Extreme Networks Reports Second Quarter Fiscal Year 2026 Financial Results
Extreme Networks, Inc. (“Extreme”) (Nasdaq: EXTR) today released financial results for its second quarter of fiscal 2026 ended December 31, 2025. “Extreme is taking share from the largest player...
Revenue up 14% year-over-year, seventh consecutive quarter of sequential growth
SaaS ARR up 25% YoY
MORRISVILLE, N.C.: Extreme Networks, Inc. (“Extreme”) (Nasdaq: EXTR) today released financial results for its second quarter of fiscal 2026 ended December 31, 2025.
“Extreme is taking share from the largest players in enterprise networking, which is reflected in seven consecutive quarters of sequential revenue growth,” said Ed Meyercord, President and CEO of Extreme. “Extreme Platform ONE bookings in the quarter were twice our plan, highlighting our customers’ need for a platform that simplifies operations, automates complex networking tasks, and delivers faster, more resilient experiences through advanced AI.”
Meyercord continued, “With the ever-changing supply chain conditions, we remain confident in our ability to deliver networking solutions that our customers demand. The combination of our talented team, strong supplier relationships, operational agility, and experience navigating changing market conditions, positions Extreme for continued growth.”
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 growth by 10 percentage points. We’re executing well on our strategy, while navigating the current supply chain environment. We are raising our revenue outlook for fiscal '26 and continue to focus on increasing profitability.”
Fiscal Second Quarter Results:
- Revenue $317.9 million, up 14% year-over-year and up 2.5% quarter-over-quarter
- SaaS ARR $226.8 million, up 25.2% year-over-year and 4.9% quarter-over-quarter
- GAAP diluted EPS $0.06, compared to $0.06 last year and $0.04 last quarter
- Non-GAAP diluted EPS $0.26, compared to $0.21 last year and $0.22 last quarter
- GAAP gross margin 61.4%, compared to 62.7% last year and 60.6% last quarter
- Non-GAAP gross margin 62.0%, compared to 63.4% last year and 61.3% last quarter
- GAAP operating margin 4.1%, compared to 4.5% last year and 3.6% last quarter
- Non-GAAP operating margin 15.0%, compared to 14.7% last year and 13.3% last quarter
Liquidity:
- Q2 ending cash balance was $219.8 million, an increase of $10.8 million from the end of Q1 2026 and an increase of $49.5 million from the end of Q2 in the prior year.
- Q2 net cash was $47.3 million, as compared to net cash of $7.8 million at the end of Q1 2026 and net debt of $14.7 million at the end of Q2 in the prior year.
Recent Key Highlights:
- Extreme was named as a Leader in the IDC MarketScape: Worldwide Enterprise Wireless LAN 2025 Vendor Assessment (Doc #US52978225, October 2025), with IDC noting strengths including Extreme Platform ONE, strong reviews from customers for responsive support services, expertise in high-density environments, and highly flexible deployment and management options for customers through its Universal Hardware.
- During the quarter, Extreme hosted both an Investor Day and its inaugural AI Summit in New York City. Investor Day centered on our long-term vision, financial outlook, and the key drivers of growth, while the AI Summit brought together industry leaders and CxOs for a forward-looking discussion on the future of AI and its impact on how enterprises build and operate networks.
- Organizations including Baylor University, Barnsley College, Henry Ford Health, University Hospital Birmingham NHS Foundation Trust, Six Flags, and multiple NFL teams including the Pittsburgh Steelers, chose Extreme’s Wi-Fi 7 solutions to deliver faster, more reliable connectivity and drive more efficient operations.
- TJ Regional Health selected Extreme to modernize its network across 15 facilities with a resilient, fabric-based architecture delivering reliability for clinical systems, EHR access, and high-density Wi-Fi 7 connectivity. By deploying Extreme Platform ONE with Fabric and advanced wired and wireless solutions, TJ Regional gains simplified operations and future-ready performance for clinical workflows.
- Groupe Jolimont, one of Belgium’s leading healthcare systems, has modernized its network with Extreme to support reliable, high-quality patient care across its seven hospital sites. By deploying Extreme Platform ONE, Jolimont can leverage AI-driven insights and automation to manage its switching and Wi-Fi environment faster, smarter, and more efficiently. The upgraded network will help power critical use cases such as electronic health records access, connected medical devices, real-time clinical collaboration, and enhanced digital experiences for both staff and patients.
- Sunis Hotels, a Turkish hospitality brand with a growing portfolio of coastal resorts along the Mediterranean and Aegean is modernizing its network with Extreme to enhance guest experience and support core systems, IoT, and security at scale. Extreme beat a larger competitor by demonstrating a stronger grasp of hospitality’s need for always-on, high-performance connectivity, delivering an integrated Wi-Fi, switching, and Fabric experience through ExtremeCloud.
- Extreme expanded its relationship with the world’s largest theme park operator by adding Six Flags Great Adventure in New Jersey. The deployment marks the twelfth Six Flags property to standardize on Extreme and includes Wi-Fi 6E and Wi-Fi 7, universal switching, and fabric, delivering high-performance connectivity for guests while supporting critical park operations.
- SK bioscience, a leading South Korean biotech company, is deploying Extreme Platform ONE to support rapid growth across its expanded offices and new R&D center. The platform simplifies network operations while delivering the reliability and performance needed to support data-intensive research, connected labs, and collaboration between scientists. This ensures researchers stay focused on innovation, not IT complexity, as SK bioscience scales its critical R&D initiatives.
