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Extreme Networks (EXTR)
NASDAQ:EXTR
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Extreme Networks
(NASDAQ:EXTR)
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Rating:67Neutral
Price Target:
$21.50
▼(-3.59% Downside)
Extreme Networks is on a positive trajectory with strong revenue growth and strategic wins, particularly in APAC and EMEA. The technical indicators support a bullish trend. However, profitability issues and high leverage pose risks. The valuation is unattractive due to a negative P/E ratio and lack of dividend yield.
Positive Factors
Revenue Growth
Consistent revenue growth indicates strong market demand and successful product adoption, supporting long-term business expansion.
SaaS ARR Acceleration
The acceleration in SaaS ARR reflects a successful transition to recurring revenue models, enhancing financial stability and predictability.
Product Innovation
Innovative product launches like Extreme Platform 1 strengthen competitive positioning and drive future growth in the networking sector.
Negative Factors
Profitability Challenges
Ongoing profitability issues can hinder reinvestment in growth initiatives and affect long-term financial health.
High Leverage
High leverage increases financial risk and limits flexibility, potentially impacting the company's ability to navigate economic downturns.
Dependency on Government Contracts
Reliance on government contracts introduces revenue volatility, as these contracts can be subject to political and budgetary changes.
Extreme Networks (EXTR) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$2.95B
Dividend YieldN/A
Average Volume (3M)1.37M
Price to Earnings (P/E)―
Beta (1Y)1.40
Revenue Growth2.05%
EPS Growth91.37%
CountryUS
Employees2,656
SectorTechnology
Sector Strength88
IndustryCommunication Equipment
Share Statistics
EPS (TTM)0.25
Shares Outstanding132,209,610
10 Day Avg. Volume1,173,626
30 Day Avg. Volume1,374,527
Financial Highlights & Ratios
PEG Ratio3.48
Price to Book (P/B)36.22
Price to Sales (P/S)2.08
P/FCF Ratio17.25
Enterprise Value/Market Cap0.81
Enterprise Value/Revenue2.08
Enterprise Value/Gross Profit3.35
Enterprise Value/Ebitda48.18
Forecast
1Y Price Target
$23.50Price Target Upside5.38% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering7
Extreme Networks Business Overview & Revenue Model
Company DescriptionExtreme Networks, Inc. provides software-driven networking solutions worldwide. It designs, develops, and manufactures wired and wireless network infrastructure equipment; and develops software for network management, policy, analytics, security, and access controls. The company offers ExtremeCloud IQ, an ML/AI powered, wired, and wireless cloud network management solution that offers advanced visibility and control over users, devices, and applications; ExtremeCloud IQ Site Engine that provides task automation, access control, granular visibility with real-time analytics and multi-vendor device management; and ExtremeCloud IQ Essentials offers WIPS, location services, IoT, and guest management services. It also provides wireless access point products; ExtremeSwitching portfolio that includes access edge products that offer physical presentations along with options to deliver Ethernet or convergence-friendly Power-over-Ethernet (POE), including high-power universal POE; aggregation/core switches designed to address aggregation, top-of-rack, and campus core environments; and data center switches and routers. In addition, the company offers cloud native platforms and applications for service providers; and customer support and services. It markets and sells its products through distributors, resellers, and field sales organizations to healthcare, education, government, manufacturing, retail, and hospitality markets. Extreme Networks, Inc. was incorporated in 1996 and is headquartered in Morrisville, North Carolina.
How the Company Makes MoneyExtreme Networks generates revenue through multiple streams, primarily from the sale of networking hardware, software licenses, and subscription-based services. The company earns significant income from its networking equipment, including switches and routers, which are essential for building and maintaining network infrastructure. Additionally, Extreme Networks offers cloud-based networking solutions that are billed on a subscription model, providing a steady revenue stream from ongoing service contracts. The company also benefits from professional services, including installation, support, and consulting services, which contribute to its overall earnings. Strategic partnerships with other technology providers and integration with third-party solutions further enhance its market reach and revenue potential.
Extreme Networks Earnings Call Summary
Earnings Call Date:Aug 06, 2025
(Q4-2025)
| % Change Since: |
Next Earnings Date:Oct 29, 2025
Earnings Call Sentiment Positive
The earnings call reflects a strong performance in Q4 with notable revenue growth and strategic wins, particularly in the APAC and EMEA regions. The launch of Extreme Platform 1 and expansion in high-density venues further showcase the company's innovation and market penetration. However, there are growth challenges in the Americas and a dependency on large government contracts. Overall, the positive aspects significantly outweigh the lowlights.Q4-2025 Updates
Positive Updates
Record Revenue Growth
Achieved a revenue of $307 million in Q4, marking a 20% increase year-over-year and an 8% increase sequentially.
SaaS ARR Acceleration
SaaS ARR revenue grew to $208 million, an increase of 24% year-over-year.
Significant Wins in APAC
Achieved the largest win in company history in the APAC region with the Japanese government, including a major project with the Supreme Court.
Strong Performance in EMEA
EMEA revenue grew 21% year-over-year, the highest level since early 2024.
Expansion in High-Density Venues
Expanded presence in venues like MetLife Stadium and Pinnacle Bank Arena with modern WiFi 6E infrastructure.
Introduction of Extreme Platform 1
Launched the AI-powered Extreme Platform 1, recognized by industry analysts as at the leading edge of the market.
Strong Financial Performance
Achieved earnings per share of $0.25, up 32% from the prior year.
Improved Cash Flow
Generated $75 million in free cash flow, the highest quarterly level since 2023.
Negative Updates
Challenges in the Americas
Revenue in the Americas grew only 4% year-over-year, indicating slower growth compared to other regions.
