Extreme Networks Reports Third Quarter Fiscal Year 2025 Financial Results

Marks Fourth Consecutive Quarter of Sequential Revenue Growth

Strong Funnel Provides Increased Visibility and Confidence in Outlook

MORRISVILLE, N.C.: Extreme Networks, Inc. (“Extreme”) (Nasdaq: EXTR) today released financial results for its third quarter ended March 31, 2025, highlighting strong execution, continued market recovery in enterprise networking and Extreme's fourth consecutive quarter of sequential revenue growth.

"Our continued growth reflects our elevated team performance as it pertains to generating opportunities and improving win rates, particularly among new logos we won from larger competitors. The simplicity of our cloud networking platform, differentiation of our enterprise campus fabric solution, and accelerated traction with new commercial models, such as selling through managed service providers, is creating a robust pipeline of opportunities and provides us with good visibility,” said Ed Meyercord, President and Chief Executive Officer.

“We continue building momentum for Extreme Platform ONE, the industry’s only solution to offer holistic AI for networking. The solution drives significant automation by leveraging AI agents that assist in tasks across the entire network lifecycle, from planning and deployment to management and remediation, significantly reducing the time to complete complex tasks from hours to minutes. Nearly 100 customers have pre-ordered Platform ONE, and we see encouraging bookings activity, which is a positive sign for future demand," concluded Meyercord.

Kevin Rhodes, Executive Vice President and Chief Financial Officer, stated, "Our team’s strong execution drove continued sequential revenue growth in the third quarter. The resulting operating leverage led to another quarter of strong earnings and cash flow. We are seeing accelerated growth in our funnel and higher conversion rates, which give us confidence for the fourth quarter, driving year-over-year topline growth for the fiscal year. We expect earnings and cash flow growth based on our higher revenue outlook and prudent expense management."

Fiscal Third Quarter Results:

• Revenue $285 million, up 34.8% year-over-year, and up 1.8% quarter-over-quarter
• SaaS ARR $184 million, up 13.4% year-over-year, and up 1.5% quarter-over-quarter
• GAAP diluted EPS $0.03, compared to GAAP diluted loss per share $0.50 last year and GAAP diluted EPS $0.06 last quarter
• Non-GAAP diluted EPS $0.21, compared to Non-GAAP diluted loss per share $0.19 last year and Non-GAAP EPS $0.21 last quarter
• GAAP gross margin 61.7% compared to 56.8% last year and 62.7% last quarter
• Non-GAAP gross margin 62.3% compared to 57.6% last year and 63.4% last quarter
• GAAP operating profit margin 3.6% compared to GAAP operating loss margin 29.6% last year and GAAP operating profit margin 4.5% last quarter
• Non-GAAP operating profit margin 14.1 % compared to Non-GAAP operating loss margin 12.2% last year and Non-GAAP operating profit margin 14.7% last quarter
• Share repurchases amounted to $13 million during the quarter for a total of 853,247 shares

Liquidity:

• Q3 ending cash balance was $185.5 million, an increase of $15.2 million from the end of Q2 2025 and an increase of $34.5 million from the end of Q3 in the prior year.
• Q3 net cash was $3.0 million, an increase of $17.7 million from net debt of $14.7 million at the end of Q2 2025 and an increase of $44.5 million from net debt of $41.5 million at the end of Q3 in the prior year.
• During Q3, we generated net cash flow from operations of $30.0 million and had free cash flow of $24.2 million.

Recent Key Highlights:

• Extreme Platform ONE™ now available for MSPs: Extreme’s Managed Service Provider (MSP) program offers an AI-driven multi-tenant architecture, consumption-based billing, and poolable licensing which provides MSPs with more predictable costs, helping to better manage finances and reduce risk in IT investments. Extreme Platform ONE helps MSPs simultaneously manage multiple clients’ licenses, performance, and service interruptions within a single workspace, reducing the time and IT staff needed for operational excellence. Extreme currently has 48 MSP partners.

• Extreme displaced a major competitor at The City of Everett, the seventh largest city in Washington state, which decided to upgrade its network and moved to a flexible, cost-effective Network-Infrastructure-as-a-Service (NIaaS) model. During the upgrade, the city can continue to manage aging third party devices with ExtremeCloud™ IQ while automating and provisioning new devices with Extreme Fabric, making it fast and easy to upgrade with no downtime.

• Ferrovienord, an Italian transport company overseeing 120 regional railway stations, chose ExtremeCloud and Extreme Fabric to streamline network management, ensure consistent performance and low latency, and create secure network segmentation across its sites.

• The United Soccer League selected Extreme as its Official Wi-Fi Solutions and Analytics Supplier, enabling teams to support modern stadium experiences from retail POS systems to mobile ticketing and mobile concessions, gain actionable insights on fan behavior and network performance, and streamline operations.

• Six Flags Magic Mountain and Fiesta Texas are deploying ExtremeCloud alongside a new 6 GHz wireless network to enhance park operations and guest experiences. The upgraded network will create efficiencies within park infrastructures, reduce operating costs, and enable real-time visibility of network performance.

Fiscal Q3 2025 Financial Metrics:

Extreme uses the non-GAAP free cash flow metric as a measure of operating performance. Free cash flow represents GAAP net cash provided by (used in) operating activities, less capital expenditures for purchases of property and equipment and capitalized software development costs. Extreme considers free cash flow to be useful information for management and investors regarding the amount of cash generated by the business after the purchases of property and equipment and capitalized software development costs, which can then be used to, among other things, invest in Extreme’s business, make strategic acquisitions, and strengthen the balance sheet. A limitation of the utility of this non-GAAP free cash flow metric as a measure of financial performance is that it does not represent the total increase or decrease in the Company's cash balance for the period. The following table shows non-GAAP free cash flow calculation (in millions):

SaaS ARR: Extreme uses SaaS annual recurring revenue (“SaaS ARR”) to identify the annual recurring revenue of ExtremeCloud IQ and other subscription revenue, based on the annualized value of quarterly subscription revenue and term-based licenses. We believe that SaaS ARR is an important metric because it is driven by our ability to acquire new customers and to maintain and expand our relationships with existing customers. SaaS ARR should be viewed independently of revenue or deferred revenue that are accounted for under U.S. GAAP. SaaS ARR does not have a standardized meaning and therefore may not be comparable to similarly titled measures presented by other companies. SaaS ARR is not intended to be a replacement for forecasts of revenue.

Gross Debt: Gross debt is defined as long-term debt and the current portion of long-term debt as shown on the balance sheet plus unamortized debt issuance costs, if any.

Net Cash (Debt) is defined as cash and cash equivalents minus gross debt, as shown in the table below (in millions):

Business Outlook:

Extreme’s business outlook is based on current expectations. The following statements are forward-looking, and actual results could differ materially based on various factors, including market conditions and the factors set forth under “Forward-Looking Statements” below.

For its fourth quarter of fiscal 2025, ending June 30, 2025, the Company is targeting:

The following table shows the GAAP to non-GAAP reconciliation for Q4 FY'25 guidance: