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01/09 22:53
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reveals strong financial performance with a 35% revenue increase, a 32% EPS rise, and robust cash flow. Product and subscription revenues are growing, and guidance remains optimistic. The Q&A highlights sustainable growth in key regions and opportunities in the Fortune 500 market. Although Platform One's impact is limited, future contributions are expected. The company's differentiation in technology and anticipated margin improvements further support a positive outlook. With a market cap of approximately $1.7 billion, the stock is likely to see a positive reaction, potentially in the 2% to 8% range.
Revenue Revenue reached $307 million, representing a 20% increase year-over-year. The growth was driven by strong performances in APAC and EMEA regions, robust demand across wired and wireless network solutions, and acceleration in SaaS ARR revenue.
SaaS ARR Revenue SaaS ARR revenue reached $208 million, up 24% year-over-year. This was driven by recent wins, continued growth in the wireless business with strong Wi-Fi 7 adoption, and early adoption of Extreme Platform 1.
Earnings Per Share (EPS) Earnings per share were $0.25, up 32% from $0.19 in the prior year quarter. This increase was attributed to strong revenue growth and effective expense management.
Product Revenue Product revenue was $192 million, growing 26% year-over-year. This growth was driven by recovery and strong demand for Extreme's solutions, as well as meaningful growth in Wi-Fi 7 adoption.
Subscription and Support Revenue Total subscription and support revenue was $115 million, up 11% year-over-year. This growth was supported by the increase in SaaS ARR and recurring revenue.
Recurring Revenue Recurring revenue grew 8% year-over-year and represented 36% of total revenue. This was driven by growth in SaaS ARR and deferred revenue.
Deferred Revenue SaaS deferred revenue increased 15% year-over-year to $308 million, while total deferred revenue exceeded $600 million. This growth reflects the expanding base of contracted future revenue.
Non-GAAP Gross Margin Non-GAAP gross margin was 62.3%, consistent with guidance. This reflects the leverage from top-line growth and prudent expense management.
Operating Margin Operating margin was 15.2%, up from 13.5% in the prior year. This improvement was driven by revenue growth and expense management.
Free Cash Flow Free cash flow was $75 million, the highest quarterly level since 2023. This was aided by a significant improvement in the cash conversion cycle, which decreased to 81 days from 112 days in the prior quarter.
Net Cash Position Net cash position was $52 million, up $49 million from the end of the third quarter. This improvement was driven by strong cash flow generation.
Extreme Platform 1: First and only networking vendor to offer a conversational multimodal, agentic AI-powered networking platform. Early feedback highlights its efficiency and AI capabilities.
Wi-Fi 7: Adoption grew significantly, representing 30% of all wireless units, driving revenue growth in wireless products.
APAC Expansion: Achieved largest bookings quarter ever in Asia Pacific, with major wins in the Japanese government and public sector.
EMEA Growth: Revenue grew 21% year-over-year, marking the highest level since early 2024.
Revenue Growth: Achieved $307 million in Q4 revenue, a 20% year-over-year increase, marking the fifth consecutive quarter of growth.
SaaS ARR: Accelerated to $208 million, up 24% year-over-year.
Cash Flow: Generated $75 million in free cash flow, the highest quarterly level since 2023.
Strategic Partnerships: Secured multimillion-dollar wins in Japan, including the judiciary and Supreme Court, displacing competitors.
Commercial Models: Doubled MSP program to 53 partners year-over-year, offering consumption-based billing and flexible licensing.
Market Conditions: Potential risks from economic uncertainties and market conditions that could impact customer demand and revenue growth.
Competitive Pressures: Challenges in maintaining competitive win rates and displacing larger players in the market.
Regulatory Hurdles: Possible regulatory challenges in expanding operations, particularly in regions like APAC and EMEA.
Supply Chain Disruptions: Risk of supply chain issues affecting product availability and delivery timelines.
Strategic Execution Risks: Challenges in successfully executing strategic initiatives, including the rollout of new products like Extreme Platform 1 and maintaining operational efficiency.
Economic Uncertainties: Potential impact of global economic conditions on customer spending and project funding.
Revenue Expectations: For fiscal year 2026, revenue is expected to be in the range of $1.228 billion to $1.238 billion. For Q1 fiscal 2026, revenue is expected to be in the range of $292 million to $300 million.
Gross Margin Projections: Gross margin for Q1 fiscal 2026 is expected to be in the range of 61.9% to 62.3%.
Operating Margin Projections: Operating margin for Q1 fiscal 2026 is expected to be in the range of 12.7% to 14.5%.
Earnings Per Share (EPS): EPS for Q1 fiscal 2026 is expected to be in the range of $0.20 to $0.23.
Growth Expectations: The company expects growth in fiscal 2026 to accelerate, driven by strong customer demand, a robust pipeline, and large customer opportunities.
Market Trends and Product Adoption: Wi-Fi 7 adoption is growing, representing 30% of all wireless units. Early adoption of Extreme Platform 1 is contributing to growth.
Recurring Revenue and Cash Flow: Recurring revenue growth is expected to continue, supported by a growing base of contracted future revenue, which should drive strong cash flow generation.
Share Repurchase: We returned value to shareholders through a repurchase of 1.5 million shares for a total of $25 million.
The earnings call highlights strong financial performance, with improved cash flow and cash conversion cycle. Despite component price increases, the company is implementing strategies to improve gross margins. The Q&A session reveals positive market opportunities, particularly from disruptions at competitors, and strong growth prospects driven by Platform ONE and federal market opportunities. While there are some uncertainties regarding specific metrics, the overall sentiment is optimistic, with strategic initiatives expected to drive growth. The market cap suggests a moderate reaction, leading to a positive stock price prediction.
The earnings call reveals strong financial performance with a 35% revenue increase, a 32% EPS rise, and robust cash flow. Product and subscription revenues are growing, and guidance remains optimistic. The Q&A highlights sustainable growth in key regions and opportunities in the Fortune 500 market. Although Platform One's impact is limited, future contributions are expected. The company's differentiation in technology and anticipated margin improvements further support a positive outlook. With a market cap of approximately $1.7 billion, the stock is likely to see a positive reaction, potentially in the 2% to 8% range.
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