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DATE

Wednesday, April 29, 2026 at 8 a.m. ET

CALL PARTICIPANTS

  • President & Chief Executive Officer — Edward Meyercord
  • Executive Vice President & Chief Financial Officer — Kevin Rhodes
  • Senior Vice President, Finance and Corporate Development — Stan Kovler

TAKEAWAYS

  • Revenue -- $317 million, up 11% year over year and exceeding the high end of guidance.
  • Product Revenue -- Increased 12% year over year, marking eight consecutive quarters of growth.
  • SaaS Annual Recurring Revenue (ARR) -- Reached $236 million, growing 29% year over year.
  • Subscription and Support Recurring Revenue -- $114 million, up 13% year over year and stable at 36% of total revenue.
  • SaaS Deferred Revenue -- Rose to $342 million, a 19% year-over-year increase.
  • Gross Margin -- Achieved 62.3%, improving quarter over quarter and exceeding guidance.
  • Product Gross Margin -- Increased by 70 basis points sequentially from Q2 2026.
  • Operating Margin -- 15.2%, up from 14.1% in the prior quarter and 15% in the year-ago period.
  • EBITDA -- $53.4 million, with a margin of 16.9%, the highest in ten quarters.
  • Earnings Per Share (EPS) -- $0.26, up 24% year over year from $0.21 and above the high end of guidance.
  • Share Repurchases -- Company returned $50 million to shareholders by repurchasing over 3 million shares at an average price of $14.58 per share.
  • Wi-Fi 7 Contribution -- Accounted for 37% of total wireless unit shipments, up from 27% the previous quarter; nearly half of wireless bookings were from Wi-Fi 7.
  • Large Deals -- 44 customers spent more than $1 million, the highest in the last two years.
  • MSP Billings -- Managed service provider billings grew 26% quarter over quarter.
  • Supply Chain -- Memory and key components are secured through fiscal 2027 and beyond via multi-sourcing, alternative qualification, design redesign, inventory investments, and strategic partnerships.
  • Price Increases -- New round implemented in March 2026, following mid-single-digit increases in November 2025 to address supply cost inflation.
  • Full Year Revenue Guidance -- $1.275 billion to $1.280 billion, implying 12% year-over-year growth at the midpoint.
  • Full Year Gross Margin Guidance -- 61.8% to 61.9%; full year operating margin is expected at 14.7% to 14.9%.
  • Full Year EPS Guidance -- $1.02 to $1.04 per share.
  • Q4 Revenue and Margin Guidance -- Revenue expected at $330 million to $335 million; gross margins at 61.8% to 62.2%; operating margin at 15.2% to 16.1%; EPS at $0.28 to $0.30; fully diluted share count to be around 132 million.
  • Competitive Positioning -- Company claims to provide enterprise customers with more than 30% total cost of ownership savings compared to "leading competitors."
  • Customer Wins -- Notable accounts signed include Asiana Airlines, Atlantic Food Distributors, Bridgeport Public Schools, City of Prescott, Johnstone Supply, Nissha Medical Technologies, and University of Buckingham.
  • Public Sector Demand -- Cited strong demand driven by platform compliance, privacy, and flexibility.
  • Regional Performance -- EMEA and APAC delivered particularly strong growth, with notable upward bookings in the Americas despite a challenging revenue comp.
  • Partner Program -- New program delivers "20% higher profitability" versus the largest competitor, according to a cited independent study.

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RISKS

  • Management noted that some professional services projects shifted to later quarters, affecting gross margin mix this period and indicating future volatility in margin from services.
  • There were delays in shipping to the Middle East due to regional conflict, with project schedules impacted though now reportedly resuming.

SUMMARY

The company delivered five consecutive quarters of double-digit revenue growth and achieved a sector-leading gross margin. Management highlighted substantial enterprise wins exceeding $1 million each, rapid Wi-Fi 7 adoption, and robust operational leverage reflected in increasing earnings and EBITDA margins. Persistent supply chain risks previously cited have been mitigated by direct sourcing and alternative component strategies, and further price increases have been implemented to offset cost inflation. The Americas region demonstrated notable bookings momentum, while EMEA and APAC continued strong expansion despite shipment timing nuances. The company affirmed full-year financial guidance and signaled further Platform ONE growth with upcoming new feature announcements.

