internal plan.
Speaker #4: And that you need a modern network with modern networking tools. So this is true for all of our customers, so it's kind of a non-negotiable.
Uh, for for platform, 1 that we more than doubled in in the quarter. Um and you know people people
Speaker #4: So, I'd say our customers are very resilient from a pricing perspective. Going forward, we will evaluate price increases as we go forward and use that where we need to.
Ed Meyercord: Going forward, we will evaluate price increases as we go forward and use that, you know, where we need to. We're very good at it as a company, and I'd say we're very good at it as an industry. Specifically, you know, meeting demand for things like DDR4 memory. I believe size is an advantage for Extreme here. First of all, we have a very, very strong team. It's the same team that we've had going back into the COVID era, and, you know, supply chain disruption is normal for us and our business, and so our teams are very strong. We have excellent vendor relationships, so I'd say we get out in front of these things before our competitors. Size is an advantage. We're solving for fewer problems.
Going forward, we will evaluate price increases as we go forward and use that, you know, where we need to. We're very good at it as a company, and I'd say we're very good at it as an industry. Specifically, you know, meeting demand for things like DDR4 memory. I believe size is an advantage for Extreme here. First of all, we have a very, very strong team. It's the same team that we've had going back into the COVID era, and, you know, supply chain disruption is normal for us and our business, and so our teams are very strong. We have excellent vendor relationships, so I'd say we get out in front of these things before our competitors. Size is an advantage. We're solving for fewer problems.
Speaker #4: We're very good at it as a company. And I'd say we're very good at it as an industry. Specifically, meeting demand for things like DDR4 memory I believe size is an advantage for Extreme here.
Are are the way that we've structured our our commercial terms is that, you know, our, our customers can can buy platform 1 and then they can move at their own pace and migrate from xiq and our our other, you know, our Cloud platforms. And so our customers have really embraced that and so that I'd say that's where we're seeing. Uh, most demand
Speaker #4: First of all, we have a very strong team. It's the same team that we've had going back into the COVID era. And supply chain disruption is normal for us and our business.
Speaker #4: And so our teams are very strong. We have excellent vendor relationships. So I'd say we get out in front of these things before our advantage.
Yeah, I think you're right and and we lay this out the analyst day, right? That we expected, you know, you know mid to high, you know, 20s growth rates and and we're we're seeing that now over 25% growth rate in our, it is absolutely just a product of a really good platform, a simple licensing model, uh, you know, that includes the cloud management, includes the agentic AI, it includes, you know, um, you know, the support contracts and everything that we talked about
Speaker #4: Competitors—we're solving for fewer. Size is an issue. We're solving for enterprise networking, switches, and access points. Our competitors have much bigger portfolios that they're trying to solve for.
Ed Meyercord: We're solving for enterprise networking, switches, and access points. Our competitors have much bigger portfolios that they're trying to solve for. Then what we need, what we're chasing for, is lower volume. So in a way, it's easier for us to get our hands on it. So these are some points that allow us to be kind of resilient in that environment. I'll give you an example with DDR4 memory chips. We were working with a vendor, and yes, prices, you know, are going up. We talked about, you know, raising price, but we talked about how we can find other sources of supply, and we were able to unlock DDR4 chips that had been designed and developed for another industry. And they were actually aging inventory for another industry.
We're solving for enterprise networking, switches, and access points. Our competitors have much bigger portfolios that they're trying to solve for. Then what we need, what we're chasing for, is lower volume. So in a way, it's easier for us to get our hands on it. So these are some points that allow us to be kind of resilient in that environment. I'll give you an example with DDR4 memory chips. We were working with a vendor, and yes, prices, you know, are going up. We talked about, you know, raising price, but we talked about how we can find other sources of supply, and we were able to unlock DDR4 chips that had been designed and developed for another industry. And they were actually aging inventory for another industry.
Speaker #4: And then what we need, what we're chasing for, is lower volume. So, in a way, it's easier for us to get our hands on it.
And and, and people like that model. They have a simple for them. It's easy. They understand what the pricing is, they're not going to have hidden costs in the future, Etc. And then, and then our customers, really enjoy the agentic AI. And, and now let's, you know, making their um, network operations this that much more efficient.
it's like, adding an extra engineer to their team, this is what they're saying,
Speaker #4: So, these are some points that allow us to be kind of resilient in that environment. I'll give you an example. With DDR4 memory chips, we were working with a vendor.
Speaker #4: And yes, price is going up. We talked about raising price. But we talked about how we can find other sources of supply. unlock DDR4 chips that had been designed and developed for another industry.
Speaker #4: And they were actually aging inventory for another industry. We were able to pull in the chip, bring it to our vendor, bring it to Broadcom, work closely with them.
That's great. That's that caller. And uh, you guys have some really strong results in in email. I look like a record for what I can tell or close to it but at least for several years, um, you know, can you maybe unpack what's what's behind that strength we heard from uh kind of a a private networking peer last night that also had very strong emia uh sales and noted that there that there were some regulatory requirements around sovereignty for coming down from the EU, uh, maybe you can explain if there was any impact on some of your sales, uh, due to regulatory
Ed Meyercord: We were able to pull in the chip, bring it to our vendor, bring it to Broadcom, work closely with them, and they certified the chip, and that opened up a new source of supply, for example, of memory. That's the kind of thing that Extreme does that I think is a little different from our competitors. And so our teams are out there, very creative, finding ways to replace components and find alternative sources of supply, yeah, in the market. And again, our size is somewhat of an advantage for us to meet demand.
We were able to pull in the chip, bring it to our vendor, bring it to Broadcom, work closely with them, and they certified the chip, and that opened up a new source of supply, for example, of memory. That's the kind of thing that Extreme does that I think is a little different from our competitors. And so our teams are out there, very creative, finding ways to replace components and find alternative sources of supply, yeah, in the market. And again, our size is somewhat of an advantage for us to meet demand.
Speaker #4: And they certified the chip. And that opened up a new source of supply, for example, of memory. That's the kind of thing that Extreme does that I think is a little different from our competitors.
Speaker #4: And so, our teams are out there, very creative, finding ways to replace components and find alternative sources of supply in the market. And again, our size is somewhat of an advantage for us to meet demand.
Speaker #6: Got it. Thank you.
Kevin Rhodes: Got it. Thank you.
Tomer Zilberman: Got it. Thank you.
Speaker #1: Your next question comes from Ryan Coombs from Needham & Co. Ryan, your line is now open.
Operator: Your next question comes from Ryan Koontz, from Needham & Company. Ryan, your line is now open.
Operator: Your next question comes from Ryan Koontz, from Needham & Company. Ryan, your line is now open.
Speaker #1: open. Great.
Ryan Koontz: Great. Thanks. Nice quarter, guys, and nice to have outlook, hanging in there strong. Maybe unpacking the ARR bit, the cloud ARR, in the quarter a bit. Can you maybe talk about, you know, puts and takes, where you're seeing, you know, strength in selling subscription and areas you're still working on within that sales process?
