Extreme Networks at JPMorgan Conference: AI and Growth Strategies

On Tuesday, 13 May 2025, Extreme Networks (NASDAQ:EXTR) presented at the 53rd Annual JPMorgan Global Technology, Media and Communications Conference. The company reported its strongest bookings in six quarters, driven by improved execution and strategic focus on AI and high-value deals. Despite macroeconomic challenges, Extreme Networks remains optimistic about future growth, leveraging its differentiated technology and strategic capital allocation.

Key Takeaways

• Extreme Networks reported its best bookings in six quarters.
• The company is focusing on AI and large deals to differentiate itself from competitors.
• A new $200 million share buyback has been authorized to manage capital allocation.
• Extreme Networks is launching Extreme Platform One to drive SaaS and subscription growth.
• The company is well-positioned to handle macroeconomic and tariff uncertainties.

Financial Results

• Extreme Networks expects its product margin to increase to 60%, up from the current 58%.
• Gross margins are projected to reach 64% to 66% within three years, driven by a shift towards higher-margin recurring revenue.
• The company has pre-purchased approximately 13 million shares last quarter and authorized a new $200 million share buyback.
• E-Rate programs contribute about 7% of the company’s business.

Operational Updates

• The company attributes improved execution to team upgrades, especially in marketing.
• Extreme Networks has implemented targeted regional strategies and focuses on verticals where it can leverage its technology.
• The company has diversified its supply chain to mitigate tariff impacts and has reached target inventory levels.
• Extreme Platform One, an AI platform for networking, has been launched with 100 current customers, focusing on migration and growth in SaaS and subscription lines.

Future Outlook

• Extreme Networks anticipates continued sequential growth and aims to expand its market share in enterprise networking.
• The company expects its AI-powered platform to drive efficiencies in network operations, with competitors finding it challenging to replicate.
• Strategic M&A opportunities remain open, but the focus is on organic growth and platform adoption.
• The launch of Extreme Platform One is expected to significantly boost growth in the company’s SaaS and subscription lines.

Q&A Highlights

• Macroeconomic concerns have not yet impacted demand significantly.
• The company believes it has more tailwinds than headwinds, with tariffs not posing a current significant supply chain impact.
• Extreme Networks is focused on taking market share from larger competitors, leveraging its AI platform.
• Customers can achieve efficiency upgrades primarily through software enhancements, without needing hardware changes.

For the complete details of the conference call, please refer to the full transcript below.

Full transcript - 53rd Annual JPMorgan Global Technology, Media and Communications Conference:

Samik Chatterjee, Analyst, JPMorgan: Good afternoon. Thank you for coming to the conference. And I’m Samik Chatterjee. I cover hardware and networking companies at JPMorgan. With me, I have the pleasure of hosting Extreme Networks for the next session.

Ed Meiercord, President and CEO of Extreme, and Kevin Rhodes, EVP and CFO, thank you both for coming to the conference. I’ll start you both off with a question that we’ve been asking all companies we’ve talked to today, which is largely to get, based on your conversations with customers, what’s your latest thinking in terms of the macro. And really, what we’re looking for is investors are clearly very concerned about a slowdown in the second half of the year about potentially going into a recession. And given the visibility you’re getting from your customers, how likely do you think that is? How concerned are you and particularly when you’re planning your business for the second half, are you sort of thinking of those possibilities already?

Ed Meiercord, President and CEO, Extreme Networks: Yeah. And the macro as it relates to demand is a little trickier to call. To date, we haven’t seen an impact. Initially there was some concern about reduction in government spend as it relates to education in our markets. So as an enterprise customer we’re selling into the education market, large campuses, etcetera.

I think some of the concerns there were misplaced because a lot of the funding for the K through 12 schools and those environments are coming from universal service fund which is administered by the FCC which is out from under the Department of Education. We really haven’t seen an impact there and we don’t expect to see one. In higher education there’s some impact as it relates to spending more likely on research projects and joint research projects with the federal government and the universities. And in our case, we’re providing that infrastructure that’s so important. And so we’re not seeing an impact.