  • Company leadership expects SaaS ARR growth to sustain within a 20%-30% range annually, stating recent results were at the upper end.
  • Competitive displacement occurs primarily versus Cisco and HPE Juniper, with management attributing new customer wins to platform differentiation, channel dynamics, and integration disruption at rivals.
  • Management stated, "we have no near-term nor do we believe a long-term issue with memory and currently any of our components going forward," emphasizing resolved supply constraints as a competitive advantage.
  • Quote windows for customer pricing are typically 30 to 60 days, introducing lag before recent price increases fully impact reported gross margins.
  • While regional instability in the Middle East briefly delayed a major project, management reported, "projects are getting back and that they will recover from prior delays," and indicated that EMEA remains a source of growth.

INDUSTRY GLOSSARY

  • Platform ONE: Extreme Networks’ unified platform providing AI-driven network management, automation, analytics, and full-visibility capabilities across customer environments.
  • SaaS ARR: The recurring annual revenue generated exclusively from software-as-a-service subscriptions.
  • MSP Program: Managed services partner initiative enabling third-party providers to deliver, license, and bill Extreme’s cloud and networking solutions at scale.
  • Agentic AI: Term used by Extreme Networks for embedded artificial intelligence agents driving automation and root-cause network diagnostics within Platform ONE.

Full Conference Call Transcript

Operator: Hello, everyone. Thank you for joining us, and welcome to the Extreme Networks Q3 Fiscal Year '26 Financial Results. [Operator Instructions] I will now hand the call over to Stan Kovler, Senior Vice President, Finance and Corporate Development. Please go ahead.

Stan Kovler: Thank you. Good morning, everyone, and welcome to Extreme Networks's Third Quarter Fiscal Year 2026 Earnings Conference Call. I'm Stan Kovler, Senior Vice President of Finance and Corporate Development. And with me today are Extreme Networks President and CEO, Ed Meyercord; and Executive Vice President and CFO, Kevin Rhodes. We just distributed a press release and filed an 8-K detailing Extreme Networks' financial results for the third quarter of 2026 and a copy of our press release, which includes our GAAP to non-GAAP reconciliations, and our earnings presentation is available in the IR section at extremenetworks.com.

Today's call and Q&A may include certain forward-looking statements based on current expectations about Extreme's future financial and operational results, growth expectations, new product introductions, supply chain dynamics and management strategies. All financial disclosures made on this call will be on a non-GAAP basis, unless stated otherwise. We caution you not to put undue reliance on these forward-looking statements as they involve risks and uncertainties that can cause actual results to differ from those anticipated by these statements. These risks are described in our risk factors in our 10-K and 10-Q filings. Any forward-looking statements made on this call reflect our analysis as of today, and we have no plans to update them, except as required by law.

Following our prepared remarks, we will take questions. And now I will turn the call over to Extreme's President and CEO, Ed Meyercord.

Kevin Rhodes: Ed, you may be on mute.

Operator: [Operator Instructions] Please stand by. Ladies and gentlemen, we are currently experiencing technical difficulties. Please stand by as we resolve the issue.

Edward Meyercord: Am I unmuted?

Kevin Rhodes: There you go, you're good, Ed.

Edward Meyercord: Okay. Sorry about that. Thank you all for joining us this morning, and thank you, Stan. The third quarter marks our fifth consecutive quarter of double-digit revenue growth. Our results reinforce our momentum as the fastest-growing enterprise networking player, outpacing market leaders. Our performance reflects strong sales execution and differentiated technology, including our enterprise fabric and AI-powered platform, which are driving share gains across key markets. We've also resolved memory supply needs for both the near and long term, which will allow us to meet customer demand and stabilize gross margins. And in the quarter, we returned $50 million to shareholders through share repurchases.

Revenue in the quarter beat the high end of our guidance at $317 million, an improvement of 11% year-over-year. Product revenue increased 12% year-over-year, representing 8 quarters of growth. Cloud subscription momentum lifted SaaS ARR to $236 million, an increase of 29% year-over-year. This performance underscores the strength of our Platform ONE strategy and the durability of our recurring revenue model. Extreme has secured our forward-looking supply to support demand through fiscal '27 and beyond through a combination of multi-sourcing, alternative component qualification, engineering redesign, component inventory investments and strategic supplier partnerships. Moving forward, this gives us greater fulfillment certainty and margin visibility.

