Extreme Networks Q4 2026 Earnings Call Transcript

Extreme Networks (NASDAQ: EXTR ) released fourth-quarter financial results and hosted an earnings call on Wednesday. Read the complete transcript below. APIs provide real-time access to earnings call transcripts and financial data. Visit to learn more.

View the webcast at Summary Extreme Networks reported a 13% year-over-year revenue growth and 26% EPS growth for fiscal year 2026, with Q4 marking the sixth consecutive quarter of double-digit growth. Key drivers included the introduction of innovative products like Platform 1 and Wi-Fi 7, as well as a strong market position in integrated platforms over point solutions. The company secured its supply chain into fiscal 2028, positioning it well against competitors facing supply constraints, and plans to continue expanding through aggressive go-to-market strategies.

Platform 1 adoption is accelerating, accounting for nearly half of subscription bookings in Q4, and the company anticipates SaaS ARR growth to reaccelerate to the mid-20% range. 7% and EPS growth exceeding 20%. Full Transcript OPERATOR Hello everyone. Thank you for joining us, and welcome to Extreme Networks' fourth quarter fiscal year 2026 financial results conference call.

After today's prepared remarks, we will host a question-and-answer session. If you'd like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Stan Kovler, Senior Vice President, Finance and Corporate Development.

Please go ahead. Stan Kovler, Senior Vice President, Finance and Corporate Development Thank you, Jay. Good morning, and welcome to Extreme Networks' fourth quarter and 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 fourth quarter and full fiscal year 2026. 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, supply chain dynamics, and management 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 and uncertainties 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. Ed Meyercord, President and Chief Executive Officer Thank you, Stan. And thank you all for joining us this morning.

In fiscal 26 we delivered 13% year-over-year revenue growth and 26% EPS growth, highlighting competitive strength and the operating leverage in our model. During the year we took share and accelerated our move up market by winning more sophisticated networking projects with larger customers. And Q4 was our sixth consecutive quarter of double digit growth. Our performance was driven by the convergence of three factors.

First, our highly differentiated portfolio including Platform 1, Enterprise Fabric, Wi—Fi 7 and the industry's first multi—beam wireless solution. Our innovation is driving competitive wins and opening doors to new customers. Second, we're well positioned in a market that's rapidly moving away from point solutions toward integrated platforms. Our go—to—market teams are tightly aligned and capitalizing on the opportunity to take share here, and third, operating excellence and disciplined execution highlighted by our supply chain team eliminating product constraints and by allowing us to meet customer demand into fiscal 28 and beyond.

Enterprise networking is in an extended growth cycle fueled by new demands on the network created by AI, security, the modernization of enterprise. At the same time, competitor refresh cycles are creating a significant multi—year window for us to take share, win new customers and deepen existing relationships. Fiscal 26 highlighted a significant move up market with 187 customers booking more than a million dollars in business with Extreme. Our average deal size grew by a third and our enterprise competitive win rate improved significantly.

We just completed nine consecutive quarters of product growth driven by innovation. Our unique Enterprise Fabric remains one of our strongest differentiators. One customer recently told us they've gone 11 years without a single network outage since deploying Fabric. By automating operations, strengthening security and simplifying management, Fabric delivers results customers can see and when they experience it in a proof of concept, our win rate goes way up.

And now our Fabric with enhanced capabilities is built into Platform 1. Extreme Platform 1 accounted for 30% of subscription bookings in the first year of general availability and nearly half of subscription bookings in the fourth quarter, underscoring the rapid pace of customer adoption for our unified AI—powered networking platform. Customers and partners are interested in Extreme. They want the most advanced networking platforms that leverage modern agentic AI technology.

The release of our Extreme Agent 1 co—worker this quarter is highly anticipated. Deployment flexibility: no competitor matches Extreme's cloud flexibility, whether it's public, private or on—prem. We offer seamless alternatives without compromising performance, control or compliance. That differentiation brings unique data sovereignty protection, driving strong public sector demand.

