2Q26 Financial Results January 28, 2026 DISCLAIMER Non - GAAP Financial Measures This presentation includes certain financial measures that are not presented in accordance with generally accepted accounting principles in the United States ("GAAP"), such as, among other things, Non - GAAP Gross Profit, Non - GAAP EPS, Free Cash Flow, Non - GAAP Gross Margin, Non - GAAP Operating Margin, Net Cash (Debt), Non - GAAP Operating Income (Loss), Non - GAAP Net Income (Loss), Non - GAAP Operating Expense, Gross Debt ...

Financial Performance - Revenue for Q2 FY2026 was $317.9 million, representing a 14% year-over-year increase and a 2.5% quarter-over-quarter increase[3] - SaaS ARR reached $226.8 million, up 25.2% year-over-year and 4.9% quarter-over-quarter[3] - GAAP diluted EPS was $0.06, consistent with the previous year and up from $0.04 in the last quarter[3] - Non-GAAP diluted EPS increased to $0.26, compared to $0.21 last year and $0.22 last quarter[3] - Total net revenues for the three months ended December 31, 2025, were $317.9 million, a 13.8% increase from $279.4 million in the same period of 2024[23] - Gross profit for the same period was $195.1 million, representing a gross margin of approximately 61.4%[23] - Operating income for the three months ended December 31, 2025, was $13.0 million, compared to $12.7 million in the prior year, indicating a slight increase[23] - Net income for the three months ended December 31, 2025, was $7.9 million, compared to $7.4 million in the same period of 2024, reflecting a year-over-year growth[23] - The company reported a basic and diluted net income per share of $0.06 for the three months ended December 31, 2025, consistent with the prior year[23] - GAAP revenues for the six months ended December 31, 2025, increased to $628,170,000, up from $548,559,000 in 2024, representing a growth of 14.5%[43] - Non-GAAP gross profit for the six months ended December 31, 2025, was $387,070,000, compared to $348,610,000 in 2024, reflecting a year-over-year increase of 11.0%[43] - Non-GAAP operating income for the six months ended December 31, 2025, reached $89,137,000, up from $74,659,000 in 2024, indicating a growth of 19.4%[43] - GAAP net income for Q4 2025 was $7,876 million, compared to $7,382 million in Q4 2024, representing a 6.7% increase[44] - Non-GAAP net income for Q4 2025 reached $34,725 million, up from $28,573 million in Q4 2024, reflecting a 21.5% growth[44] - Adjusted EBITDA for Q4 2025 was $52,413 million, compared to $45,695 million in Q4 2024, indicating a 14.9% increase[44] - The diluted non-GAAP net income per share for Q4 2025 was $0.26, up from $0.21 in Q4 2024, representing a 23.8% increase[44] - The company reported a GAAP net income of $13,487 million for the first half of 2025, a significant recovery from a loss of $3,122 million in the first half of 2024[44] Cash and Assets - The company ended Q2 with a cash balance of $219.8 million, an increase of $10.8 million from Q1 2026[5] - Net cash for Q2 was $47.3 million, compared to net cash of $7.8 million at the end of Q1 2026[5] - Cash and cash equivalents as of December 31, 2025, were $219.8 million, a decrease from $231.7 million as of June 30, 2025[21] - Total assets increased to $1.17 billion as of December 31, 2025, compared to $1.15 billion as of June 30, 2025[21] - Total current liabilities decreased to $565.1 million as of December 31, 2025, from $587.9 million as of June 30, 2025[21] - Cash flows from operating activities for the six months ended December 31, 2025, totaled $36,140,000, a decrease from $40,118,000 in 2024[25] - Cash and cash equivalents at the end of the period were $219,791,000, down from $170,322,000 at the end of December 31, 2024[25] Company Strategy and Market Position - The company is focused on AI-driven cloud networking solutions, aiming to leverage technology to enhance business operations and customer connections[13] - Forward-looking statements indicate expectations for continued demand and product adoption, with potential risks related to competitive dynamics and macroeconomic factors[17] - The company expects to continue investing in new product development and market expansion strategies to enhance future growth[30] - Extreme was recognized as a Leader in the IDC MarketScape for Worldwide Enterprise Wireless LAN 2025 Vendor Assessment, highlighting strengths in customer support and deployment options[5] Expenses and Adjustments - The company incurred share-based compensation expenses of $44,679,000 for the six months ended December 31, 2025, compared to $41,219,000 in 2024[25] - Litigation charges for Q4 2025 were $822 million, slightly lower than $877 million in Q4 2024, indicating a 6.3% decrease[44] - System transition costs for Q4 2025 were $6,467 million, compared to $4,026 million in Q4 2024, reflecting a 60.7% increase[44] - Total adjustments to GAAP operating income for the six months ended December 31, 2025, amounted to $64,850,000, compared to $66,711,000 in 2024[43] - Total adjustments to GAAP net income for the first half of 2025 were $83,657 million, compared to $85,639 million in the first half of 2024, a decrease of 2.3%[44]

MORRISVILLE, N.C.--(BUSINESS WIRE)--Extreme Networks, Inc. ("Extreme†) (Nasdaq: EXTR) today released financial results for its second quarter of fiscal 2026 ended December 31, 2025. Extreme FY26 Results - Seven Consecutive Quarters of Revenue Growth Share Kevin Rhodes, Executive Vice President and Chief Financial Officer stated, "Second quarter results exceeded our expectations for revenue and profitability. Our results highlight the leverage in our business model, where earnings growth exceeds revenue gr ...

