Extreme Networks (NASDAQ:EXTR) reported first-quarter fiscal 2027 revenue growth of 10% year over year, extending its streak of double-digit growth in total revenue and product revenue to seven consecutive quarters. The networking company also raised its outlook for the second quarter and full fiscal year, citing demand visibility, expanding enterprise opportunities, product availability and increasing adoption of its Platform ONE offering.
Revenue for the quarter reached $341 million, exceeding the high end of the company’s guidance range, according to Executive Vice President and CFO Kevin Rhodes. Product revenue rose 12% to $218 million, while recurring revenue increased 7% to $119 million. SaaS annual recurring revenue grew 22% year over year to approximately $265 million.
Non-GAAP earnings per share increased 50% from a year earlier to $0.33. Gross margin was 62.6%, up 130 basis points year over year, while operating margin expanded 410 basis points to 17.4%. Adjusted EBITDA rose 47% to $66 million, representing a 19.2% margin.
Platform ONE Adoption and Enterprise Expansion
President and CEO Ed Meyercord said Platform ONE accounted for more than half of subscription bookings during the quarter. The company expects more than 50% of its customers to be using the platform by the end of fiscal 2027, compared with 10% at the end of the prior fiscal year, and expects adoption to approach 80% in the following year.
“Customers want a single AI-powered platform that integrates security and networking to help reduce complexity, simplify operations, and manage their wired and wireless environments in one place,” Meyercord said.
The company said it is gaining traction with larger customers, booking 44 customers with transactions exceeding $1 million during the quarter, compared with 36 a year earlier. Meyercord said the funnel of opportunities worth more than $1 million had grown by more than 20%, depending on the period measured.
Extreme cited several customer wins, including a campus transformation for a large U.S. integrated healthcare network across 21 hospitals and about 600 care locations. The company said the customer reported support tickets fell by more than 90% in the first month after deployment. Hard Rock Stadium in Miami also selected Extreme for a Wi-Fi 7 and switching upgrade, while an Austrian bank chose the company to refresh wired and wireless networks across more than 70 branches.
Management said its Agent ONE Coworker AI tool, introduced to Platform ONE customers in early September, generated a 10-fold increase in adoption versus the company’s prior AI product. Meyercord said 98% of critical “Nudges,” or proactive recommendations provided by the system, received a response. He added that 58% of support cases opened through Agent ONE Coworker included the information engineers needed to begin troubleshooting.
The company plans to introduce Agent ONE Operator Mode in calendar 2027. Management said the feature is expected to execute tasks independently within defined governance limits and create a new revenue stream through “agent actions,” which it described as token-based economics. Extreme also expects to introduce Exchange zones in the first half of calendar 2027, enabling customers to run enterprise AI applications on premises or in the cloud while retaining control over data residency.
Supply Position and Margins
Management emphasized its supply-chain position as component availability and memory costs remain a concern across the technology industry. Rhodes said Extreme made strategic memory purchases and ended the quarter with $36 million of memory on its balance sheet. Meyercord said the company has supply coverage extending into fiscal 2028 and does not believe its revenue outlook is constrained by supply.
“The higher cost of memory is built into the gross margin that we just reported and our guide,” Meyercord said during the question-and-answer session.
He said the company has been able to pass along some component-cost increases through pricing while remaining less aggressive on price increases than larger competitors. Rhodes said future margin improvement could be supported by a larger mix of higher-margin subscription revenue, scale and potential reductions in component costs over time.
Extreme generated $39 million in free cash flow during the quarter and ended the period with $245 million in cash and $45 million in net cash. The company repurchased $25 million of shares during the quarter.
Raised Fiscal 2027 Outlook
For the second quarter of fiscal 2027, Extreme forecast:
- Revenue of $345.8 million to $350.8 million.
- Gross margin of 62.2% to 62.7%.
- Operating margin of 16.4% to 17.4%.
- Non-GAAP earnings per share of $0.32 to $0.34.
For the full fiscal year, the company raised its revenue outlook to a range of $1.402 billion to $1.412 billion, representing 10% year-over-year growth at the midpoint. It projected gross margin of 62.3% to 62.8%, operating margin of 17.2% to 17.6%, and non-GAAP earnings per share of $1.35 to $1.39.
Management attributed the increased outlook to stronger-than-expected Platform ONE subscription adoption, product demand and a growing sales funnel. Rhodes said bookings growth was particularly strong in education, manufacturing, healthcare, and sports and entertainment. While Asia-Pacific revenue declined against elevated prior-year comparisons, the company said it continued to win large deals in the region and expects growth across all regions during fiscal 2027.
About Extreme Networks (NASDAQ:EXTR)
Extreme Networks, Inc develops networking solutions that help organizations connect, manage and secure users, devices and applications across campus, data center and distributed environments. Its portfolio includes wired and wireless network infrastructure, Ethernet switches, access points, software-defined wide-area networking (SD-WAN), network access control and cloud-based network management.
The company’s ExtremeCloud platform supports centralized monitoring, configuration, analytics and automation for network operations.
