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The call highlighted multiple clear operational and financial improvements: revenue beat, sustained double-digit growth, rapid SaaS ARR acceleration (+29% YoY), margin expansion (62.3% GM, +30 bps q/q), recordably strong EBITDA, resolved supply constraints and meaningful product and partner traction (Wi‑Fi 7 adoption, Platform ONE wins, MSP growth). Lowlights were primarily execution/timing and margin-transmission uncertainties — higher component costs necessitating price increases whose net benefits are diluted by discounting, some project timing shifts and regional shipping delays. Overall, positives (growth, margin improvement, supply resolution, recurring revenue momentum, capital returns) materially outweigh the challenges, though timing and competitive dynamics require monitoring.
Extreme guided Q4 revenue of $330–335 million with gross margins of 61.8%–62.2%, operating margins of 15.2%–16.1% and EPS of $0.28–0.30 on roughly 132 million diluted shares; for full FY2026 it expects revenue of $1.275–1.280 billion (midpoint implying ≈12% y/y growth), full‑year gross margin of 61.8%–61.9%, operating margin of 14.7%–14.9% and EPS of $1.02–1.04. Management also reiterated strong SaaS momentum (Q3 SaaS ARR $236M, +29% y/y; guidance for long‑run SaaS ARR growth of ~20%–30%), highlighted $342M of SaaS deferred revenue (+19% y/y), subscription & support of $114M (36% of revenue), exited the quarter with >$200M annualized EBITDA, and noted $137.5M remaining of a $200M share‑repurchase authorization after a $50M buyback.
Total revenue of $317.0M, up 11% year-over-year, beat the high end of guidance. This marks 5 consecutive quarters of double-digit revenue growth and 8 quarters of sequential product revenue growth; product revenue rose 12% year-over-year.
SaaS ARR reached $236M, up 29% year-over-year. SaaS deferred revenue was $342M (+19% YoY). Subscription & support recurring revenue was $114M, up 13% YoY and representing 36% of revenue.
Gross margin improved to 62.3% (up 30 bps quarter-over-quarter) and product gross margin rose 70 bps q/q. Operating margin was 15.2% (vs. 14.1% prior quarter). EBITDA was $53.4M (16.9% margin), the highest dollar and margin level in 10 quarters. EPS was $0.26, up 24% YoY (from $0.21). The company exited the quarter with over $200M in annualized EBITDA.
Company secured memory and component supply through fiscal 2027+ via multi-sourcing, alternative component qualification, engineering redesign, inventory investments and strategic supplier partnerships — restoring fulfillment certainty and improving margin visibility.
Wi‑Fi 7 represented 37% of wireless unit shipments (up from 27% last quarter) and accounted for nearly half of wireless bookings. The company reported 44 customers spending over $1M in the quarter and multiple Platform ONE wins (e.g., Asiana Airlines, Bridgeport Public Schools, University of Buckingham). High-profile deployments included Artemis II launch support and Lucas Oil Stadium.
MSP program growth with more than 70 active partners; MSP billings grew 26% quarter-over-quarter. New partner program delivers ~20% higher profitability versus the largest competitor, supporting channel expansion and higher attach rates.
Executed a $50M accelerated share repurchase, retiring over 3M shares at an average price of $14.58. $137.5M remains of the current $200M buyback authorization, signaling continued share repurchases.
Q4 guidance: revenue $330M–$335M; gross margin 61.8%–62.2%; operating margin 15.2%–16.1%; EPS $0.28–$0.30. FY26 guidance: revenue $1.275B–$1.280B (midpoint implies ~12% YoY growth), gross margin 61.8%–61.9%, EPS $1.02–$1.04. Company reiterates plan for continued double-digit growth and share gains into FY27.
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.
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, ...