Ryan Koontz: Great. Thanks. Nice quarter, guys, and nice to have outlook, hanging in there strong. Maybe unpacking the ARR bit, the cloud ARR, in the quarter a bit. Can you maybe talk about, you know, puts and takes, where you're seeing, you know, strength in selling subscription and areas you're still working on within that sales process?
Speaker #7: Thanks. Nice quarter, guys. And nice chip outlook. Hanging in there strong. Maybe unpacking the ARR bit, the cloud ARR in the quarter a bit.
Yep. Uh, and and Ryan, I I, I, I say I don't, I don't I don't think we've seen the benefit of that yet, but I think that Port 10's good things to come for extreme. Um, you know, when you talk about data sovereignty, if you talk to the Gartner group, they'll tell you that extreme is the only player in the networking space that can deliver a data Sovereign, uh, solution and networking. And so, and that goes back to Cloud Choice. Um, and, and, you know, and when you look at our competitors in a public Cloud, that doesn't quite get you there, or you have a purpose-built cloud that that, you know, isn't um, built and operated, you know, in country. Um, you know, this is an area where, you know, we, we we we we have an opportunity. I will say we are seeing, you know, as governments uh government coalitions and, you know, Europe form and get organized, uh, and get United around creating budgets and spending. I for us, I'd say it's taking
Speaker #7: Can you maybe talk about puts and takes, where you're seeing strength in selling subscription and areas you're still working on within that sales process?
Speaker #4: Yeah, thanks, Ryan. I mean, the strength has been with platform one, right? I mentioned that we don't disclose our internal plans, but we had an internal plan for platform one that we more than doubled.
Ed Meyercord: Yeah, thanks, Ryan. I mean, the strength has been with Platform One. Ryan, I mentioned that, you know, we don't disclose our internal plans, but we had an internal plan for Platform One that we more than doubled in the quarter. And, you know, the way that we've structured our commercial terms is that, you know, our customers can buy Platform One, and then they can move at their own pace and migrate from XIQ and our other, you know, our cloud platforms. And so our customers have really embraced that. And so that- I'd say that's where we're seeing most demand. Kevin, do you want to comment?
Ed Meyercord: Yeah, thanks, Ryan. I mean, the strength has been with Platform One. Ryan, I mentioned that, you know, we don't disclose our internal plans, but we had an internal plan for Platform One that we more than doubled in the quarter. And, you know, the way that we've structured our commercial terms is that, you know, our customers can buy Platform One, and then they can move at their own pace and migrate from XIQ and our other, you know, our cloud platforms. And so our customers have really embraced that. And so that- I'd say that's where we're seeing most demand. Kevin, do you want to comment?
Longer than than we'd expected for spending to be unlocked. But we're starting to see, um, government spend come back. We put that in our comments. Uh, so we are we expect that to be Europe to be a Tailwind for us, going forward. Kevin, do you want to add anything?
Speaker #4: In the quarter, and people are the way that we structured our commercial terms is that our customers can buy platform one, and then they can move at their own pace and migrate from XIQ and our cloud platforms.
No, I think I mean I think it's covered at the the only other thing I'd add is we just added a new, you know, leader to our opinion, Sales Group and and he's come in and and, and he's been very impressed with the opportunities that out, you know, that are that are, that are in the idea, you know, market and, uh, and he's very excited. So I I think that we've got the right team in place and, and there's there's plenty more opportunity there in AIA for us to continue as well.
Speaker #4: And so our customers have really embraced that. And so I'd say that's where we're seeing most demand. Kevin, do you want to
Super appreciate the commentary.
Yeah, that's right.
Speaker #4: comment? Yeah, I think you're
Kevin Rhodes: Yeah, I think you're right. And we laid this out at the analyst day, right? That we expected, you know, mid- to high-20s growth rates, and we're seeing that now with a 25% growth rate in AR. It is absolutely just a product of a really good platform, a simple licensing model that includes the cloud management, includes the agentic AI, it includes the support contracts and everything that we talked about. And people like that model. It's simple for them, it's easy, they understand what the pricing is, they're not going to have hidden costs in the future, et cetera. And then our customers really enjoy the agentic AI and how that's, you know, making their network operations just that much more efficient.
Kevin Rhodes: Yeah, I think you're right. And we laid this out at the analyst day, right? That we expected, you know, mid- to high-20s growth rates, and we're seeing that now with a 25% growth rate in AR. It is absolutely just a product of a really good platform, a simple licensing model that includes the cloud management, includes the agentic AI, it includes the support contracts and everything that we talked about. And people like that model. It's simple for them, it's easy, they understand what the pricing is, they're not going to have hidden costs in the future, et cetera. And then our customers really enjoy the agentic AI and how that's, you know, making their network operations just that much more efficient.
Speaker #3: right. And we laid this out in the state, right, that we expected mid to high 20s growth rates and we're seeing that now with the 25% growth rate.
Your next question comes from Dave, King from B Riley. Dave, your line is now open.
Uh, thank you. Good morning. Uh,
Speaker #3: And it is absolutely just a product of a really good platform, a simple licensing model that includes the cloud management, includes the agentic AI.
Just a question on on. Uh, the rumor about this Ruckus and you guys just uh uh wanted to hear uh from you directly.
Yeah, thanks. Thanks Dave, um,
Speaker #3: It includes the support contracts and everything that we talked about. And people like that model. It's simple for them. It's easy. They understand what the pricing is.
Speaker #3: They're not going to have hidden costs in the future, etc. And then our customers really enjoy the agentic AI and how that's making their network operations that much more efficient.
Speaker #3: It's like adding an extra engineer to their team is what they're
Kevin Rhodes: It's like adding an extra engineer to their team, is what they're saying.
It's like adding an extra engineer to their team, is what they're saying.
Speaker #3: saying.
Yeah, I would just say, you know, it it extreme our policy. If, if, if uh assets or or, or businesses, um, are potentially for sale or if, if potentially available in the marketplace. Um, we're always going to have a look. So at at extreme, you'll, you'll always see us. Um, and I would say, we're always in the market, looking at different assets. Be it, adjacencies, or being at, or being, you know, players in, in our direct space. So, um,
Speaker #7: That's great. Thanks for
Ryan Koontz: That's great. Thanks for that color. And, you guys have some really strong results in EMEA. Looked like a record from what I could tell, or close to it, at least for several years. You know, can you maybe unpack what's behind that strength? We heard from kind of a private networking peer last night that also had very strong EMEA sales, and noted that there were some regulatory requirements around sovereignty coming down from the EU.
Ryan Koontz: That's great. Thanks for that color. And, you guys have some really strong results in EMEA. Looked like a record from what I could tell, or close to it, at least for several years. You know, can you maybe unpack what's behind that strength? We heard from kind of a private networking peer last night that also had very strong EMEA sales, and noted that there were some regulatory requirements around sovereignty coming down from the EU.
Speaker #7: that color. And you guys did some really strong results in EMEA. It looked like a record, from what I could tell, or close to it, at least for several years.