In fact, if you’re extreme and you’re a 5% market share player, we’re actually seeing significant growth opportunities in higher education because of just taking share. And we’ve been moving up market and winning more. So we’re seeing an expanding funnel right now. So it’s we’re somewhat maybe of a contrarian in terms of the second half of the year because we’re seeing our funnel growing and we’re seeing an expansion of opportunities. We play in 19 different markets around the world And if you look at each of the markets that we’re playing in, they have unique characteristics, unique growth characteristics.

And at this stage of the game, we probably have more tailwinds than headwinds.

Samik Chatterjee, Analyst, JPMorgan: Got it. Okay. Fair.

Ed Meiercord, President and CEO, Extreme Networks: Kevin, do you want to add?

Kevin Rhodes, EVP and CFO, Extreme Networks: No, I think you nailed

Ed Meiercord, President and CEO, Extreme Networks: it. Okay.

Samik Chatterjee, Analyst, JPMorgan: Moving to tariffs. And one, how is that impacting your supply chain? And more curious to hear how are you managing through this unpredictability of tariffs? Like I’m sure your day looks now very different than what it used to pre tariffs. So maybe help us understand sort of what goes into the planning process and how you’re navigating through that?

Yeah.

Ed Meiercord, President and CEO, Extreme Networks: Well, if we go back to the first round of tariffs several years ago, we had to implement operationally a process to reclaim tariffs for goods that come into The United States and out of The United States. And I’ll tell you at the time we weren’t prepared for that, but we built out the operating processes. So now we are prepared for that in the event that tariffs are implemented, we have a way to recover them first and foremost. So depending on how it plays out if tariffs are implemented, I’d say we’re in a much stronger position today than certainly we were years ago in the first Trump administration. The other thing, our supply chain, we have ODMs that are based in Taiwan, and then their factories and manufacturing were primarily in China, but we moved out working with our partners, and we moved and factories moved to Taiwan, Vietnam, Philippines, Thailand.

All of these countries have been hit with tariffs that have gone away. Our product category was exempt. We don’t know if that will remain to be the case. We’re also hearing that all these countries are in active negotiations. And so to date, there’s basically been no impact on Extreme in our supply chain to date.

And, you know, we’re expecting negotiated settlements with all these countries. So, we’re gonna have to wait and see what happens. If in fact there are tariffs, I mentioned the reclamation process that we put in place. And then we also can circumvent by shipping direct into Asia to our distributors as well as into Europe. So, one of the advantages that we have is our size relative to our competitors.

And, we’re able to move quickly. And so, we have several plans that were you know in parallel process to mitigate the impact of tariffs. The last point I’ll make is it relates to pricing. As you’ve seen some larger competitors especially the industry leader, you know has always been very responsive in raising price and passing through tariffs. And so we and the rest of the industry are fast followers when they take those actions.

We would expect as things settle down if we wind up in a higher tariff environment that there would likely be price increases and there would be an umbrella that we could raise price under.

Samik Chatterjee, Analyst, JPMorgan: Yeah,

Kevin Rhodes, EVP and CFO, Extreme Networks: one thing I would just add to that is that we did communicate out to our resellers that we’re going to hold price steady through June 30. And so, that’s a that was a positive indication that we made to our reseller community. They were very appreciative of that because they weren’t hearing a similar message from the rest of the competitive set. It’s really unknown right now what will happen the rest of the competitors, but we came out with that. So we were happy to be able to do that.

Samik Chatterjee, Analyst, JPMorgan: If I can just follow-up on that. I mean, a lot of the conversation I’ve had with some of your peers is them trying to move capacity to countries like Mexico, where there’s USMCA compliance that gives you cover. From what I understand in terms of what you’re trying to do at this point is wait and see which of the footprint that you have will eventually be under tariff and then potentially take any actions on the manufacturing side. Is that a fair assessment of what your strategy on the supply side is?

Ed Meiercord, President and CEO, Extreme Networks: Yeah, think it’s fair. Would say where we have the highest concentration is in Taiwan and Philippines. I think as we look at the macro landscape and geopolitical environment between The United States and China, those are two very important strategic countries for The US and for the Trump administration. So we know they’re in active negotiations and we would expect resolution to an area that’s a tariff level that’s reasonable.