Summary of Earnings Conference Call Insights Industry Overview - **Industry Focus**: US Enterprise Hardware and Networking - **Key Trends**: AI infrastructure investments are expected to drive earnings per share (EPS) beats for select companies, while traditional demand remains uneven. Strong performance is anticipated in AI-centric data centers, supported by robust financial results from vendors like Ciena and EMS providers such as Jabil and TD SYNNEX [2][4]. Company-Specific Insights Arista Networks (ANET) - **Performance Expectations**: Anticipated revenue for December quarter is $2.42 billion, approximately 3% above the estimate of $2.35 billion, reflecting a 25% year-over-year growth against a guide of 19% to 24% [10][11]. - **EPS Forecast**: Expected diluted EPS of ~$0.79, which is a 5% beat compared to the estimate of $0.75 [10][11]. - **Revenue Guidance**: Expected to raise the CY26 revenue guidance to 22% growth from the previous 20% due to strong AI investments and $2.5 billion in deferred revenue entering the December quarter [18][19]. - **Historical Performance**: Over the past five years, Arista has consistently exceeded revenue guidance by an average of 4% in the December quarter [7][13]. - **Operating Margins**: Expected operating margin of at least 48.3%, which is approximately 150 basis points above the estimate of 46.8% [11]. IBM - **Revenue Expectations**: Anticipated revenue of $19.2 billion for the December quarter, in line with consensus estimates [22][25]. - **Segment Performance**: Expected constant currency growth of ~9% in Software, ~2% in Consulting, and ~6% in Infrastructure [22][24]. - **EPS Forecast**: Expected adjusted EPS of $4.29, slightly below consensus of $4.30 [23][25]. - **Future Guidance**: Anticipated guidance for CY26 revenue growth of 5+%, including a contribution from the pending Confluent acquisition [39][42]. Celestica (CLS) - **Revenue Expectations**: Projected revenue of $3.61 billion for the December quarter, which is 3% to 4% above the guide, driven by strong demand for AI back-end 800G switches [49][54]. - **EPS Forecast**: Expected adjusted EPS of $1.86, approximately 7.5% above the midpoint of the company outlook [49][54]. - **Future Guidance**: Anticipated increase in CY26 revenue and EPS guidance to $16.5 billion and $8.70 respectively, reflecting strong demand in both HPS switching and TPU/Compute [62][63]. Extreme Networks (EXTM) - **Performance Expectations**: Continued strength in wired and wireless markets is expected to support upside in December quarter revenue and EPS estimates [68]. Lumentum - **Revenue Expectations**: Expected revenue to exceed estimates by at least 5%, driven by strong demand for laser chips and transceivers [4]. Key Takeaways - **AI Investment Impact**: Companies like Arista, Celestica, and Lumentum are well-positioned to benefit from AI infrastructure investments, with expectations of revenue and EPS beats [2][4]. - **Market Sentiment**: Investor expectations for Celestica and Lumentum are notably high, while Arista's expectations are more modest, indicating a preference for Arista based on its conservative outlook [2][4]. - **Guidance Trends**: Companies are expected to provide optimistic guidance for the upcoming quarters, reflecting confidence in sustained demand and operational efficiency [18][19][59]. Additional Insights - **Market Dynamics**: The anticipated price increases by customers may lead to a slight demand pull-in, impacting orders positively for companies like Extreme Networks [68]. - **Operational Efficiency**: Companies are maintaining tight control over operating expenses, which is expected to enhance margins despite potential revenue mix challenges [11][23].

Core Insights - Extreme Networks, Inc. has launched a new partner program called Extreme Partner First, aimed at simplifying partner engagement and enhancing collaboration through a unified rebate structure and AI tools [1][4] Group 1: Program Features - The Extreme Partner First program eliminates confusion and delays typical in traditional partner programs, offering quicker deal approvals and clearer pricing [1][2] - It simplifies deal registration and provides transparent pricing, comprehensive training, and certifications to improve time to revenue and profitability [2][6] - The program includes a global, SKU- and volume-based rebate model, enhancing margin predictability for partners [6] Group 2: Partner Benefits - Reseller partners benefit from a unified global deal framework that allows for frictionless international deal registration and protection [6] - The program features an AI Sales Assistant that helps partners access critical sales information quickly, facilitating faster deal closures [6] - Role-based experiences and automation provide personalized dashboards, real-time deal visibility, and accelerated access to rewards [6] Group 3: Commitment to Partners - The program reflects Extreme Networks' commitment to building long-term partnerships focused on mutual success and customer satisfaction [4] - The company emphasizes the importance of removing friction in partner programs to adapt to accelerating technology shifts and rising customer expectations [4]

Core Viewpoint - The article discusses the performance of Extreme Networks, Inc. (EXTR) and the author's investment philosophy, emphasizing a long-term investment horizon and a preference for value stocks [1]. Company Performance - The analysis indicates that it has been a significant period since the last coverage of Extreme Networks, suggesting a need to evaluate its recent performance [1]. Investment Philosophy - The company adopts a long-term investment strategy, typically focusing on a 5-10 year horizon, and advocates for a diversified portfolio that includes growth, value, and dividend-paying stocks, with a stronger inclination towards value investments [1].