Yeah, I, I think you could always expect us to be engaged in dialogue to get smarter and to learn. Um,
Speaker #7: Can you maybe unpack what's behind that strength? We heard from kind of a private networking peer last night that also had very strong EMEA sales.
And uh and and I, I would say to the extent that there's an opportunity that presents itself. We we will always
Speaker #7: And noted that there were some regulatory requirements around sovereignty coming down from the EU. Maybe you can explain if there was any impact on some of your sales due to regulatory?
Um, we have the condition that that, that anything that we do, uh, would be a creative.
Ed Meyercord: Yeah.
Ed Meyercord: Yeah.
Ryan Koontz: Maybe you can explain if there was any impact on some of your sales due to regulatory.
Ryan Koontz: Maybe you can explain if there was any impact on some of your sales due to regulatory.
Um, but I would say, you know, at this point, you know, that's that's, uh, conjecture, there's really nothing. There's really nothing for us to comment on uh on that front.
Speaker #4: Yeah, and Ryan, I'd say I don't think we've seen the benefit of that yet. But I think that portends good things to come for Extreme.
Ed Meyercord: Yeah. And Ryan, I'd say I don't think we've seen the benefit of that yet, but I think that portends good things to come for Extreme. You know, when you talk about data sovereignty, if you talk to Gartner, they'll tell you that Extreme is the only player in the networking space that can deliver a data sovereign solution and networking. And that goes back to cloud choice. You know, when you look at our competitors in a public cloud, it doesn't quite get you there, or you have a purpose-built cloud that you know isn't built and operated, you know, in country. You know, this is an area where we have an opportunity.
Ed Meyercord: Yeah. And Ryan, I'd say I don't think we've seen the benefit of that yet, but I think that portends good things to come for Extreme. You know, when you talk about data sovereignty, if you talk to Gartner, they'll tell you that Extreme is the only player in the networking space that can deliver a data sovereign solution and networking. And that goes back to cloud choice. You know, when you look at our competitors in a public cloud, it doesn't quite get you there, or you have a purpose-built cloud that you know isn't built and operated, you know, in country. You know, this is an area where we have an opportunity.
Got it. And my follow-up is um uh the Tariff situation just um um
And you think that we should be concerned about?
Speaker #4: When you talk about data sovereignty, if you talk to the Gartner Group, they'll tell you that Extreme is the only player in the networking space that can deliver a data sovereign solution and networking.
Speaker #4: And so that goes back to cloud choice. And when you look at our competitors in a public cloud, it doesn't quite get you there.
Speaker #4: Or you have a purpose-built cloud operated that isn't built and in-country. This is an area where we have an opportunity. I will say we are seeing as governments and government coalitions in Europe form and get united around creating budgets, and organized, and get spending, for us, I'd say it's taken longer than we've expected.
No, I mean, you know it, it data goes back to, you know, supply chain Etc. A changing tariffs is a way of life for all of us. Um, especially with the current Administration in the US. So I I I this is a core competency at extreme. So we're well-versed at at manipulating and managing through changing tariff environments. So I I, you know, at this stage it's it's I'd say it's a non-issue for us at Xtreme
Got it. Thank you.
Your next question comes from Christian swab at Craig Halen.
Ed Meyercord: I will say we are seeing, you know, as governments, government coalitions in, you know, Europe form and get organized, and get united around creating budgets and spending, for us, I'd say, it's taken longer than we've expected for spending to be unlocked, but we're starting to see, government spend come back. We put that in our comments. So we expect that to be, Europe to be a tailwind for us going forward. Kevin, do you want to add anything?
I will say we are seeing, you know, as governments, government coalitions in, you know, Europe form and get organized, and get united around creating budgets and spending, for us, I'd say, it's taken longer than we've expected for spending to be unlocked, but we're starting to see, government spend come back. We put that in our comments. So we expect that to be, Europe to be a tailwind for us going forward. Kevin, do you want to add anything?
Christian, your line is now open.
So a great threat to take to my questions. So uh, thanks for the guidance for fiscal year 26. But as we look a little bit longer term, Ed, you know, given you know, market share gains, you know, in conjunction with uh,
Speaker #4: For spending to be unlocked, but we're starting to see government spend come back. We put that in our comments. So we expect that to be—Europe—to be a tailwind for us going forward.
Speaker #4: Kevin, do you want to add anything?
Speaker #3: No, I think— I mean, I think you covered it. And the only other thing I'd add is we just added a new leader to our sales group.
Kevin Rhodes: No, I think, I mean, I think you covered it. And the only other thing I'd add is we just added a new, you know, leader to our EMEA sales group, and he's come in and he's been very impressed with the opportunities that, you know, are in the EMEA, you know, market. And he's very excited. So I think that we've got the right team in place, and there's plenty more opportunity there in EMEA for us to continue to grow.
Kevin Rhodes: No, I think, I mean, I think you covered it. And the only other thing I'd add is we just added a new, you know, leader to our EMEA sales group, and he's come in and he's been very impressed with the opportunities that, you know, are in the EMEA, you know, market. And he's very excited. So I think that we've got the right team in place, and there's plenty more opportunity there in EMEA for us to continue to grow.
You know, we'll call it better Solutions uh as well as the disruption by 2 of your leading competitors and and recent strong sales strengths, is it safe to assume that, you know, uh, we should expect a continuation of double digit Topline growth, uh, in in 27 over 26. Uh,
Speaker #3: And he's come in, and he's been very impressed with the opportunities that are in the EMEA market, and he's very excited. So I think that we've got the right team in place, and there's plenty more opportunity there in EMEA for us to continue as
Without any unforeseen, you know, uh, macroeconomic dislocation.
Speaker #3: well. Super.
Yeah, and I, I, I I uh, I don't want to Kevin and Stan have provided you Christian, as far as the outlook for 27, um, you know what you're saying, makes a lot of sense to me. Um, because, you know, we're seeing this continuation of
Speaker #7: Appreciate the commentary.
Ed Meyercord: ... commentary?
Ryan Koontz: ... commentary?
Speaker #3: Yeah, that's right.
Kevin Rhodes: Yeah, that's right.
Kevin Rhodes: Yeah, that's right.
Speaker #1: Your next question comes from Dave King from B Riley. Dave, your line is now
Operator: Your next question comes from Dave Kang from B. Riley. Dave, your line is now open.
Operator: Your next question comes from Dave Kang from B. Riley. Dave, your line is now open.
Speaker #1: open. Thank you.
Dave Kang: Thank you, good morning. Just a question on the rumor about this Ruckus, and you guys just wanted to hear from you directly.
David Kang: Thank you, good morning. Just a question on the rumor about this Ruckus, and you guys just wanted to hear from you directly.
Speaker #8: Good morning. Just a question on the rumor about this ruckus. And you guys just wanted to hear from you directly.
Um, you know not only demand in the marketplace but the strengthening of our competitive position, especially considering what's going on with the larger 2 players so um us us nibbling away and small share gains for extreme has a big impact on our Top Line. Uh, Kevin I might let you jump in and
Speaker #4: Yeah, thanks, Dave. Yeah, I would just say, at Extreme, our policy is if assets or businesses are potentially for sale, or if they're potentially available in the marketplace, we're always going to have a look.