Samik Chatterjee, Analyst, JPMorgan: Got it. Okay, great. You reported the best bookings in six quarters. Maybe walk us through from your lens how much of that is a function of customers looking to pull forward some of the demand versus true drivers like real time deployment from your customers?

Ed Meiercord, President and CEO, Extreme Networks: So we did not see a lot of pull in action. I’d say it’s less than, for our bookings number, it’s something that’s less than I’d say 3% overall for the quarter, so a very small, somewhat immaterial number. I think the growth at Extreme is due to improved execution with the team. We’ve made a lot of changes in upgrading. In the marketing role, I hired amazing Chief Marketing Officer, Monica Kumar.

She’s come in a year and a half ago and completely rebuilt our marketing function. We’ve created, I mentioned 19 markets, but we’ve created these pods where we have a very targeted regional director seller combined with a field marketer combined with a regional channel lead working together to drive funnel in a very verticalized, localized way, taking into consideration distribution, taking into consideration the channel, and focusing on verticals where we have differentiation and we can work with partners to drive funnel and convert on the funnel. It’s been very successful. It’s not a macro horizontal strategy, it’s a highly targeted focused strategy on where we’re winning and where we’re taking share. We’ve had tremendous wins for example, and it’s really a design win with the Japanese government where now we’ve been specked for GSS contracts for Japanese government agencies, which is creating tremendous growth for us, but it’s a very different strategy than for example our strategy in The UK where we’re moving up market with partners in healthcare and higher education where we have customer wins that we’re focusing on those wins with our channel partners and driving more and more opportunities and growth.

So we have 19 distinct strategies where we have our marketing, our sales teams, and our channel teams working together to create funnel and then driving activities to close on the funnel. I give credit to Kevin and the teams in terms of developing all the reporting infrastructure and data that gives us complete visibility into the activities and what’s working and what’s not. And understanding what’s in our funnel of activities. And so by seeing that and seeing the conversion rates and watching that over time, it’s improved. I gotta shout out to our new sales lead and new sales leadership and also channel leadership that we brought in.

They’ve been driving very consistent performance that’s predictable. So we’ve been doing a much better job at Extreme of calling a number and executing on the number, and then having this collaboration, this cross collaboration alignment that’s building funnel and driving higher conversion and win rates.

Kevin Rhodes, EVP and CFO, Extreme Networks: Okay. And Ed, would just add to that. We’re also going up market a bit, right? So we’re seeing some good success on over a million dollar deals.

Ed Meiercord, President and CEO, Extreme Networks: Yep.

Kevin Rhodes, EVP and CFO, Extreme Networks: 29 last year, 39 this year. And so those million dollar deals allows us to meet to to compete against the the larger competitor set in a in a more robust way. You know, it’s kinda success begets success as you win a very large logo in a competitive situation that adds more credibility where you can win the next one.

Samik Chatterjee, Analyst, JPMorgan: Got it. I’m going to come back to that in one minute. But based on the strategy that you outlined where you are focusing on these markets individually, do I take that as naturally an implication that you’re very close to the customer? Because when I compare this what’s going on right now to the post COVID time frame where we did have a supply chain crisis, there was a lot of demand pull forward and a digestion after that. Not every company had good visibility into what customer inventory looked like.

Given sort of how you’re executing now with focus on very sort of very regional level, do you have much better visibility in terms of what the inventory in the channel, inventory in the customers looks like? Or how should I interpret sort of visibility today versus what was it post COVID?

Ed Meiercord, President and CEO, Extreme Networks: Yeah, we have much better reporting, much better visibility and metrics that we’re using to drive the business. As far as inventory in the channel, we’ve driven to our target levels. So we’re where we wanted to be. We were in an oversupply situation with distribution, with channel and actually with customers that were buying forward. All of that has been cleaned out.

And so we have the visibility as we look at our bookings and then we look at the pipeline of opportunities that are sitting there and we look at backlog. Backlog is attributed to the next quarter, all of it. So we don’t have backlog and we measure this but most of our backlog you can see being attributed in the near term. So when the order is coming in they want it chipped. If you go back to where we were during the constraints, the lead time was much longer.