Fiscal Q2 2026 Financial Results:
(in millions, except percentages and per share information)
|
| GAAP Results |
| |||||||||
|
| Three Months Ended |
| |||||||||
|
| December 31, 2025 |
|
| December 31, 2024 |
|
| Change |
| |||
Product |
| $ | 197.8 |
|
| $ | 172.3 |
|
| $ | 25.5 |
|
Subscription and support |
|
| 120.1 |
|
|
| 107.1 |
|
|
| 13.0 |
|
Total net revenue |
| $ | 317.9 |
|
| $ | 279.4 |
|
| $ | 38.5 |
|
Gross margin |
|
| 61.4 | % |
|
| 62.7 | % |
|
| (1.3 | )% |
Operating margin |
|
| 4.1 | % |
|
| 4.5 | % |
|
| (0.4 | )% |
Net income |
| $ | 7.9 |
|
| $ | 7.4 |
|
| $ | 0.5 |
|
Net income per diluted share |
| $ | 0.06 |
|
| $ | 0.06 |
|
| $ | - |
|
|
| Non-GAAP Results |
| |||||||||
|
| Three Months Ended |
| |||||||||
|
| December 31, 2025 |
|
| December 31, 2024 |
|
| Change |
| |||
Product |
| $ | 197.8 |
|
| $ | 172.3 |
|
| $ | 25.5 |
|
Subscription and support |
|
| 120.1 |
|
|
| 107.1 |
|
|
| 13.0 |
|
Total net revenue |
| $ | 317.9 |
|
| $ | 279.4 |
|
| $ | 38.5 |
|
Gross margin |
|
| 62.0 | % |
|
| 63.4 | % |
|
| (1.4 | )% |
Operating margin |
|
| 15.0 | % |
|
| 14.7 | % |
|
| 0.3 | % |
Net income |
| $ | 34.7 |
|
| $ | 28.6 |
|
| $ | 6.1 |
|
Net income per diluted share |
| $ | 0.26 |
|
| $ | 0.21 |
|
| $ | 0.05 |
|
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 purchases of property, 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, 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 the non-GAAP free cash flow calculation (in millions):
Free Cash Flow | Three Months Ended | ||||||
| December 31, 2025 |
| December 31, 2024 | ||||
Cash flow provided by operations | $ | 50.1 |
|
| $ | 21.5 |
|
Less: Capital expenditures for property, equipment and capitalized software development costs |
| (7.1 | ) |
|
| (5.4 | ) |
Total free cash flow | $ | 43.0 |
|
| $ | 16.1 |
|
SaaS ARR: Extreme uses SaaS annual recurring revenue (“SaaS ARR”) to identify the annual recurring revenue of Extreme Platform ONE, 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: is defined as cash and cash equivalents minus gross debt, as shown in the table below (in millions):
Cash and cash equivalents |
|
| Gross debt |
|
| Net cash |
| |||
$ | 219.8 |
|
| $ | 172.5 |
|
| $ | 47.3 |
|
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 third quarter fiscal 2026, ending March 31, 2026, the Company is targeting:
(in millions, except percentages and per share information) | Low-End |
|
| High-End |
| ||
FQ3'26 Guidance – GAAP |
|
|
|
|
| ||
Total net revenue | $ | 309.1 |
|
| $ | 314.1 |
|
Gross margin |
| 60.4 | % |
|
| 60.8 | % |
Operating margin |
| 2.8 | % |
|
| 4.1 | % |
Earnings per share | $ | 0.03 |
|
| $ | 0.06 |
|
Diluted Shares outstanding used in calculating GAAP EPS |
| 135.8 |
|
|
| 135.8 |
|
FQ3'26 Guidance – Non-GAAP |
|
|
|
|
| ||
Total net revenue | $ | 309.1 |
|
| $ | 314.1 |
|
Gross margin |
| 61.0 | % |
|
| 61.4 | % |
Operating margin |
| 13.6 | % |
|
| 14.8 | % |
Earnings per share | $ | 0.23 |
|
| $ | 0.25 |
|
Diluted Shares outstanding used in calculating non-GAAP EPS |
| 135.8 |
|
|
| 135.8 |
|
The following table shows the GAAP to non-GAAP reconciliation for Q3 FY'26 guidance:
| FQ3'26 | ||||
| Gross Margin |
| Operating Margin |
| Earnings per Share |
GAAP | 60.4% - 60.8% |
| 2.8% - 4.1% |
| $0.03 - $0.06 |
Estimated adjustments for: |
|
|
|
|
|
Share-based compensation | 0.5% |
| 7.3% - 7.4% |
| 0.17 |
Amortization of product intangibles | 0.1% |
| 0.1% |
| 0.00 |
Amortization of non-product intangibles | - |
| 0.1% |
| 0.00 |
Other non-recurring costs | - |
| 0.8% |
| 0.02 |
Litigation charges | - |
| 0.7% |
| 0.02 |
System transition costs | - |
| 1.7% |
| 0.04 |
Tax adjustment | - |
| - |
| (0.06) - (0.05) |
Non-GAAP | 61.0% - 61.4% |
| 13.6% - 14.8% |
| $0.23 - $0.25 |
The total percentage rate changes may not equal the total change in all cases due to rounding.
For the full year fiscal 2026, ending June 30, 2026, the Company is targeting:
(in millions, except percentages and per share information) | Low-End |
|
| High-End |
| ||
FY'26 Guidance |
|
|
|
|
| ||
Total net revenue | $ | 1,262.0 |
|
| $ | 1,270.0 |
|
Gross margin |
| 60.5 | % |
|
| 61.1 | % |
Operating margin |
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