Ed Meyercord: Yeah, thanks, thanks, Dave. Yeah, I would just say, you know, at Extreme, our policy, if assets or businesses are potentially for sale or if potentially available in the marketplace, we're always gonna have a look. So at Extreme, you'll always see us, I would say we're always in the market looking at different assets, be it adjacencies or being players in our direct space. So, you know, I think you can always expect us to be engaged in dialogue, to get smarter and to learn. And I would say to the extent that there's an opportunity that presents itself, we will always, we have the condition that anything that we do would be accretive.
Ed Meyercord: Yeah, thanks, thanks, Dave. Yeah, I would just say, you know, at Extreme, our policy, if assets or businesses are potentially for sale or if potentially available in the marketplace, we're always gonna have a look. So at Extreme, you'll always see us, I would say we're always in the market looking at different assets, be it adjacencies or being players in our direct space. So, you know, I think you can always expect us to be engaged in dialogue, to get smarter and to learn. And I would say to the extent that there's an opportunity that presents itself, we will always, we have the condition that anything that we do would be accretive.
Speaker #4: So at Extreme, you'll always see us—I would say we're always in the market, looking at different assets, be it adjacencies or being players in our direct space.
Speaker #4: So, I think you could always expect us to be engaged in dialogue to get smarter and to learn. And I would say, to the extent that there's an opportunity that presents itself, we will always have the condition that anything that we do would be accretive.
Uh, comment on the official sponsor. Yeah, I mean, my my comment my comments would be, you know. Um, you know we we we feel confident with and and positive about all the improvements we've made from the go to market perspective. I I say we feel comfortable uh with the the fy2 setup. Obviously, we are not guiding the 27 yet we still have plenty of time and now we can say this Market's pretty Dynamic right now and so it's really hard to get you know that far out like a year and a half from now. We feel really good about our guidance for FY. 2682 in the coming, in the coming quarters. Uh, just don't want to comment too much about about.
Given where we are the market.
Ed Meyercord: But I would say, you know, at this point, you know, that's conjecture. There's really nothing for us to comment on, on that front.
Speaker #4: But I would say, at this point, that's conjecture. There's really nothing for us to comment on that.
But I would say, you know, at this point, you know, that's conjecture. There's really nothing for us to comment on, on that front.
Speaker #4: front. Got it.
Dave Kang: Got it. And my follow-up is, the tariff situation, just, any changes, anything that we should be concerned about?
David Kang: Got it. And my follow-up is, the tariff situation, just, any changes, anything that we should be concerned about?
Speaker #8: And my follow-up is the tariff situation, just any changes, anything that we should be concerned about?
Speaker #4: No, I mean, data goes back to supply chain, etc. A changing tariffs is a way of life for all of us. Especially with the current administration in the US, so this is a core competency at Extreme.
Ed Meyercord: No, I mean, you know, Dave, it goes back to, you know, supply chain, et cetera. Changing tariffs is a way of life for all of us, especially with the current administration in the US. So, this is a core competency at Extreme, so we're well versed at manipulating and managing through a changing tariff environment. So, you know, at this stage, it's a non-issue for us at Extreme.
Ed Meyercord: No, I mean, you know, Dave, it goes back to, you know, supply chain, et cetera. Changing tariffs is a way of life for all of us, especially with the current administration in the US. So, this is a core competency at Extreme, so we're well versed at manipulating and managing through a changing tariff environment. So, you know, at this stage, it's a non-issue for us at Extreme.
That's fair and and unfortunately, I'm going to ask another long-term question. Um, you know, given the gross margin headwinds in the near term, uh, you know, given the big installation of large steel contracts, but silver stating the goal of 64, to 60% of those margins that won't ask you to, to give me the level of improvement with with Clarity. But is, you know, and your ability, uh, to raise, uh, prices which, uh, appear to be, uh, currently happily absorbed by the customers given their networking. Um, technology needs given memory component costs, in particular, um, would we should we expect, uh, gross margins and aggregate to improve, you know, in 27 over 26 as we begin to March towards that 64 to 66% goal?
Speaker #4: So we're well-versed at manipulating and managing through changing tariff environments. So at this stage, I'd say it's a non-issue for us at
I mean, I think that the state that
Speaker #4: Extreme. Thank
Dave Kang: Got it. Thank you.
David Kang: Got it. Thank you.
Speaker #1: Your next question comes to you from Christian Swab at Craig Hallam. Christian, your line.
Operator: Your next question comes from Christian Schwab at Craig-Hallum. Christian, your line is now open.
Operator: Your next question comes from Christian Schwab at Craig-Hallum. Christian, your line is now open.
Speaker #9: Hello, great, and thank you for my questions. So thanks for the guidance for fiscal year '26. But as we look at market share gains in conjunction with, a little bit longer term, Ed, with—we'll call it—better solutions, as well as the disruption by two of your leading competitors and recent strong sales strength, is it safe to assume that we should expect a continuation of double-digit top-line growth in '27 over '26?
Christian Schwab: Great, thank you for taking my questions. So, thanks for the guidance for fiscal year 26. But as we look a little bit longer term, Ed, you know, given, you know, market share gains, you know, in conjunction with, you know, we'll call it better solutions, as well as the disruption by two of your leading competitors and recent strong sales strength, is it safe to assume that, you know, we should expect a continuation of double-digit top line growth, in 27 over 26, without any unforeseen, you know, macroeconomic dislocation?
Christian Schwab: Great, thank you for taking my questions. So, thanks for the guidance for fiscal year 26. But as we look a little bit longer term, Ed, you know, given, you know, market share gains, you know, in conjunction with, you know, we'll call it better solutions, as well as the disruption by two of your leading competitors and recent strong sales strength, is it safe to assume that, you know, we should expect a continuation of double-digit top line growth, in 27 over 26, without any unforeseen, you know, macroeconomic dislocation?
is to say that we will expect Improvement just a reminder, the product growth margins coming out in Q3 and Q4 will improve Christian, right? So you've got the product margin Improvement happening there. Already, it's really just these lower margin, you know, Professional Services, that will overhang in the third and fourth quarter, uh, you know, as we do those installations and those are just
You know, that that's higher installation Revenue than we normally have their.
But, you know, naturally in 27 and I can't predict how many installations we might have in 27 at this moment. But but but nationally, if, if we have a normalized amount of of Professional Services of a new in 27, you would certainly see a mix Improvement in margin in 27, okay?
Yeah, that's a fantastic answer. Congrats again on, on the great results that Outlook, thank you.
Speaker #9: Without any unforeseen macroeconomic dislocation?
Yeah, sure.
Speaker #4: Yeah, and I don't want to put Kevin in the stand, and provided you, Christian, as far as the outlook for '27. What you're saying makes a lot of sense to me.
