Executive Summary
Extreme Networks reported its first quarter of fiscal year 2025 with revenue of $269.2 million, up 5% sequentially but down 23.8% year over year. The company posted a GAAP net loss of $10.5 million and an EPS of -$0.08, while Non-GAAP operating profit reached $33.5 million (12.4% of revenue) and Non-GAAP EPS of $0.17, beating the top end of previously guided ranges. Gross margin improved to 63.7% (+20 bps sequentially) driven by a favorable product mix and higher product revenue offsetting fixed costs. Recurring revenue remained a meaningful and visible portion of the business, totaling $107 million (38% of revenue), with subscription deferred revenue up 19% YoY to $282 million and total deferred revenue at $577 million (up 10% YoY). Net cash from operations was $18.6 million in the quarter, with free cash flow of $11.7 million; cash balance stood at $159.5 million and total debt was $236.1 million with net debt of $76.6 million. Management signaled ongoing quarterly growth in Q2 and reiterated a full-year revenue target of $1.117–$1.137 billion, accompanied by margin expansion and higher cash flow as the company grows revenue and improves profitability. CEO Ed Meyercord framed the quarter as the early stage of a broad networking market recovery, aided by higher new logo win rates, cloud-based operating models, and differentiated end-to-end solutions (campus data center to WAN) that support faster wins and higher stickiness. Key growth levers include the company’s campus fabric architecture, Cloud IQ platform, Wi‑Fi 7 deployment (AP5020), and the new AI-enabled co-pilot (AIOps) for proactive network management. The management team underscored market dynamics in the U.S. leading the recovery, with Europe (EMEA) showing improvement but facing government-budget timing lags, which may push some projects into the second half of fiscal year 2025. Overall, Extreme is transitioning its mix toward more predictable recurring revenue and higher margin contributions from software, services, and consumption-based offerings.
Key Performance Indicators
QoQ: 48.54% | YoY:-20.40%
QoQ: 87.89% | YoY:-113.14%
QoQ: 80.62% | YoY:-136.63%
QoQ: 80.93% | YoY:-136.41%
Key Insights
Revenue: $269.204M, down 23.77% YoY, up 4.89% QoQ. Gross profit: $169.507M; gross margin: 62.97% (rounded to 0.63). Operating income: -$4.717M; operating margin: -1.75%. EBITDA: $0.485M; EBITDA margin: 0.18%. Net income: -$10.504M; net margin: -3.90%. EPS: -$0.0801; diluted EPS: -$0.0801. Recurring revenue: $107.0M (46.8% of revenue? Note: reported as 38% in the call; recurring revenue definition includes subscription and support). Subscription deferred revenue: $282.0M (YoY +19%). Total deferre...
Financial Highlights
Revenue: $269.204M, down 23.77% YoY, up 4.89% QoQ. Gross profit: $169.507M; gross margin: 62.97% (rounded to 0.63). Operating income: -$4.717M; operating margin: -1.75%. EBITDA: $0.485M; EBITDA margin: 0.18%. Net income: -$10.504M; net margin: -3.90%. EPS: -$0.0801; diluted EPS: -$0.0801. Recurring revenue: $107.0M (46.8% of revenue? Note: reported as 38% in the call; recurring revenue definition includes subscription and support). Subscription deferred revenue: $282.0M (YoY +19%). Total deferred revenue: $577.0M (YoY +10%). Cash from operations: $18.585M; capex: -$6.916M; free cash flow: $11.669M. Cash and cash equivalents: $159.546M; total debt: $236.102M; net debt: $76.556M. Backlog and revenue visibility: product backlog within expected range; 32 MSP partners by quarter-end; 27 customers spent >$1M this quarter. Geography: North America back to double-digit sequential growth; APAC up sequentially YoY; EMEA slower with government spend delays. Guidance: Q2 revenue $273–$283M; gross margin 63–64%; operating margin 11.3–13.4%; EPS $0.16–$0.20; full-year revenue $1,117–$1,137M. SaaS ARR growth observed at 23% YoY.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
269.20M |
-23.77% |
4.89% |
| Gross Profit |
169.51M |
-20.40% |
48.54% |
| Operating Income |
-4.72M |
-113.14% |
87.89% |
| Net Income |
-10.50M |
-136.63% |
80.62% |
| EPS |
-0.08 |