So you could see it. You look at the bar chart and you look at the quarters of where the customer request date And so you saw a lot of orders that were out. A number of orders. Three quarters, two quarters. Now if you look at it, there’s one color on the bar chart which is next quarter.

Kevin Rhodes, EVP and CFO, Extreme Networks: Yeah, that’s a real distant memory for us now. It’s over a year ago that we were, you know, kind of managing through, you know, higher channel inventories. But at this point, we’ve really stacked up four sequential quarters in a row of of growth. And we’ve just, you know, guided for another quarter of sequential growth. So I think we’re well beyond that.

Samik Chatterjee, Analyst, JPMorgan: Okay. No, that’s interesting. Thank you for sharing that insight. Coming back to, Kevin, what you were mentioning, like the larger deal sizes that you talked about on the call, do you really take that as a function of displacing some of the larger incumbents like Cisco and others? Or are you seeing other drivers within there that’s not share related but your customers just willing to expand more their current footprint that they had with you?

Just help us think about the drivers and how much of this is the competitive landscape itself.

Ed Meiercord, President and CEO, Extreme Networks: Yeah. Think the look, moving up market for us is about taking share and it’s absolutely about taking share from the larger players. We have highly differentiated technology with the enterprise campus market with our fabric technology. We have unique capabilities that makes it much easier to provision and deploy services on a network. We say it’s a zero touch provisioning, but when you compare what we can do versus the traditional service provisioning, the old way of doing it is creating VLANs which are very expensive that have to be delivered right to the port of a switch to the target service area.

With our fabric you literally can just plug in an edge device, it calls for the service and it it. So the ease of provisioning, the automation that we bring in terms of delivering service, the resilience that we have in terms of sub second convergent, if there’s a loop in the network or there’s an issue in the network, we can drive performance because of our fabric that none of our competitors can provide. So if we’re in a we just won John Deere, for example, major global corporation, and in the case that win, we were the last one in. So the big three were there and there was not high expectations for extreme networks. They had questions about the technology.

We demonstrated the technology. They used the technology and then none of our competitors could replicate the performance. So it’s the ability to provision, it’s the resilience of the network, it’s the ability to create a network within a network in terms of segmentation. And this is why we won Wynn Casino and Resorts for building out a $5,000,000,000 project in UAE. It’s the first casino in The Middle East.

They’re going with Extreme because they love the fabric technology and the differentiation. This is opening up a lot of new opportunities. When we win one of these big customers and then they’re able to speak on our behalf, they become the voice and they become a very compelling reference for the rest of the market. When we went to Washington University and they’re leveraging our fabric technology, well now it’s time for other large universities to refresh and they want to hear from the Washington news of the world. And so our marketing teams are doing a better job of capturing those customers, leveraging kind of the customer relationship to market.

And that’s what’s driving an increased funnel and pipeline. And whether or not it’s higher ed in The US, whether or not it’s hospitality and entertainment in The Middle East, or if it’s our stadium business here in The US that’s spreading over into Europe with exclusive relationships with the NFL, Major League Baseball, NASCAR, Formula One racing. These networks are super high quality, high performance. A lot of people might not be as familiar with Extreme brand, when they find out about the brand and they see the technology, we win. So if we get an environment where there’s straight up competition, we’re doing really well.

And then the customers we win will also open up partner relationships because in the case of for example a John Deere, they need a global partnering network and they want consistent service and support around the world. So for Extreme as we’re going into markets, we might go to a partner that is a non typical partner, it’s a much larger partner, but if we bring them a customer like John Deere, all of a sudden we’re in. And now we have an opportunity to share our technology, they train up on our technology, They realize what we have and the differentiated solutions that we bring. And so Kevin said success begets success and that’s kind of how the chain works.

Samik Chatterjee, Analyst, JPMorgan: Staying with the competitive landscape, help me think about like there’s obviously with the share gains you’re seeing, there’s going to be some questions about how sort of permanent it is in the sense that is it more a function of some of your larger competitors being distracted at this point when I take like Cisco, HP, Juniper, like this. Yes. Talk about sort of how permanent do you see some of these share gains being versus what’s the maybe and give us a lay of the land of where you see your competitors being in terms of both technology but also their focus on this part of the market?