Ed Meyercord: Yeah, and I know what Kevin and Stan have provided you, Christian, as far as the outlook for 27. You know, what you're saying makes a lot of sense to me, because, you know, we're seeing this continuation of, you know, not only demand in the marketplace, but the strengthening of our competitive position, especially considering what's going on with the larger two players. So, us nibbling away and small share gains for Extreme has a big impact on our top line. Kevin, I might let you jump in and comment on the-
Ed Meyercord: Yeah, and I know what Kevin and Stan have provided you, Christian, as far as the outlook for 27. You know, what you're saying makes a lot of sense to me, because, you know, we're seeing this continuation of, you know, not only demand in the marketplace, but the strengthening of our competitive position, especially considering what's going on with the larger two players. So, us nibbling away and small share gains for Extreme has a big impact on our top line. Kevin, I might let you jump in and comment on the-
You're next question comes from Eric Martin newsy from Lake Street Capital markets. LLC Eric your line is now open.
color that you gave uh, just
Speaker #4: Because we're seeing this continuation of not only demand in the marketplace, but the strengthening of our competitive position, especially considering what's gone on with the larger two players.
Speaker #4: So us nibbling away in small share gains for Extreme has a big impact on our top line. Kevin, I might let you jump in and comment on the official response
At the the bottom line, the 98 cents to a dollar 02 for FY 26 uh relatively in line with where you were before is that to say then that there's not an a substantial incremental contribution. From the the
Kevin Rhodes: Yeah, and-
Kevin Rhodes: Yeah, and-
Ed Meyercord: efficient response here.
Ed Meyercord: efficient response here.
Speaker #3: Yeah, I mean, my comments would be we feel confident with and positive about all the improvements we've made from the go-to-market perspective. I'd say we feel comfortable with the FY '27 setup.
Kevin Rhodes: Yeah, I mean, my comments would be, you know, we feel confident with and positive about all the improvements we've made from the go-to-market perspective. I'd say we feel comfortable with the FY 2027 setup. Obviously, we are not guiding to 2027 yet. We still have plenty of time, and I would say this market's pretty dynamic right now, and so it's really hard to get, you know, that far out, a year and a half from now. We feel really good about our guidance for FY 2026, and I'd say, you know, we'll circle back, you know, on 2027 in the coming quarters. Just don't wanna comment too much about that far out, given where we are in the market.
Kevin Rhodes: Yeah, I mean, my comments would be, you know, we feel confident with and positive about all the improvements we've made from the go-to-market perspective. I'd say we feel comfortable with the FY 2027 setup. Obviously, we are not guiding to 2027 yet. We still have plenty of time, and I would say this market's pretty dynamic right now, and so it's really hard to get, you know, that far out, a year and a half from now. We feel really good about our guidance for FY 2026, and I'd say, you know, we'll circle back, you know, on 2027 in the coming quarters. Just don't wanna comment too much about that far out, given where we are in the market.
U the Professional Services in other words, is it, are we talking no margin on the Professional Services that we're taking on? Because I would have expected given the fees for Q2 that the guide for the EPS for the year would have risen
Speaker #3: Obviously, we are not guiding to '27 yet. We still have plenty of time. And I would say this market's pretty dynamic right now, so it's really hard to get that far out—a year and a half from now.
Speaker #3: We feel really good about our guidance for FY '26, and I'd say we'll circle back on '27 in the coming quarters. Just don't want to comment too much about that far out.
Speaker #3: Given where we are in the market.
Christian Schwab: That's fair, and unfortunately, I'm gonna ask another long-term question. You know, given the gross margin headwinds in the near term, you know, given the big installation of large deal contracts, but still restating the goal of 64 to 60 percent gross margins, I won't ask you to give me the level of improvement with clarity. But, you know, is your ability to raise prices, which appear to be currently happily absorbed by the customers, given the networking technology needs, given memory component costs in particular, should we expect gross margins in aggregate to improve, you know, in 2027 over 2026 as we begin to march towards that 64 to 66% goal?
Christian Schwab: That's fair, and unfortunately, I'm gonna ask another long-term question. You know, given the gross margin headwinds in the near term, you know, given the big installation of large deal contracts, but still restating the goal of 64 to 60 percent gross margins, I won't ask you to give me the level of improvement with clarity. But, you know, is your ability to raise prices, which appear to be currently happily absorbed by the customers, given the networking technology needs, given memory component costs in particular, should we expect gross margins in aggregate to improve, you know, in 2027 over 2026 as we begin to march towards that 64 to 66% goal?
Speaker #9: to ask another long-term That's fair. And unfortunately, I'm going question. Given the gross margin headwinds in the near term, given the big installation of large deal contracts, but silver stating the goal of 64 to 60% gross margins, I won't ask you to give me the level of improvement with clarity.
Sure. I mean you you would expect Eric right? That that the overall deal is is a is a good margin deal, right? But that we do tend to price the Professional Services installation with a much lower margin than our subscription and support which tends to be in the 70% range and and it's just low market. And then and and and these all these have a different, you know, margin profile to them. But I would say they're in the, you know, 15 to 20% range, you know of of margin not certainly at the 70% level like you see, you know, in the subscription and support and so that that's where I would comment that that that's why you see a mixed ship in the third and fourth quarter. Being a little bit, overall lower margins but again product margins improving in the second half of the year.
Speaker #9: your ability But in to raise prices which appear to be currently happily absorbed by the customers, given their networking technology needs, given memory component costs in particular, would we expect gross margins and aggregate to improve in '27 over '26 as we begin to march towards that 64 to 66% goal?
Yeah, I I guess I jump in and add. I I would just jump in and add Eric. Like, in some cases, we get involved in a customer, says, we we'd really like you to do the cabling work for example, and then we'll bring in a contractor and Mark it up 10 10 15%, right? And and that's not you know, our traditional business but it's almost like us doing a favor for a customer in a in a large complicated project and we have
Speaker #3: I mean, I think that to say that we will expect improvement—just a reminder, the product gross margins coming out in Q3 and Q4 will improve, Christian, right?
Kevin Rhodes: I mean, I think it's safe that, you know, it's safe to say that we will expect improvement. Just a reminder, the product gross margins coming out in Q3 and Q4 will improve, Christian, right? So you've got the product margin improvement happening there already. It's really just these lower margin, you know, professional services that will overhang in the third and fourth quarter, you know, as we do those installations. And those are just, you know, that's higher installation revenue than we normally have there. But, you know, naturally, in 2027, and I can't predict how many installations we might have in 2027 at this moment, but naturally, if we have a normalized amount of professional services revenue in 2027, you would certainly see a mixed improvement in margin in 2027. Okay?
Kevin Rhodes: I mean, I think it's safe that, you know, it's safe to say that we will expect improvement. Just a reminder, the product gross margins coming out in Q3 and Q4 will improve, Christian, right? So you've got the product margin improvement happening there already. It's really just these lower margin, you know, professional services that will overhang in the third and fourth quarter, you know, as we do those installations. And those are just, you know, that's higher installation revenue than we normally have there. But, you know, naturally, in 2027, and I can't predict how many installations we might have in 2027 at this moment, but naturally, if we have a normalized amount of professional services revenue in 2027, you would certainly see a mixed improvement in margin in 2027. Okay?
