Extreme Networks CEO on 8 Straight Earnings Beats and AI Growth

**SPEAKER_1** (0:00)
We are happy to be joined by the company's president and CEO, Ed Meyercord. Thank you, and welcome back to the show.
Let's talk about your latest earnings and reaction to those earnings, where we did see somewhat of a dramatic sell-off. You didn't necessarily think that was merited. Let's talk about the quarter. Tell us more.

**Ed Meyercord** (0:21)
Hi, Nicole. Thanks for having us back.
Yeah, it was another beat and raise, and believe it or not, it's our 8th beat and raise quarter in a row. And then when your stock falls 25%, you say, well, maybe it must be that the street expected us to beat more or raise more, likely to raise more. But we put up about 13% top line growth for the year last year. And importantly, this has been a big thread in terms of news around supply chain. Our supply chain issues, as far as memory and securing components, we've been able to solve that. And so we had a really bullish announcement after last quarter, and we reiterated that again. So we've been able not only to get supply to meet demand, but also to hold our gross margins in the 62% range. We beat on the gross margin front by about a half a point.
And then that led to a slight earnings beat. And then for the outlook, we raised our revenue outlook for Q1. And then for the year, we have a June fiscal year. So that's being led by the strength of our technology platforms in the market. We are innovating in AI for networking. We have been very successful out in front with the release of our Agent One with Platform One, which effectively allows company companies and our enterprise customers to automate network functions. It makes life a lot easier and you have a lot more insights and visibility as to what's happening in the network. And so really through all stages of network development, you'll have an AI agent as a partner. And we're out in front there. So we're leading on the innovation front.

**SPEAKER_1** (2:17)
Yeah, Extreme Platform One, you talked about the capabilities to simplify the operations. And so you're seeing demand for that. I'd love to hear a little more about that. As you noted, the pendulum really swinging back to enterprise, enterprise data centers, AI workloads more over time. So this is all good news for you. I also saw some of the deals you have with the Tennessee Titans and University of Florida. You had another big win in Australia. Tell us about some of the demand even globally that you are now seeing.

**Ed Meyercord** (2:50)
Well, our innovations on the technology front are resonating with larger customers. So what you hear us talking about is how we're moving up market. You mentioned the Tennessee Titans, huge project, more than just the stadium.
In Australia, we had the University Technology of Sydney, and this was the largest deal that we've ever had in the Australia and New Zealand marketplace. This is happening across all of our industry verticals, across all geographies for Extreme around the world. So we put up for us, we look at one of the metrics, we look at customers who spend over a million dollars with Extreme. Last year, we capped out with 187 customers, which is up significantly from the year before. And then the quarter over quarter, we look at Q4 over Q4 even higher. And what's encouraging for me is to see how it all comes together in terms of the kinds of customers that we're winning, and we have data to support it, numbers to back it up, in terms of higher profile accounts, more complex networking projects. And that ties directly to the technology that we're building. Our larger enterprise customers are very interesting in having the most modern networking tools to future proof their investments, and important investments in IT infrastructure. So we're able to provide these tools, and with these larger customers, they're more and more interested in partnering with Extreme because of these capabilities that we have. And we compete with a lot of larger companies, some of the bigger well-known names in the space. However, we're out in front of them. And what we've found is that while we're actually, we're demoing live technology, we're actually going general availability with this technology, whereas our larger competitors are still in PowerPoint mode. And so that has a huge impact on customers when they can actually touch and feel and see the technology in action, as opposed to hearing about a roadmap. So that's opening up doors for us at Extreme.
We're seeing bigger opportunities, more opportunities, getting more at-bats. And then we're also seeing our conversion of those opportunities go up. So we're really hitting on all cylinders at Extreme. We're executing incredibly well.