Ed Meiercord, President and CEO, Extreme Networks: So we are incredibly focused on enterprise, on the enterprise market. We’re particularly strong and competitive enterprise campuses that are looking for very high quality, high performance networking. Every one of our customers in all these industries, what’s the question that they’re getting? The question they’re getting is, hey, how are you leveraging this thing called AI? How are you how are you using AI to drive efficiency, to drive performance, to drive better outcomes?

And and it’s top of mind for everyone. So we we decided many years ago that we were not gonna try to be the networking solution for AI. Okay? There’s a lot of competition for that. The companies have done very well.

It’s great. Scaling up, scaling out, supporting these large language model sort of deployments. That’s great. What we decided, we’re gonna be the leader in AI for networking. And so, we’re gonna be in Paris next week.

I’m gonna encourage everyone to tune in, at least watch the replay. But, we’re gonna be opening, you know, it’s largest user conference we’ve had. We’re way over subscribed and we’re gonna be rolling out demoing, not PowerPoint slides. We’re gonna be demoing new use cases with the first agentic AI platform for networking in the industry. We’ve been told by our partners that we’re way out in front.

We’re excited. We were a player in first generation AI ops for networking and basically AI ops for for WiFi which is where the industry was. And now we have a service agent that sits on top of the entire platform. So you’ve got AI that’s not just about AI ops but it’s also the commercials and the operations of the network licensing, a lot of different personas that we’re supporting. But we’re gonna drive massive efficiency for our customers.

So for all the people that are sitting out trying to figure out, hey, how am I leveraging AI in my IT teams, we’re gonna be providing the most modern, high quality tools for people to take advantage of driving efficiency in the networking space. And so, we’re really excited about how we’re rolling this out. I mentioned our fabric, the platform is taking the fabric to a new level with complete visibility from Extreme platform one. And, it’s gonna provide visibility not only of the physical layer, logical layer, but also the services layer that no one else in the industry can do. It’s gonna put us way out in front, simplifying networking operations.

And so, net net it’s about turning months into weeks and weeks into days and days into hours and hours into minutes, etcetera. And we have thousands of examples of of how we’re gonna do this and how we are doing it with our platform. The platform GA’s in the beginning of our first quarter, which is in the month of July. We have 100 customers that are using the platform, we’re getting great feedback. All of our system engineers and sellers are using platform.

But we’re unveiling some of the capabilities for the very first time on Tuesday. And we’re expecting a lot of surprise and a lot of interest in community of customers.

Samik Chatterjee, Analyst, JPMorgan: How long does it take if one of your competitors does want to replicate what you’re doing? How long does it take them?

Ed Meiercord, President and CEO, Extreme Networks: It depends on if you’re trying to merge with another big company or it depends on if you’re trying to move away from core networking into other markets. And size also matters. So for us putting this platform together, we had to sort of bring together about nine applications that were independent. You look at our wireless, you look at our wired, if you look at SD WAN, if you look at ZTNA and network access control and all of these different services, while we’re pulling all that together, what does AI want? AI wants data.

So we’re able to pull all these together so AI has the data and has the data across the entire spectrum. I think it’s going to take a long time for our largest competitor to do that. They have a history of not integrating their technologies and their acquisitions. We’ll see, we’ll see. But it’s gonna take them I think eighteen months or so even though AI moves quickly.

I think our other two competitors that are trying to figure out if they’re gonna get married, They have to focus on integrating and delivering a huge amount of synergy to make their deal work. And that’s very distracting if you’re trying to do what we’ve just done.

Samik Chatterjee, Analyst, JPMorgan: One of the big things we’re trying to figure out is when we think about the next sort of campus refresh from enterprise customers, what’s going to be the driver for it? What gets the companies to sort of enterprise customers to think that they’re right for an upgrade at this point? Is it going to be more WiFi led? Is it going to be features on the campus equipment? Or is it going to be AI?

Like when you think about the upcoming cycle, what do you think is the trigger to get enterprises to upgrade?