Enterprise networking demand remains strong as high-quality secure networks are mission-critical to scaling operations and achieving business objectives. This demand supports targeted price increases to offset supply costs while maintaining a price advantage relative to Cisco. The combination of disciplined pricing actions and cost management allowed us to improve gross margins to 62.3%, up quarter-over-quarter, exceeding guidance. A recent independent study found that enterprise customers can experience more than 30% total cost of ownership savings with Extreme compared to leading competitors. Additionally, our new partner program delivers 20% higher profitability versus our largest competitor. This, combined with Cisco's end-of-life refresh cycle and HPE Juniper integration complexity is creating a significant opportunity for Extreme to take share.

This is reflected in double-digit growth, where 44 customers spent over $1 million with Extreme this quarter. Our products and solutions stand out in the market. Our fabric continues to be a significant differentiator. Customers highlight its simplicity and automation, which translate into reduced deployment time, improved reliability and lower operational complexity. It also strengthens security by shrinking the attack surface and containing threats with built-in segmentation that limits lateral movement. The feedback we hear most often is, "It's so easy," and our favorite customer quote is, "What took us 6 hours with Cisco, took only 6 minutes with Extreme." We're the only vendor that offers this fabric. We're gaining traction and adoption across verticals with Extreme Platform ONE.

Its agentic core and ability to provide customers with full network visibility is a significant competitive advantage. Customers are using Platform ONE to streamline operations, accelerate root cause analysis and automate routine tasks, resulting in faster issue resolution, reduced downtime and more efficient use of IT resources across increasingly complex environments. Wi-Fi 7 continues to be a key driver of wireless network refresh opportunities. This is driven by the advanced design of our access points, which maximizes throughput, minimizes latency and efficiently utilizes spectrum in dense environments. Our APs are built to handle the increasing demand of complex enterprise applications, AI-driven workloads and real-time traffic, delivering consistent high-performance connectivity even in the most challenging conditions.

And finally, no one matches Extreme's cloud choice, public, private or on-prem with no trade-offs in performance or control. Our platform's built-in compliance and flexibility let customers meet strict data security and regulatory requirements without compromise, driving strong public sector interest. The strength of our portfolio is showing up clearly in our results and customer wins. For example, Extreme played a role in 2 marquee events this quarter. During the recent Artemis II lunar spaceflight launch from Kennedy Space Center, our networking solutions supported mission-critical systems at the launch control operations. We're very proud to be a part of this historic and critical mission.

We also supported Lucas Oil Stadium during the NCAA Men's Final Four, where our team rapidly modernized connectivity, removing legacy access points and deploying temporary infrastructure to make the stadium game ready. Now we're upgrading and modernizing the stadium to Wi-Fi 7 for the upcoming Indianapolis Colts season. In addition, we had several new Extreme platform ONE wins in the quarter with customers, including Asiana Airlines, which is merging with Korean Air; Atlantic Food Distributors; Bridgeport Public Schools; City of Prescott, Arizona; Johnstone Supply; Nissha Medical Technologies; and the University of Buckingham. These customers are turning our AI-powered automation to reduce manual tasks, streamline operations and minimize network complexity, ultimately enabling faster execution and lower costs.

We're seeing strong momentum with our MSP program, with more than 70 active partners. MSP billings grew 26% quarter-over-quarter and continued a solid upward trajectory. MSPs value Platform ONE for its ability to manage multiple customer networks, licenses and incidents and our unique consumption billing and portable licensing model make it easy for them to scale their businesses. We exited the quarter with over $200 million in annualized EBITDA, healthy net cash and a full year guidance that reflects continued growth. And we have resolved supply chain concerns, which could translate into increased market opportunity.

The setup for Q4 means we're set to grow double digits for fiscal '26, and we're confident in our ability to outpace the market and continue to gain share in fiscal '27. Now let me turn the call over to Kevin to discuss financial results and guidance.