Company Overview - Extreme Networks is a global provider of advanced networking equipment and cloud-managed solutions, focusing on integrating hardware and software for secure, AI-driven network management across various industries [5] - The company reported a total revenue of $1.18 billion and a net income of $8.65 million for the trailing twelve months (TTM) [4] - The company has 2,656 employees and experienced a 1-year price change of -9.38% as of January 2, 2026 [4] Recent Transaction - Edward Meyercord, President and CEO, exercised 50,000 stock options and sold them for approximately $827,000 on January 2, 2026 [1][2] - Post-transaction, Meyercord holds 1,871,418 shares directly, valued at approximately $30.95 million [2][6] - This transaction is considered a routine liquidity event rather than a discretionary sale, as it was part of a pre-arranged Rule 10b5-1 trading plan [6][9] Financial Performance - For the fiscal first quarter ended September 30, revenue increased by 15% year-over-year to $310.2 million, although this growth rate decelerated from 20% in the previous quarter [10] - The company forecasts fiscal 2026 revenue between $1.25 billion and $1.26 billion, indicating modest growth compared to fiscal 2025's $1.14 billion [11] - Fiscal Q1 net income was $5.6 million, a significant improvement from a net loss of $10.5 million in the prior year [11] Investment Consideration - Despite the recent stock price decline, Extreme Networks may present a viable investment opportunity, particularly given its price-to-sales ratio of less than two, suggesting a reasonable valuation [12]

Core Viewpoint - Extreme Networks, Inc. has enhanced its board of directors by appointing Ron Pasek, who brings extensive experience as a former CFO and board member of various public tech companies, to support the company's long-term growth objectives [1] Company Summary - The addition of Ron Pasek to the board is aimed at providing strategic, financial, and governance oversight for Extreme Networks as it pursues its growth plans [1]

Core Insights - The finance sector is experiencing a significant shift towards the integration of AI, moving from experimentation to proven enterprise-wide applications by 2026, with a focus on governance, data quality, and human judgment [1][2][3] Group 1: AI Integration in Finance - CFOs are expected to transition from viewing AI as a tool for efficiency to recognizing it as a strategic driver for business transformation [1][2] - AI will enable finance teams to provide real-time insights, enhance decision-making, and optimize capital allocation, moving beyond traditional automation [2][3] - The role of CFOs will evolve to become transformational architects, focusing on strategy and decision-making rather than merely financial gatekeeping [1][2] Group 2: Governance and Data Management - Strong governance and clean, trusted data will be critical for the successful implementation of AI in finance [1][3] - Organizations will need to prioritize data governance and process redesign to ensure the effective use of AI technologies [1][2] - The importance of human oversight and accountability in AI-driven processes will be emphasized to maintain quality and reliability [1][3] Group 3: Future of Finance Operations - AI is anticipated to disrupt low-value, transactional activities, allowing finance teams to concentrate on higher-value strategic work [5] - The integration of AI will facilitate real-time decision-making, enhancing forecasting and cash visibility while automating compliance processes [3][5] - CFOs will need to develop AI literacy to evaluate investments in AI platforms and guide their teams in adoption [3][5] Group 4: Market Dynamics and Competitive Edge - The market is currently saturated with overlapping AI tools, leading to a cautious approach among CFOs regarding broad AI adoption [5] - Predictive analytics and competitive benchmarking will become essential for anticipating market shifts and optimizing decisions [5] - Companies that embrace streamlined, integrated AI solutions are expected to gain a competitive advantage in the evolving financial landscape [5]

Group 1 - Extreme Networks, Inc. (NASDAQ:EXTR) is rated as a consensus 'Buy' by 88% of analysts, with a median price target of $24.50 indicating a potential upside of nearly 35% [1] - BofA analyst Tomer Zilberman initiated coverage with a 'Buy' rating and a $24 price target, citing growth catalysts such as campus network refresh projects, the WiFi-7 upgrade cycle, and increased adoption of cloud and SaaS products [2] - The price target is based on 17 times the company's forecasted EPS for CY2027, which is considered a discount compared to peers due to the company's narrower operating scale and exposure to budget-sensitive markets [3] Group 2 - Other analysts, including Eric Martinuzzi from Lake Street and Michael Genovese from Rosenblatt Securities, have also reaffirmed 'Buy' ratings with price targets of $24 and $25 respectively [4] - Extreme Networks specializes in infrastructure equipment and related software, offering products like ExtremeCloud IQ, ExtremeCloud IQ-Site Engine, and ExtremeCloud IQ Essentials [5]