Speaker #3: So you've got the product margin, improvement happening there already. It's really just these lower margin professional services that will overhang in the third and fourth quarter as we do those installations.
Yeah, we have some some large uh complicated projects going on right now where customers have said we we feel more comfortable if you would manage this, you know, through your Professional Services organization. So again you know where we have subscription at an 80% margin and we have um you know support and and and and other services in the 60 70% range. You know it it gets pulled down when we get pulled into some of these large projects, it's the right thing for us to do for customers. Uh but um and it has a near-term effect over the long term, you know, once we've deployed once we're in the stadium then obviously those margins go up as we continue to work with those customers.
That's right. Got it. Thanks for taking my question.
Speaker #3: Just, that's higher, and those are installation revenues than we normally have there. But naturally, in '27—and I can't predict how many installations we might have in '27 at this moment—but naturally, if we have a normalized amount of professional services revenue in '27, you would certainly see a mix improvement in margin in '27.
your final question comes from David VOD from UBS David, your line is now open,
Speaker #3: Okay? Yeah, that's a fantastic answer.
Christian Schwab: Yeah, that's a fantastic answer. Congrats again on, on the great results and outlook. Thank you.
Christian Schwab: Yeah, that's a fantastic answer. Congrats again on, on the great results and outlook. Thank you.
Speaker #9: Congrats again on the great results and outlook. Thank you.
Speaker #3: Yeah, sure. Your
Kevin Rhodes: Yes, sure.
Kevin Rhodes: Yes, sure.
Operator: Your next question comes from Eric Martinuzzi from Lake Street Capital Markets LLC. Eric, your line is now open.
Operator: Your next question comes from Eric Martinuzzi from Lake Street Capital Markets LLC. Eric, your line is now open.
Speaker #1: next question comes from Eric Martinuzzi from Lake Street Capital Markets LLC. Eric, your line is now
Speaker #1: open.
Speaker #10: I also wanted
Eric Martinuzzi: I also wanted to focus on the gross margin color that you gave. Just at the bottom line, the $0.98 to a dollar Q2 for FY 2026, relatively in line with where you were before. Is that to say then that there's not a substantial incremental contribution from the professional services? In other words, is it—Are we talking no margin on the professional services that we're taking on? Because I would have expected, given the beat for Q2, that the guide for the EPS for the year would have risen.
Eric Martinuzzi: I also wanted to focus on the gross margin color that you gave. Just at the bottom line, the $0.98 to a dollar Q2 for FY 2026, relatively in line with where you were before. Is that to say then that there's not a substantial incremental contribution from the professional services? In other words, is it—Are we talking no margin on the professional services that we're taking on? Because I would have expected, given the beat for Q2, that the guide for the EPS for the year would have risen.
Speaker #10: To focus on the gross margin color that you gave: the $0.98 to $1.02 for FY '26 is relatively in line with where you were before.
Speaker #10: Is that to say, then, that there's not a substantial incremental contribution from the professional services? In other words, are we talking no margin on the professional services that we're taking on?
Great guys, thanks for squeezing in. I have actually kind of a 3-part question here, Ed and Kevin. I appreciate all the detail but the question I have is on sort of pricing demand and margin and I'm just trying to try and delete all the comments that you made and you prepared remarks and in response to questions. So maybe Ed just from a demand perspective. Obviously we understand that you took prices up 567%. Um oh we just are you suggesting that the price increases are not filtered into Revenue this year and fiscal 26 relative to where you thought you'd be you know 3 months ago or 6 months ago given Kevin mentioned. You have several multi-million dollar deployments in the Outlook going forward and is the guidance raised just those multi-million dollar deployments. And I'll give you the second question along that. So even if I take that into consideration, um, the low margin of the installments, it sounds like gross margins on a pure product basis adjusted for the installments are down relative to where you were.
Speaker #10: Because I would have expected given the beat for Q2 that the guide for the EPS for the year would have risen.
Kevin Rhodes: Sure. I mean, you would expect, Eric, right, that the overall deal is a good margin deal, right? But that we do tend to price the professional services installation with a much lower margin than our subscription and support, which tends to be in the 70% range, and it's just low margin. And these always have a different, you know, margin profile to them. But I would say they're in the, you know, 15 to 20% range, you know, of margin, not certainly at the 70% level like you see, you know, in subscription and support. And so that's where I would comment that that's why you see a mix shift in the Q3 and Q4 being a little bit overall lower margin, but again, product margin improving in the second half of the year.
Kevin Rhodes: Sure. I mean, you would expect, Eric, right, that the overall deal is a good margin deal, right? But that we do tend to price the professional services installation with a much lower margin than our subscription and support, which tends to be in the 70% range, and it's just low margin. And these always have a different, you know, margin profile to them. But I would say they're in the, you know, 15 to 20% range, you know, of margin, not certainly at the 70% level like you see, you know, in subscription and support. And so that's where I would comment that that's why you see a mix shift in the Q3 and Q4 being a little bit overall lower margin, but again, product margin improving in the second half of the year.
Speaker #8: Expect, Eric, right, that the overall deal is a good margin deal, right? But that we do tend, sure—I mean, you would—to price the professional services installation with a much lower margin than our subscription and support, which tends to be in the 70% range.
3 months ago can you talk to like what that Dynamic looks like? If the pricing is not going to affect us yet? And then the final point I would just ask is when I think about 27, I know it's quite a ways away. Um would you imagine that that pricing has a much bigger impact on launching next year and demand versus where we sit here in 2026?
Hey, Kevin, if you want I can jump in, uh, and then you can go ahead and and then I'll follow up. Yeah. Um,
Speaker #8: And it's just low margin. And all these have a different margin profile to them. But I would say they're in the 15% to 20% range of margin, not certainly at the 70% level like you see in Subscription and Support.
Speaker #8: And so that's where I would comment that that's why you see a mixed shift in the third and fourth quarter being a little bit overall lower margin, but again, product margins improving in the second half of the year.
It David, the bright, the pricing. Um, it comes in pretty quickly. I mean, I think so you you'll, you'll see the impact. Um, Kevin mentioned that our product margins are going up. So our product margins are up um, this quarter over the last quarter and will be in the second half of the year. So, um, there, there there are just a few of these large projects that have Professional Services that that you know, Drive the margin down. But uh, you know, there,
Speaker #8: year.
Speaker #10: Yeah, I guess, Kevin,
Ed Meyercord: Yeah, I think, Kevin, I'd jump in and add. I would just jump in and add, Eric, like, in some cases, we get involved and a customer says, "We'd really like you to do the cabling work," for example, "and then we'll bring in a contractor and mark it up 10, 10, 15%," right? And that's not, you know, our traditional business, but it's almost like us doing a favor for a customer in a large, complicated project.
Ed Meyercord: Yeah, I think, Kevin, I'd jump in and add. I would just jump in and add, Eric, like, in some cases, we get involved and a customer says, "We'd really like you to do the cabling work," for example, "and then we'll bring in a contractor and mark it up 10, 10, 15%," right? And that's not, you know, our traditional business, but it's almost like us doing a favor for a customer in a large, complicated project.