Kevin Rhodes: Thanks, Ed. We're really pleased with the third quarter performance. It was another strong quarter across several key areas: revenue growth, SaaS ARR growth, deal volume, gross margin improvement, earnings per share and solidifying our supply chain for at least the next fiscal year. Let me walk you through what drove the strong results this quarter. Total revenue of $317 million, grew 11% year-over-year and exceeded the high end of our guidance range. We achieved 5 sequential quarters of growth, a double-digit growth year-over-year and 8 quarters of sequential product revenue growth.

The growth in revenue is being driven by larger deals over $1 million, higher overall volumes of deals and improved average selling prices due in part to selective price increases. We achieved strong bookings across all regions, which reflects strong execution as well. On the bottom line, we continue to achieve strong operating leverage. Earnings per share of $0.26 exceeded the high end of our guidance range and grew 24% year-over-year, up from $0.21 in the prior year quarter. A few highlights to consider. We saw a meaningful acceleration in our SaaS ARR to $236 million, which was up 29% year-over-year due to strong Platform ONE attach to new product sales and upsells within our existing customer base.

We have several new AI and product features that are being announced at our upcoming Connect conference next week, which we expect to continue to drive Platform ONE adoption. Subscription and support recurring revenue of $114 million in the quarter grew 13% year-over-year and remained consistent at 36% of revenue. SaaS deferred revenue climbed to $342 million, a 19% year-over-year increase. This strong and growing base of deferred revenue signifies the shift to a more favorable mix of predictable, high-margin recurring revenue. Wi-Fi 7 grew meaningfully in its contribution to wireless product revenue, representing 37% of total wireless unit shipments in the quarter, up from 27% last quarter.

In terms of bookings dollars, nearly half of wireless bookings came from Wi-Fi 7 this quarter. This favorable mix shift continues to drive higher selling prices and gross margin. Geographically, we had very strong performance in EMEA and APAC, and we're confident in building on our success in those regions due to our favorable competitive positioning and differentiated solutions. Performance in Americas was also solid, especially considering the elevated revenue benchmark set in the prior year, and our bookings growth during the third quarter provides confidence in our outlook. Across verticals, we saw particular strength -- booking strength that is in education, health care, manufacturing and sports and entertainment during the quarter.

Several other factors drove revenue growth during the third quarter. The first factor was our momentum in winning larger and more strategic customer engagements, demonstrated by 44 customers spending over $1 million with Extreme, higher than any point in the last 2 years. Second, we had recent competitive wins and strong funnel conversion. We're seeing improved win rates with our differentiated campus fabric, Platform ONE's ability to offer full network visibility and AI-powered automation and network refresh opportunities with Wi-Fi 7. And finally, we successfully implemented another round of price increases in March, following our mid-single-digit November price increases. The rising cost of memory and other components caused us to selectively raise price.

This as well as disciplined discounting helped improve gross margins during the quarter. Overall, gross margins of 62.3% was up 30 basis points from the last quarter. Product gross margin grew 70 basis points from the second quarter as well. We've secured our supply chain, including our memory supply through fiscal 2027 and beyond, putting us in a strong position to meet our longer-term demand due to a combination of multi-sourcing, alternative component qualification, engineering redesign, component inventory investments and strategic supplier partnerships. Turning to operating profit. Our operating margin in the third quarter was 15.2%, up from 14.1% in the prior quarter and 15% last year. This was driven by improved gross margins and disciplined cost management.

In fact, we achieved our highest EBITDA on a dollar and margin basis in the last 10 quarters at $53.4 million of EBITDA and a 16.9% EBITDA margin. Our strong operating results reaffirm our confidence in driving operating leverage to reach our long-term profit target of 22% to 24%. On the capital allocation side, we executed a $50 million accelerated share repurchase during the quarter, retiring over 3 million shares post settlement at an average price of $14.58 per share. We plan to return cash to shareholders through continued buybacks with $137.5 million of our current $200 million authorization still remaining. Now let me turn to our fourth quarter guidance.