Ed Meiercord, President and CEO, Extreme Networks: Well, so in the case of Extreme Platform One, customers don’t necessarily have to upgrade their network from a hardware perspective. Okay, so that’s one of the benefits in terms of what we’re able to do. I just upgraded, I just got out of the platform, I just changed my login and I was in this incredible user interface which is super modern and huge improvement over the XiQ cloud platform that we had before. So upgrading is actually quite easy from that standpoint. So I think customers are gonna wanna do that because they’re gonna wanna use the tools that are allowing them to drive the efficiency and have enhanced visibility, performance, etcetera across the network.

What’s gonna drive a campus refresh? Think it’s the things that always have is we have WiFi seven now which has significantly enhanced bandwidth and performance in terms of reliability. Now you’re seeing in a manufacturing environment, mission critical systems being deployed on WiFi. The same thing would be true in a hospital in an operating room. So historically WiFi, you know, it’s crossed over that chasm.

So that can drive more usage and more demand. As you upgrade bandwidth at the very edge of the network, like WiFi, it filters through the network. Then your edge switch requires more demand, etcetera. So that plays in it. I think if you look at different markets, maybe there are different upgrade cycles.

I don’t think there’s one. A lot of people point to COVID and saying people left the office for a couple years and now they’re being forced to return to office and it’s that return to office that’s driving an upgrade cycle. It’s hard for us to see that per se because we’re taking share in the market. We’re a smaller network market share player. And because if we’re taking share, maybe it distorts the overall market view because we’re seeing growth.

Okay.

Samik Chatterjee, Analyst, JPMorgan: Coming back to sort of what you’re seeing with your customers and you mentioned the likelihood of price increases by your largest competitor and you’re following on that front, like how do you think about price elasticity of demand at this point for your customers? Like one of the big concerns has been price increases and demand destruction as a result of that. But do you necessarily see the drivers for why enterprises have to upgrade being resilient enough that price elasticity of demand is very limited?

Ed Meiercord, President and CEO, Extreme Networks: I mean our market is strategic. Mean you think about the network and how important networking infrastructure is to any organization and just daily life. And the requirement for high quality, secure, high performance networks are critical. So in terms of people deciding and maybe deciding to cancel certain projects, maybe you can hold on a networking project for a year or maybe you can hold on a networking project for eighteen months. But over the long run, as you’re adding new devices, as you’re adding new capabilities and applications and with the growth of data and these networks, you think about the growth of AI, networking infrastructure is absolutely critical.

So it’s less likely that it’s going to be deprioritized than maybe some other investments that are nice to have and not need to have.

Kevin Rhodes, EVP and CFO, Extreme Networks: And I would just comment in today’s world of cyber security concerns being probably at the highest of the CIO level, sitting on an old network that you may have to patch and patch and patch and patch and do upgrades to is probably not the best strategy for you to avoid any cyber security threats that come to you. At the end of the day, when you’ve got a fresh network that’s got the most latest technology associated with it, you know you’re not worried about, at some point in the future, having a vulnerability there that you didn’t see coming.

Samik Chatterjee, Analyst, JPMorgan: Okay. Got it. Got it. E Rate programs, I think you made a comment on the last call about seeing more share gains in the E Rate programs. Maybe firstly, give us maybe take a step back and give us sort of the background of how relevant these programs are now to Extreme versus maybe sort of a few years ago?

And then secondarily, what’s driving the share gain?

Ed Meiercord, President and CEO, Extreme Networks: Sure. Yeah, E Rate is a funding program that’s funding kind of K through 12 schools. It’s very popular in the with politicians giving kind of the state of the art technology for our kids in a learning environment is popular on both sides of the aisle. So it’s a program that’s in place and we expect it to continue to be in place. We’re at the fifth year funding cycle of the last cycle and then a new program will start.

And it’s a combination of our cloud, it’s a combination of our fabric, and it’s a combination of I think our overall service and engagement in that community. We have every single school in Palm Beach County, Florida runs on extreme networks. And, they had our wireless but then there’s an opportunity. They saw our fabric. They didn’t believe it.