Speaker #10: I jump in and add I would just jump in and add, Eric, in some cases, we get involved in a customer says we'd really like you to do the cabling work, for example.
On the services side but on the product side. Um, you know, we're expecting a a a growing product margins in this environment. Um,
Speaker #10: And then we'll bring in a contractor and mark it up 10, 15 percent, right? And that's not our traditional business, but it's almost like us doing a favor for a customer in a large, complicated project.
Speaker #10: And we have some large, complicated projects going on right now where customers have said, 'We feel more comfortable if you would manage this through your Professional Services organization.'
Ed Meyercord: We have some large, complicated projects going on right now where customers have said, "We'd feel more comfortable if you would manage this, you know, through your professional services organization." So again, you know, where we have subscription at an 80% margin, and we have, you know, support and other services in the 60 to 70% range, you know, it gets pulled down when we get pulled into some of these large projects. It's the right thing for us to do for customers, but, and it has a near-term effect. Over the long term, you know, once we've deployed, once we're in the stadium, then obviously those margins go up as we continue to work with those customers.
You know, when you know, as we go forward, you know, we still have the the ability to use pricing, you know, as a lever. And so you'll see us and you'll see the other players in our industry, you know, passing through pricing, you know, as as we make adjustments for what's happening in in, in the supply chain.
We have some large, complicated projects going on right now where customers have said, "We'd feel more comfortable if you would manage this, you know, through your professional services organization." So again, you know, where we have subscription at an 80% margin, and we have, you know, support and other services in the 60 to 70% range, you know, it gets pulled down when we get pulled into some of these large projects. It's the right thing for us to do for customers, but, and it has a near-term effect. Over the long term, you know, once we've deployed, once we're in the stadium, then obviously those margins go up as we continue to work with those customers.
Kevin, do you want to add?
To that just for my time.
Speaker #10: So again, where we have subscription at an 80% margin, and we have support and other services in the 60–70% range, it gets pulled down when we get pulled into some of these large projects.
Perspective. That right, we put some price increases through in the second quarter we we had minimal effect on our on our results. In this second quarter, we expect more to flow through in the third and fourth quarter from those price increases we made in November
And can I just clarification is the guidance range for 26.
Speaker #10: It's the right thing for us to do for customers, and it has a near-term effect. Over the long term, once we've deployed, once we're in the stadium, then obviously those margins go up as we continue to work with those.
Speaker #10: customers. Got it. Thanks for taking my
Um, updated reflecting the multi-million dollar investment Revenue in Q3 and Q4, or are you seeing a price, increase driven Revenue uplift in the guide or a combination of the 2?
Speaker #3: That's right.
Kevin Rhodes: That's right.
Kevin Rhodes: That's right.
Eric Martinuzzi: Got it. Thanks for taking my question.
Eric Martinuzzi: Got it. Thanks for taking my question.
Speaker #10: question.
Speaker #1: Your final question comes from David Vaught from UBS. David, your line is now open.
Operator: Your final question comes from David Vogt from UBS. David, your line is now open.
Operator: Your final question comes from David Vogt from UBS. David, your line is now open.
Speaker #1: open. Great, guys.
David Vogt: Great, guys. Thanks for squeezing me in. I have actually kind of a three-part question here, Ed and Kevin. I appreciate all the detail, but the question I have is on sort of pricing, demand, and margin, and I'm just trying to triangulate all the comments that you made in your prepared remarks and in response to questions. So maybe, Ed, just from a demand perspective, obviously, we understand that you took prices up 5, 6, 7%. Are you suggesting that the price increases are not filtering into revenue this year in fiscal 2026 relative to where you thought you'd be, you know, 3 months ago or 6 months ago, given Kevin mentioned you have several multimillion-dollar deployments in the outlook going forward? And has the guidance raised just those multimillion-dollar deployments? And I'll give you the second question along that.
David Vogt: Great, guys. Thanks for squeezing me in. I have actually kind of a three-part question here, Ed and Kevin. I appreciate all the detail, but the question I have is on sort of pricing, demand, and margin, and I'm just trying to triangulate all the comments that you made in your prepared remarks and in response to questions. So maybe, Ed, just from a demand perspective, obviously, we understand that you took prices up 5, 6, 7%. Are you suggesting that the price increases are not filtering into revenue this year in fiscal 2026 relative to where you thought you'd be, you know, 3 months ago or 6 months ago, given Kevin mentioned you have several multimillion-dollar deployments in the outlook going forward? And has the guidance raised just those multimillion-dollar deployments? And I'll give you the second question along that.
Speaker #10: Thanks for squeezing me in. I actually have kind of a three-part question here, Ed and Kevin. I appreciate all the detail, but the question I have is on sort of pricing, demand, and margin.
Are guys reflects, um, you know, a the the installation Revenue in the lower margin, really that, and the all of the decisions we've made so far on pricing today. You know, I haven't made any other decisions yet. And so we can't reflect anything in our guide that that hasn't
Great. All right. Thank you guys.
Yeah, sure.
Speaker #10: And I'm just trying to triangulate all the comments that you made in your prepared remarks and in response to the questions. So maybe, Ed, just from a demand perspective, obviously, we understand that you took prices up five, six, seven percent.
There are no further questions at this time. I will now turn the call back to Ed Meier cord, president and CEO for closing remarks.
Speaker #10: Are we suggesting that the price increases are not filtering into revenue this year, in fiscal '26, relative to where you thought you'd be three months ago or six months ago, given Kevin mentioned you have several multi-million dollar deployments in the outlook going forward?
Uh, thank you. Thanks, everyone for participating on the call, we appreciate it. And, uh, we always appreciate the questions. We also want to thank employees tuning in, and customers and partners.
Um,
Speaker #10: And is the guidance raised just those multi-million dollar deployments? And I'll give you the second question along that. So even if I take that into consideration, the low margin of the installments, it sounds like gross margins on a pure product basis adjusted for the installments are down relative to where you were.
David Vogt: So even if I take that into consideration, the low margin of the installments, it sounds like gross margins on a pure product basis, adjusted for the installments, are down relative to where you were three months ago. Can you talk to, like, what that dynamic looks like if the pricing is not going to affect just yet? And then the final point I would ask is, when I think about 2027, I know it's quite a ways away, would you imagine that that pricing has a much bigger impact on margins next year and demand versus where we sit here in 2026?
So even if I take that into consideration, the low margin of the installments, it sounds like gross margins on a pure product basis, adjusted for the installments, are down relative to where you were three months ago. Can you talk to, like, what that dynamic looks like if the pricing is not going to affect just yet? And then the final point I would ask is, when I think about 2027, I know it's quite a ways away, would you imagine that that pricing has a much bigger impact on margins next year and demand versus where we sit here in 2026?
Who uh, who are listening in and and more importantly to them for uh, the partnership and driving, uh, an excellent quarter. So uh, we're looking forward to continuing, um, on the journey in terms of our innovative solutions driving growth.