We expect our revenue to be in the range of $330 million to $335 million. We expect gross margins to be in a range of 61.8% to 62.2%. Operating margin is expected to be in a range of 15.2% to 16.1% and earnings per share is expected to be in the range of $0.28 to $0.30. Our fully diluted share count is expected to be around 132 million shares. For the full fiscal year 2026, we expect guidance as follows: revenue to be in the range of $1.275 billion to $1.280 billion. The midpoint of this range suggests 12% year-over-year growth.

Given our results and visibility we have for gross margins, we now expect gross margins for the full fiscal year to be in the range of 61.8% to 61.9% and operating margin to be in a range of 14.7% to 14.9%. Earnings per share for fiscal 2026 is expected to be in a range of $1.02 to $1.04 per share. And with that, I'll now turn the call over to the operator to begin the question-and-answer session.

Operator: [Operator Instructions] Your first question comes from the line of Ryan Koontz with Needham & Co.

Ryan Koontz: Terrific results to see here this morning. If I could start with SaaS there. Nice to see that inflect higher and start to accelerate. What's your visibility look like for that continuing that momentum? And do we expect some solid seasonality in your Q4? Maybe you can unpack that for us a bit.

Edward Meyercord: Kevin, do you want to take that one?

Kevin Rhodes: Sure. I'm happy to, Ryan. So I mean, we actually were pretty pleased with what we saw both from a bookings perspective on Platform ONE. We do have a little bit of a tougher comp in Q4, like you mentioned. We still believe that we can range, I'd say, our growth in SaaS ARR to be in that kind of 20% to 30% range. Naturally, this quarter, it's higher on that range, but that's roughly the range that we're expecting on the long term.

Edward Meyercord: And I'll just add to that. Yes, I'll add to that, Kevin, that we have -- in terms of growth, we've been exceeding our internal expectations for Platform ONE. We have a very steep ramp in our plan. And so, it's doubling from Q2 to Q3 and then further into doubling again in Q4, and we're on track. And so I would say it's really that momentum of Platform ONE adoption that has been the driver.

Ryan Koontz: That's terrific. It sounds right in line with your plan. So maybe on the competitive front, you mentioned some wins and some strong bookings internationally. Who are you seeing the most success with against in these competitive bids? And what gives you confidence here going forward on your continued share gains here because you guys are clearly taking share.

Edward Meyercord: Yes, it's interesting, Ryan, in all of the examples that we put in our press releases, it really reflects wins against virtually all of our competitors. And when we say that, obviously, #1 is Cisco, #2 -- and it really just goes by market share, #2 being HPE Juniper and then we actually included a win from Huawei, which is interesting because we don't see them in the U.S. in many markets. So I would say that it's -- our competition is primarily versus Cisco and HPE. And we're winning with our fabric. We're winning with Platform ONE. We're winning with our success and making it very easy for customers to deliver a high-quality experience in complicated networking environments.

We talk about complex wireless. And we also talk about cloud choice and flexibility. And then there's also commercial terms. There's -- today, the competitive environment is such that Cisco continues to grow and expand outside the networking market. And I would say, simply focus on other things. That opens the door for us. The new comp plan for partners require them to jump through hoops and sell things that they normally don't sell. That opens the door for us. And then HPE Juniper, the complexity of that deal and the challenges that they'll have with integration filters out into the field and into the channel.

And so here, again, with Extreme, with a very clean vision, a clean portfolio and hardware and solutions that are very easy for customers to use and simplify operations in something that's inherently complex is getting us more at bats and our conversion rates are going up and our win rates are going up.

Operator: Our next question comes from the line of Dave Kang with B. Riley.

Dave Kang: Question on the gross margin came in better than expected. Were there several large professional installation projects in fiscal third quarter? And what should we expect for fiscal fourth quarter as far as the installation projects are concerned? Because I think that was the reason that kind of pressured gross margin last quarter, right?

Kevin Rhodes: Yes. Dave, we...

Edward Meyercord: Yes. I'll take it, Kevin, and then you can jump in. We had a couple of professional projects pushed to Q4 and Q1. And so the level of professional services in the quarter was a little higher than normal, but not as significant as we had expected. But obviously, there's a lot of variables impacting gross margin. And we saw some benefit from the pricing moves we took earlier in Q2. And then we're very aggressively managing the cost on the cost of goods side. I think our teams are doing a great job there of being very disciplined and aggressive and attacking the cost structure. Kevin, do you want to add anything?