They couldn’t believe it and now they’re rolling out fabric. So, for us there’s opportunities for us to upsell a wireless customer to switching and then we’re a switching customer to the wireless side of the portfolio. So, I think it’s the differentiation of our technology. And I also think it’s the execution of our teams who are doing a great job positioning Extreme and some of the channel programs that we have to drive E Rate. So it’s about 7% of our business.

Kevin Rhodes, EVP and CFO, Extreme Networks: Okay. Maybe

Samik Chatterjee, Analyst, JPMorgan: just for the last couple of questions. Kevin, can you please outline the margin drivers that investors should think about for the company? You’re already at 62% gross margin, mid teens operating, I think. Do you see opportunities on both fronts? Or is it really going to be more about operating leverage going forward?

Kevin Rhodes, EVP and CFO, Extreme Networks: Yes. So our long range plan would be to 64% to 66%. We can do that in a couple of different ways, right? We still see product margin opportunity that we can drive. That’s at like 58% today.

We could see that getting to 60%. And then I think you’re gonna see with platform one, as Ed described it, it’s gonna be this really, you know, transitional and transformational, quite frankly, platform that we’re putting all of our customers on and selling onto. We’re gonna get a higher ASP there. We’re gonna get a higher attach rate there, and we’re gonna get higher, you know, retention rates on platform one in the future. What that’s gonna do is drive the revenue, the recurring revenue, which got a higher margin, profile to it as well.

And so as we drive the mix shift of revenue that’s higher margin, that’s gonna help to get us into that 64 to 66% range. And I’m thinking three years in that range.

Samik Chatterjee, Analyst, JPMorgan: Got it. Okay. Maybe just finishing off your capital allocation and where does current preference stand between M and

Kevin Rhodes, EVP and CFO, Extreme Networks: A versus So we just authorized got a new authorization for our $200,000,000,000 buyback. We pre purchased about 13,000,000 shares last quarter. We’re in market purchasing yet again this quarter. So I would say we are very much in the buyback strategy from a capital allocation perspective.

Samik Chatterjee, Analyst, JPMorgan: Okay. And any sort of expect terms of m and a, like, that a constant sort of pipeline that you continue to evaluate?

Kevin Rhodes, EVP and CFO, Extreme Networks: You know, we evaluate it. I and I, myself, Sam Koeffler, our our SVP of finance and and corp dev. We evaluate all opportunities for corp dev. We don’t have any money burning a hole in our pocket right now. It would have to be strategic.

We’ve got such good momentum going on in the business right now that it feels like that could take us off, you know, track. So we look, but at the end of the day, we’re very, very focused on executing and continuing to drive the growth that we have today. And it would be a high bar in order for us to go do something that would drive.

Ed Meiercord, President and CEO, Extreme Networks: Yeah. I think that’s fair. Today, it’s all about the the launch of Extreme Platform One. That’s right. And the migration of our customers onto the platform and, you know, it drives significant growth in our SaaS, our subscription line and recurring revenue at the company.

So we have a lot of growth built into the plan without M and A. But we will always we’ll be opportunistic if the right opportunity presents itself.

Samik Chatterjee, Analyst, JPMorgan: I mean you talked about higher retention on customers on platform one. Is that just based on the initial feedback you’ve got? Or is there more of a longer time frame of data that you’ve collected on the

Kevin Rhodes, EVP and CFO, Extreme Networks: Well, what I’m referring to on the retention side is what we sold to customers was on a bespoke basis. You sell the cloud management, then you sell support contracts or SD WAN, and each one of those is a sales process. And each one of those is a renewal process in of itself. Right? And sometimes a customer based on budget might say, I don’t need the support contract this this particular time.

It’s five years out. I’m gonna let that support contract drop. In the platform one world where it’s all bundled together, you’re gonna get a higher, you know, retention rate because it’s all bundled together and you’re renewing the platform one with the AgenTeq AI and all the value you’re getting. Similar to a SaaS platform, you’re creating value over that life cycle as well.

Samik Chatterjee, Analyst, JPMorgan: I’ll wrap it up there, but thank you for coming to the conference. Thank you to the audience as well. Thank you.

Kevin Rhodes, EVP and CFO, Extreme Networks: Thanks, Hugh.

Ed Meiercord, President and CEO, Extreme Networks: Thanks, Sally. Thanks.

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