-136.41% |
80.93% |
Key Financial Ratios
operatingProfitMargin
-1.75%
operatingCashFlowPerShare
$0.14
freeCashFlowPerShare
$0.09
priceEarningsRatio
-46.92
Management Commentary
Theme: Market environment and trajectory; Ed Meyercord described the quarter as ahead of plan and indicative of early networking market recovery, aided by higher new logo win rates and several large projects closing ahead of schedule. He emphasized the differentiating power of Extreme’s end-to-end cloud and campus fabric, with a single cloud covering campus data center to WAN and a zero-touch provisioning model that enables rapid service delivery and enhanced security. Theme: Product innovation and platforms; the company highlighted Wi-Fi 7 leadership (AP5020) and the ExtremeCloud Universal zero-trust network access (ZTNA) offering, positioning Extreme as the only vendor with a single policy engine for cloud NAC and ZTNA. Ed stressed the integrated AI/ML-driven “co-pilot” AIOps to detect anomalies and remediate issues proactively, with plans to expand generative AI integration across the platform. Theme: go-to-market and growth levers; the company signaled disciplined improvements in the sales organization, marketing alignment, and funnel quality, including “marketing pods” and defined funnel targets; 32 MSP partners and consumption-based licensing were cited as accelerants for recurring revenue and services growth. Theme: geometry of demand and regional mix; Ed and CFO Kevin Rhodes noted NA strength and improving APAC, but noted Europe (EMEA) faces public-sector budget cycles that could delay deal closures into the second half of fiscal 2025. The team cited ongoing share gains from Cisco and disruption risk around the HP-Juniper transaction as potential near-term read-throughs that could influence competitive dynamics. Quotes: “Our results in the first quarter were ahead of plan and reflect what we believe are the early stages of a broad networking market recovery.”; “We’re the only networking vendor to offer a single policy engine for cloud-based NAC and ZTNA.”; “SaaS ARR grew 23% year-over-year.”; “We closed our first transaction this quarter which included a major European retailer and a Fortune 100 company,”; “We’re the only enterprise player that brings end-to-end solutions from the campus data center to the edge across the WAN from one cloud.”
Our results in the first quarter were ahead of plan and reflect what we believe are the early stages of a broad networking market recovery.
— Ed Meyercord
We’re the only enterprise player that brings end-to-end solutions from the campus data center to the edge across the wide area network from one cloud.
— Ed Meyercord
Forward Guidance
Management guidance for Q2 2025: revenue $273–$283M; gross margin 63%–64%; operating margin 11.3%–13.4%; EPS $0.16–$0.20; fully diluted shares ~133M. Full-year 2025 guidance: revenue $1,117–$1,137M. Assessment: The guidance implies continued sequential revenue growth in Q2 and a modest margin expansion consistent with improving mix and higher services/recurring revenue contribution. The revenue range for FY2025 suggests a back-half acceleration if EMEA macro conditions improve and the pipeline converts to bookings; management also cited a growing funnel and higher new logo activity, which supports confidence in market rebound. Risks to achievability include: (1) persistent macro headwinds or budget delays in Europe that could push large deployments into FY2026; (2) potential disruptions from large competitive transitions (e.g., HP-Juniper integration) that could affect channel dynamics and partner incentives; (3) execution risk in scaling the new go-to-market motions and AI-enabled platforms; (4) inventory and pricing discipline in a competitive market. Key factors investors should monitor: trajectory of NA/EMEA demand by sector (government, education, healthcare), progression of recurring revenue mix, subscription-adjacent revenue growth, gross margin trend as product mix evolves, cash flow dynamics (operating cash flow, inventory sell-out), and the pace of large deal closures in H2 FY2025.