Kevin Rhodes: I think that's right, Ed. I think across the board, we just saw a little bit more improvement than we had expected. But overall, part of it is execution, part of it is the price increases and part of it is just a slight delay in some of the professional services, mix of all 3.

Dave Kang: And then more importantly, on product margins, are they still trending up and -- going forward?

Kevin Rhodes: Product margins, I mean, yes, I would say from -- first of all, we had 70 basis points increase quarter-over-quarter from a product margin perspective, Dave. I would say from a product margin perspective going forward, we're still absorbing some of the costs that we had, higher memory costs, and we're trying to balance that with the price increases that we had, including those in March. We're still trying to see if we can get those price increases in March through. But I would say, generally speaking, we feel confident in our ability to stabilize product margins around that 57% plus range.

Dave Kang: Got it. And then on the memory situation, I think the last time we talked, I thought you were targeting close to 3 years. Are we there yet? Or where are we in that regard?

Kevin Rhodes: Go ahead, Ed.

Edward Meyercord: Yes, I was going to say I don't -- we would not target to have on hand 3 years of supply of memory. But at this stage, what we're messaging is that we no longer believe we have an issue with supply of memory. And that's near term with committed supply through fiscal '27 and into '28. And then there are new sources of supply coming into the market when -- we believe in the first quarter of calendar '28. So from our perspective, we mentioned the fact that we have -- we've established direct connections with suppliers of memory and taken a multi-sourcing approach.

We've been able to qualify alternative components that were designed for other industrial sectors, which has given us another source of supply. We've been able to redesign our products to reduce the number of chips required, which is another factor. And then we've been able to make investments with our strategic partners and our ecosystem of partners, they have helped us find and locate supply, which has been very important. And so it's through a combination of a variety of initiatives that we've been able to solve for this, and we're confident in saying that we have no near-term nor do we believe a long-term issue with memory and currently any of our components going forward.

Operator: Our next question comes from the line of David Vogt with UBS.

David Vogt: So maybe, Kevin, I might have missed it and maybe if you can touch on this again regarding kind of the supply chain dynamics and all the initiatives that you undertook in the quarter, can you remind us again sort of how we should think about the implementation of price increases in the supply chain and how it flows through? Historically, you've had, what, like 90-day quoting windows. Like what do those quoting windows look like today for customers? And when do you start to think you're going to start to see the benefits of -- obviously, I'm sure you saw some of the price increase benefits from December, but you mentioned March as well.

So how do we think about that flowing through into the upcoming quarters from a gross margin perspective?

Kevin Rhodes: Sure, Dave. And first of all, I would describe the price increases, even if you do like a 10% price increase, the industry standard is discounting at 75%. So really, you're looking at somewhere between 2% to 3% net price increase, right, as you can imagine. And so with these price increases kind of coming through on a net basis at 2% to 3%, both between November and March, some of that is to obviously offset the cost themselves and some of it is to maintain the margins that we've had in the past going forward. It's a little early to tell what's going to happen with the March increases.

And quite frankly, a lot of competitors also put price increases in March. So the fact that typical quotes are open for 30, 60 days makes it a little difficult to know what's going to happen with March over the time frame. We feel good about stabilizing our gross margins and being able to start to grow gross margins I would say, into the '27 period. And so I think from our perspective, we are feeling confident about the 62% number and then growing from there throughout the next year.

David Vogt: Perfect. And maybe one follow-up too. I know, obviously, you talked about big wins in EMEA and other markets. Can you maybe just touch on the U.S. market? I would have imagined -- I know there was a little bit of a tough comp in the Americas, but I would have imagined given the share gains that you probably are taking from some of the integration challenged companies that we would have seen stronger growth in the Americas. Anything to call out there in the Americas vis-a-vis what's going on in APAC and EMEA?

Edward Meyercord: Yes, David, I think it's a little misleading because the -- what we're showing as revenue is based on shipments and the timing of shipments doesn't always line up with -- I think what you're getting at is the demand and our success in the marketplace. If we were to flip the page and actually look at bookings, and I know we don't report bookings data, but bookings growth in the Americas was up significantly, and I would say significantly higher than total revenue growth for the company. So I think the revenue stats here are going to be a little misleading because we had an excellent quarter in the Americas as far as bookings.