During the quarter, Platform 1 achieved Germany's C5 certification, one of Europe's rigorous cloud standards. In the quarter, we extended our innovation leadership with the industry's first multi—beam wireless solution with Wi—Fi 7. This is a result of an exclusive partnership with MatSing. By delivering significantly better economics, greater coverage and capacity with dramatically less infrastructure, the solution helped us win the massive and highly contested Tennessee Titans' new Nissan Stadium project.

It demonstrates how differentiated innovation continues to drive competitive wins. Platform 1 continues to accelerate with customers across all GEOs and all industry verticals, including a top 10 global retailer based in Europe, University of Technology Sydney, a new logo and our largest deal in the ANZ region in company history, Vandalia Health, the largest healthcare provider in West Virginia, the UK Health Security Agency, Assumption University, Penn State Athletics and many more. We also signed our first multimillion dollar multi—year enterprise agreement for Platform 1 with one of the Middle East's largest healthcare providers.

In other competitive wins, Extreme displaced Cisco at Nottingham City Council, the UK government authority that delivers a broad range of public services to more than 320,000 residents. The new network will include a unified Fabric, SD—WAN and our cloud—managed networking solution spanning 74 sites. Elizabeth Tweesteren, one of the largest hospitals in Netherlands, expanded its partnership with Extreme, selecting Platform 1 and wired and wireless solutions to support a major modernization initiative. Extreme Fabric was a key differentiator, helping us displace Cisco with the simplicity and resiliency required for a 24/7 healthcare environment.

Grinnell University in London, with over 16,000 students, was another new logo win. We displaced a 20—year incumbent by combining the differentiated value of our campus Fabric with Platform 1. And lastly, University of Florida selected Extreme to deploy the first Wi—Fi 7 network in a collegiate athletic venue, the iconic Ben Hill Griffin Stadium, better known as the Swamp. Our MSP program continued to gain traction, closing the year with 74 active MSPs, up from 70 last quarter.

Billings grew 16% quarter over quarter and 112% year over year. All MSPs are now running Platform 1 for MSP Workspace, with upgrades now a key focus on our differentiated multi—tenant architecture. The strength of our business momentum has carried into the new fiscal year. Market trends are favorable for Extreme and we intend to continue outpacing market growth by taking share, migrating new and existing customers onto Platform 1.

Our component supply is secured into fiscal 28 and beyond, allowing us to meet customer demand while maintaining solid gross margins. Our channel partners continue to report the competitors' lead times are extending due to ongoing supply constraints, creating tailwinds for us. With the next generation of Platform 1 and the upcoming release of both Agent 1 in co—worker mode this quarter and in operator mode next quarter, we will bring agentic AI across the entire network lifecycle from design to orchestration, troubleshooting and remediation across our entire product portfolio, while delivering complete observability, auditability and autonomy with built—in governance.

None of our competitors will be able to say this or have this capability for some time, and it will be on display at our AI Summit in Amsterdam in October. Finally, the benefits of our continued growth will show up in our operating leverage as we expect our earnings to grow in the 20 plus, more than doubling our top line growth as we go forward. Now let me turn the call over to Kevin to discuss financial results and guidance. Kevin Rhodes, EVP & Chief Financial Officer Thanks, Ed.

In the fourth quarter, total revenue of $339 million exceeded consensus and the high end of our guidance range, representing 10% year over year and 7% sequential growth. This is our ninth consecutive quarter of sequential product revenue growth, and demand remains strong, resulting in 14% year over year and 10% sequential growth. Our recurring revenue of $116 million grew 6% year over year. 7%, which exceeded consensus and was above the high end of our guidance range.

This was the result of timely pricing actions and effective cost management of our supply chain components, which led to a 40 basis point improvement in product margins. Earnings per share of 32 cents was up 28% year over year and 23% sequentially, and exceeded consensus and the high end of our guidance range with some tax favorability included. I'm pleased to report that we have secured our supply chain for the long term, including into fiscal 2028, and our broad product availability enables us to meet the needs of prospects and our customers at a time when product lead times are a concern for many of our competitors.