Speaker #10: Three months ago, can you talk to what that dynamic looks like if the pricing is not going to affect us yet? And then the final point I would ask is when I think about '27, I know it's quite a ways away.
And um uh we'll look forward to uh meeting this upcoming uh and then delivering on another quarter. Thanks everybody.
This concludes today's call, thank you for attending. You may now disconnect
Speaker #10: Would you imagine that pricing has a much bigger impact on margin next year and demand versus where we sit here in 2026? So, Kevin, if you want, I can jump in and then
Ed Meyercord: Kevin, if you want, I can jump in, and then you can-
Ed Meyercord: Kevin, if you want, I can jump in, and then you can-
Speaker #10: You can. And then, yeah, go ahead. I'll follow up.
Kevin Rhodes: Yeah, go ahead, Ed, and then I'll follow up. Yep.
Kevin Rhodes: Yeah, go ahead, Ed, and then I'll follow up. Yep.
Speaker #10: Yep. David, the
Ed Meyercord: David, the pricing, it comes in pretty quickly. I mean, I think... So you'll see the impact. Kevin mentioned that our product margins are going up. So our product margins are up, this quarter over last quarter and will be in the second half of the year. So, there are just a few of these large projects that have professional services that, you know, drive the margin down. But, you know, they're on the services side, but on the product side, you know, we're expecting a growing product margins in this environment. The other thing that I'll say is, as we go forward, you know, we still have the ability to use pricing, yeah, as a lever.
Ed Meyercord: David, the pricing, it comes in pretty quickly. I mean, I think... So you'll see the impact. Kevin mentioned that our product margins are going up. So our product margins are up, this quarter over last quarter and will be in the second half of the year. So, there are just a few of these large projects that have professional services that, you know, drive the margin down. But, you know, they're on the services side, but on the product side, you know, we're expecting a growing product margins in this environment. The other thing that I'll say is, as we go forward, you know, we still have the ability to use pricing, yeah, as a lever.
Speaker #3: pricing comes in pretty quickly. I mean, I think so you'll see the impact. Kevin mentioned that our product margins are going up. So our product margins are up this quarter over last quarter.
Speaker #3: second half of the year. And we'll be in the—so there are just a few of these large projects that have professional services that drive the margin down.
Speaker #3: But on the services side, and on the product side, we're expecting growing product margins in this environment. The other thing that I'll say is, as we go forward, we still have the ability to use pricing as a lever.
Speaker #3: And so you'll see us and you'll see the other players in our industry passing through pricing as we make adjustments for what's happening in the supply chain.
Ed Meyercord: And so you'll see us, and you'll see the other players in our industry, you know, passing through pricing, you know, as we make adjustments for what's happening in the supply chain. Kevin, do you want to add to that?
And so you'll see us, and you'll see the other players in our industry, you know, passing through pricing, you know, as we make adjustments for what's happening in the supply chain. Kevin, do you want to add to that?
Speaker #3: Kevin, do you want to add to that? Just from a timing perspective, Ed, right? We put some price increases through in the second quarter.
Kevin Rhodes: Just from a timing perspective, Ed, right, we put some price increases sort of in Q2. We had minimal effect on our results in Q2. We expect more to flow through in Q3 and Q4 from those price increases we made in November.
Kevin Rhodes: Just from a timing perspective, Ed, right, we put some price increases sort of in Q2. We had minimal effect on our results in Q2. We expect more to flow through in Q3 and Q4 from those price increases we made in November.
Speaker #3: We had minimal effect on our results in the second quarter. We expect more to flow through in the third and fourth quarter. From those price increases we made in
Speaker #3: November. And can I get
David Vogt: Can I just clarification, is the guidance range for 26 updated, reflecting the $ multi-million installment revenue in Q3 and Q4? Or are you seeing a price increase driven revenue uplift in the guide or a combination of the two?
David Vogt: Can I just clarification, is the guidance range for 26 updated, reflecting the $ multi-million installment revenue in Q3 and Q4? Or are you seeing a price increase driven revenue uplift in the guide or a combination of the two?
Speaker #10: this clarification? Is the guidance range for '26 updated reflecting the multi-million dollar installment revenue in Q3 and Q4, or are you seeing a price increase driven revenue uplift in the guide or a combination of the
Speaker #10: two? Our guide
Kevin Rhodes: Our guide reflects, you know, A, the installation revenue, and the lower margin related to that, and B, all of the decisions we've made so far on pricing to date. You know, we haven't made any other decisions yet, and so we can't reflect anything in our guide that hasn't happened.
Kevin Rhodes: Our guide reflects, you know, A, the installation revenue, and the lower margin related to that, and B, all of the decisions we've made so far on pricing to date. You know, we haven't made any other decisions yet, and so we can't reflect anything in our guide that hasn't happened.
Speaker #3: Reflects A, the installation revenue in the lower margin relates to that. And B, all of the decisions we've made so far on pricing to date.
Speaker #3: We haven't made any other decisions yet, and so we can't reflect anything in our guide that hasn't happened.
Speaker #10: Right. All right. Thank you, guys.
David Vogt: Great. All right. Thank you, guys.
David Vogt: Great. All right. Thank you, guys.
Speaker #3: Yeah. Sure.
Kevin Rhodes: Yeah, sure.
Kevin Rhodes: Yeah, sure.
Speaker #1: There are no further questions at this time. I will now turn the call back to Ed Meyercord, president and CEO, for closing remarks.
Operator: There are no further questions at this time. I will now turn the call back to Ed Meyercord, President and CEO, for closing remarks.
Operator: There are no further questions at this time. I will now turn the call back to Ed Meyercord, President and CEO, for closing remarks.
Ed Meyercord: Thank you. Thanks, everyone, for participating on the call. We appreciate it, and we always appreciate the questions. We also wanna thank employees tuning in, and customers and partners, who are listening in, and more importantly to them for the partnership in driving an excellent quarter. So, we're looking forward to continuing on the journey in terms of our innovative solutions, driving growth, and we look forward to meetings upcoming, and then delivering on another quarter. Thanks, everybody.
Speaker #10: Thank you. Thanks, everyone, for participating in the call. We appreciate it. And we always appreciate the questions. We also want to thank employees tuning in and customers and partners.
Ed Meyercord: Thank you. Thanks, everyone, for participating on the call. We appreciate it, and we always appreciate the questions. We also wanna thank employees tuning in, and customers and partners, who are listening in, and more importantly to them for the partnership in driving an excellent quarter. So, we're looking forward to continuing on the journey in terms of our innovative solutions, driving growth, and we look forward to meetings upcoming, and then delivering on another quarter. Thanks, everybody.
Speaker #10: Who are listening in and, more importantly, to them for the partnership in driving an excellent quarter. So we're looking forward to continuing on the journey in terms of our innovative solutions, driving growth, and we'll look forward to meeting upcoming and delivering on another quarter.
Speaker #10: Thanks, everybody.
Operator: This concludes today's call. Thank you for attending. You may now disconnect.
Operator: This concludes today's call. Thank you for attending. You may now disconnect.