But in terms of the shipments and the timing of shipments channel, that's what's going on. So I would say that geographically, the strongest geo was the Americas this quarter, even though it wouldn't appear so if you're looking at that revenue number.

Operator: Our next question comes from the line of Tomer Zilberman with Bank of America.

Tomer Zilberman: Maybe following along the gross margin question line here. Outside of the price increases, you also mentioned some other things like requalifying alternative parts. I think previously, historically, you mentioned qualifying in automotive-grade DDR4, if I recall, and I think also qualifying in some Chinese vendors. One, is this more about just securing supply versus improving the gross margin level? And two, these other alternative things you're doing, I think you also talked about redesigning some of your products. When is that flowing through? Did that already impact results this quarter? Or is that something that we should expect to benefit in 2027?

Edward Meyercord: Thanks for the question, Tomer. I think it's a combination of both. It's both demand as well as gross margin. I would say we're securing memory at prices that are below market with the initiatives that we have underway. As I mentioned on the last call, our size is an advantage in terms of what we're chasing. I want to shout out to our teams because we have very creative teams that have excellent relationships with our vendors. I also want to shout out Broadcom. We have a strategic relationship with Broadcom. They have gone out of their way to support us in making important introductions out into the industry for us to solve this problem.

And so they have been a key partner for us in solving for this. And it is a combination of a variety of things. Historically, we would -- Extreme would not buy memory direct. We would -- our ODMs, our manufacturers would acquire memory from distribution in Asia, and then they would, in turn, buy from suppliers. And what's changed is, we've established direct connections now with multiple vendors of memory. And as you mentioned, we've been very creative working with Broadcom to qualify memory chips that were designed for other industrial sectors that we could use and Broadcom has qualified those.

So now those are going into production, and we've been able to pick them up for a very good price. And so I would say that the efforts that have been undertaken at the company, and it's been multifaceted has opened the door for us for new supply from different vendors, from different markets. And we've been able to secure not only the supply for the long term -- near term and long term, but we've also been able to get them at very attractive prices. And I would say that we were -- I'm pleasantly surprised with the success that we've had given where we were 2 quarters ago and kind of what the outlook was at that time.

At this point in time, as I said, we put this behind us, and we believe it could turn into a competitive advantage. What we hear from manufacturers is that we are in a very strong position relative to competitors.

Tomer Zilberman: So maybe a follow-up question just to the end of what you were saying there. Are you hearing from your customers that any of your wins are coming specifically from that? One, from -- you have a level of supply that maybe some of your peers don't and customers are going to you because you can ship faster? And could it also be that you just have less cost pass-throughs versus your peers, and that's also a differentiator for your customers?

Edward Meyercord: Tomer, I think that as far as the demand side of the ledger, we haven't really seen a competitive win based on supply yet. But given what's going on in the market and given the persistent shortage out in the industry, we think it could come into play. I think that's the way to think about it. We do know that there is some activity that -- of customers wanting to make sure that they can secure supply for important projects, some of that going on. Kevin mentioned the price increase. intra-quarter, we saw some people moving orders earlier in the quarter to take advantage of the price increases. But generally, it's been business as usual.

And as we look into Q4, we have a really healthy funnel, and we're off to a really good start. So we feel really confident about how we're guiding.

Operator: Our next question comes from the line of Mike Genovese with Rosenblatt Securities.

Michael Genovese: I guess the upside in Extreme ONE orders and the RPOs kind of answered this question in a way. But is there any more detail you can give us, Kevin, on cloud and services attach rates and how those have changed since you've launched Extreme ONE?

Kevin Rhodes: Well, yes, Mike, I mean, I would say -- I mean, Ed nailed it earlier where we said our plan this year, we're running ahead of our plan. So we launched in July, obviously, Q2 being the first full quarter. And now in Q3, we've doubled what we expected from Q2, and we're expecting to double again from a bookings perspective in Q4. That's going to start to play out and continue to accelerate subscription and support revenue over time. This is what we've talked about, right, for about a year now with launching Platform ONE as a platform that gives a higher attach rate, a higher ASP and obviously better renewals in the future.