SaaS ARR climbed to $244 million in the quarter, growing 18% year over year. Investors may recall last year in the fourth quarter we grew 24% year over year due to winning large customers such as John Deere and the Japanese government. We expect SaaS ARR growth to reaccelerate toward the mid—20% range at the end of this fiscal year. Wi—Fi 7 continues to drive our wireless product revenue.

Over half of our wireless bookings and revenue now comes from Wi—Fi 7. The upgrade cycle is also creating a positive mix shift in average selling prices and further supports our gross margin outlook. Geographically, our bookings and revenue tend to fluctuate based on the seasonality of our business. This quarter the Americas region exhibited strong performance driven by continued bookings growth over the past two quarters.

We also generated major competitive wins in EMEA and APAC, including some of the largest universities, hospitals, and retailers in their respective geographies. We expect all regions to grow in fiscal 2027. 2% in the prior year quarter. We had a really strong finish to the year, winning large deals and exceeding our goals for Platform One, which drove higher incentive compensation expense.

5% EBITDA margin. In addition to strong EBITDA, we generated $65 million of cash flow and ended the quarter with a healthy $47 million of net cash. 66 per share. Our cash conversion cycle improved to 25 days from 41 days last quarter, driven primarily by a reduction in days inventory outstanding.

Lastly, just last week we strengthened our financial flexibility and reduced interest expenses with the $500 million revolving credit facility, which provides additional working capital to fuel our growth. We also simplified our terms and covenants and improved our rate structure. For the full fiscal year 2026, we continue to translate revenue growth into accelerated earnings growth, demonstrating the leverage and scalability of our operating model. On a vertical basis, we experienced broad—based strength with particular standout bookings growth in manufacturing, healthcare, retail, and sports and entertainment.

84 in the prior year. In fact, product revenue growth accelerated to 15% year over year. 2% in the prior year. EBITDA for the full year was $210 million, up 20% year over year.

In fiscal 26, we stepped up our buybacks to $87 million for the year, up from $38 million in the prior year, and we continue to prioritize the use of cash flow to repurchase shares. As we enter fiscal 2027, we believe the business is operating from a position of increasing strength based on our growth drivers and disciplined cost and expense management. This gives us confidence in our expectations for double—digit product revenue growth, visibility into our margin outlook, and more than 20% EPS growth in fiscal 27.

By the end of fiscal 27, we expect half of our installed base to be on Platform One, which in turn drives accelerated growth in our high—margin recurring revenue. 3%, and earnings per share to be in a range of 27 to 29 cents. 33 per share. We expect our fiscal 27 non—GAAP tax rate to be 23% for the year.

And with that, I'll now turn the call over to the operator to begin the question and answer session. OPERATOR Thank you. We will now begin the question and answer session. Please limit yourself to one question and one follow—up.

If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality, and 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 Ryan Kuntz from Needham. Please go ahead. Jeff Hobson, Analyst at Needham Hey, this is Jeff Hobson on for Ryan. Thank you for the question.

Just wanted to get an idea of customer buying behavior right now. You pulled out some great competitive wins. Just was wondering, you know, are they interested? Is it still a technological decision?

Are you winning on, you know, being able to get supply and allocation with the memory or the consistent pricing that you guys are giving out? Just trying to understand what customers are doing out there right now. Ed Meyercord, President and Chief Executive Officer Yeah, good, good, good, good question, Jeff. We haven't really seen the benefit in our results yet of the product availability that we're able to support.

I mentioned in my comments that, you know, we hear from our distributors and we hear from partners that they're getting notice from all of our competitors in different geos around the world, like different product sets that they're elongating and stretching lead times, and that has created, and we have a few examples, I would say, of some smaller deals and bookings that came in during the quarter. But we feel like that pressure is building momentum, and the opportunity we think will show up in greater force this quarter and the next couple of quarters where the supply chain pinch is really going to hit people. So I think our teams have done a good job communicating.

We have a special program around deal registration with a price guarantee where customers that want to move to Extreme can guarantee a price and guarantee supply, and in today's environment, what we are hearing from distribution partners is that that's going to create new business for us. We see it in the funnel and we're expecting to see that funnel convert in terms of demand.