From an attach rate perspective, I would just tell you, the agentic AI is the interesting part where we're getting higher attach rates, both on the wireless as well as the wired side. And that's where you're continuing to see strong bookings there. And like I said, we saw really strong bookings in the third quarter related to Platform ONE.

Michael Genovese: Great. And then my second question, it just seems looking at the data that you've been gaining share from Cisco for a while. But I'm wondering, has there been any inflection that you can point to on the HPE Juniper side where kind of have the share gains there started? What's the confidence that they're going to accelerate? Kind of what's going on, on that side?

Edward Meyercord: Yes. Mike, the answer is we're seeing opportunities both with end-user customers. And then we're seeing a lot of opportunities in the channel. A lot of channel partners, maybe they were Juniper partners, and now it's the HPE show and they're disillusioned and they're looking for alternatives. There's a lot of activity in the channel right now where we're engaged with new partners that are larger partners as we move upmarket and a lot of those partner opportunities are coming from the disruption of Juniper and HPE. Those opportunities as it translates into end-user business, I don't think we've seen that materialize yet.

We have examples, but in a meaningful way, but we're expecting that to gain momentum as we go forward.

Michael Genovese: Congratulations on the bullish quarter and outlook.

Operator: Our next question comes from the line of Christian Schwab with Craig-Hallum. Our next question comes from the line of Eric Martinuzzi with Lake Street Capital Markets.

Eric Martinuzzi: I wanted to revisit the Investor Day comments you had regarding long-term growth rates. At that time, this was -- you guys were talking about a 10% plus growth rate between FY '25 and FY '29. Given the good numbers that you've seen here, certainly top line, both since the December quarter and the March quarter, is there any change to that outlook as far as a double-digit growth rate?

Edward Meyercord: Eric, there's not. When you look at our guide into Q4, that implied growth in Q4 is, call it, a 7% to 9% range. But keep in mind, last year in Q4, we grew 20%. If you average that out, you've got a mid-teens growth rate that we're running at. And so I think that assumption holds and it has not changed.

Eric Martinuzzi: Okay. And then from a macro perspective and probably more for your EMEA market, but the war with Iran has been going on for a couple of months now. You obviously put up good numbers here in the March quarter. But anything on the margin, good or bad, tied to pipeline in EMEA with the war?

Edward Meyercord: Yes. I think during the quarter, there were a couple of shipments that were impacted where we couldn't ship into the region. And -- but at this point, a lot of those projects have resumed. We talked about our massive project in Ras Al Khaimah, which is just north of Dubai, right near the Strait of Hormuz is. It's a Wynn Casino and Resort. It's the first casino in the Middle East. It's the first phase is a $10 billion project, and it's a massive project for us. They're back and working. And it's hard to believe it's business as usual there. The shipping lanes and our ability to transport product into the region is open.

So at this point, I'd say we're -- it's somewhat business as usual. We have seen -- because of the incident, and we have seen some delays in some of the projects, but it feels like projects are getting back and that they will recover from prior delays. The other comment on that, Eric, is that for us, it's a smaller -- a much smaller piece of our business. The Middle East is tied to EMEA for us, and we had a strong quarter in EMEA. And we've been taking share in the Meta market, and that continues. We have excellent customer references there. So we expect that market to continue to grow at a healthy growth.

Operator: [Operator Instructions] Our next question comes from the line of Christian Schwab with Craig-Hallum. There are no further questions at this time. I will now turn the call back to Ed Meyercord, President and CEO, for closing remarks.

Edward Meyercord: Okay. Thank you, Melissa, and thank you, everybody, for joining us. I also want to shout out, we have employees, customers and partners that tune into these calls, and thank you for the hard work and support on delivering an excellent quarter. Also mentioning to stay tuned, we have some big announcements coming out next week. We have our user conference, Extreme Connect, which is going to be in Orlando. We will be talking about some new technology solutions and the evolution of our portfolio and some exciting new developments on that front. So we appreciate your support, and I hope you have a great day.

Operator: This concludes today's call. Thank you for attending. You may now disconnect.