Dependency on Government Contracts
A significant portion of revenue growth was attributed to large government contracts, which can be volatile.
Company Guidance
During the Extreme Networks Fourth Quarter Fiscal Year 2025 Conference Call, guidance highlighted several key metrics and expectations for the future. The company reported a fifth consecutive quarter of sequential revenue growth, achieving $307 million in Q4 revenue, marking a 20% year-over-year increase. SaaS ARR revenue accelerated to $208 million, a 24% increase year-over-year, driven by robust demand across various verticals and regions, including strong performances in APAC and EMEA. The company achieved a non-GAAP earnings per share of $0.25, at the high end of their guidance range, and exceeded the consensus of $0.23. Product revenue grew 26% year-over-year to $192 million, with Wi-Fi 7 representing 30% of wireless units. Looking ahead, for fiscal year 2026, revenue is expected to be between $1.228 billion to $1.238 billion, with strong visibility for growth based on the funnel, backlog, and future customer demand. For Q1 of fiscal 2026, revenue is projected to range from $292 million to $300 million, with earnings per share between $0.20 to $0.23.Extreme Networks Financial Statement Overview
Summary
Extreme Networks shows positive revenue growth and improved cash flow metrics. However, profitability remains a concern with negative net margins and zero return on equity. The balance sheet shows high leverage, which could be a risk if not managed properly.Income Statement
Extreme Networks has shown a positive revenue growth rate of 4.62% in the latest year, indicating a recovery from previous declines. The gross profit margin is strong at 62.2%, reflecting efficient cost management. However, the net profit margin remains negative, indicating ongoing profitability challenges. The EBIT and EBITDA margins have improved but remain relatively low, suggesting room for operational efficiency improvements.65
Positive
Balance Sheet
The company's debt-to-equity ratio has improved from extremely high levels but remains elevated at 3.41, indicating significant leverage. Return on equity is currently zero, reflecting profitability issues. The equity ratio is low, suggesting a heavy reliance on debt financing, which could pose risks if not managed carefully.55
Neutral
Cash Flow
The cash flow situation has improved significantly, with a free cash flow growth rate of 118.45%. The operating cash flow to net income ratio is healthy, indicating strong cash generation relative to reported earnings. The free cash flow to net income ratio of 1.0 suggests that the company is generating sufficient cash to cover its net losses, which is a positive sign for liquidity.75
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 1.14B | 1.14B | 1.12B | 1.31B | 1.11B | 1.01B |
| Gross Profit | 709.13M | 709.13M | 630.83M | 754.72M | 629.94M | 585.12M |
| EBITDA | 49.31M | 49.31M | -19.61M | 158.62M | 120.07M | 110.09M |
| Net Income | -7.47M | -7.47M | -85.96M | 78.07M | 44.27M | 1.94M |
Balance Sheet | ||||||
| Total Assets | 1.15B | 1.15B | 1.04B | 1.14B | 1.07B | 1.01B |
| Cash, Cash Equivalents and Short-Term Investments | 231.75M | 231.75M | 156.70M | 234.83M | 194.52M | 246.89M |
| Total Debt | 223.44M | 223.44M | 239.60M | 264.61M | 351.13M | 390.84M |
| Total Liabilities | 1.09B | 1.09B | 1.02B | 1.02B | 978.17M | 955.63M |
| Stockholders Equity | 65.58M | 65.58M | 25.28M | 116.75M | 90.34M | 54.47M |
Cash Flow | ||||||
| Free Cash Flow | 138.37M | 137.68M | 37.37M | 235.41M | 112.74M | 127.36M |
| Operating Cash Flow | 163.09M | 162.39M | 55.49M | 249.21M | 128.18M | 144.53M |
| Investing Cash Flow | -24.71M | -24.71M | -18.12M | -13.80M | -84.95M | -17.18M |
| Financing Cash Flow | -63.64M | -52.59M | -114.98M | -194.78M | -94.66M | -74.78M |
Extreme Networks Technical Analysis
Positive
22.30
Price Trends
19.91
Positive
18.12
Positive
16.73
Positive
Market Momentum
0.72
Positive
59.72
Neutral
65.71
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For EXTR, the sentiment is Positive. The current price of 22.3 is above the 20-day moving average (MA) of 21.91, above the 50-day MA of 19.91, and above the 200-day MA of 16.73, indicating a bullish trend. The MACD of 0.72 indicates Positive momentum. The RSI at 59.72 is Neutral, neither overbought nor oversold. The STOCH value of 65.71 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for EXTR.
Extreme Networks Risk Analysis
Extreme Networks disclosed 39 risk factors in its most recent earnings report. Extreme Networks reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Extreme Networks Peers Comparison
Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | 1.39B | 32.95 | 6.87% | ― | -2.37% | 147.46% | |
67 Neutral | $2.95B | ― | -16.44% | ― | 2.05% | 91.37% | |
65 Neutral | 2.73B | 79.69 | 4.46% | ― | 8.39% | 0.00% | |
60 Neutral | 3.98B | -6.41 | -12.63% | ― | -1.43% | 43.14% | |
58 Neutral | 3.64B | -25.02 | -69.12% | ― | -11.03% | 91.98% | |
56 Neutral | 760.50M | -7.19 | -64.24% | ― | 3.52% | 81.33% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% |
* Technology Sector Average
Performance Comparison
EXTR
Extreme Networks
22.30
7.32
48.87%
ADTN
Adtran
9.50
3.88
69.04%
DGII
Digi International
37.57
10.64
39.51%
VSAT
ViaSat
29.61
16.81
131.33%
COMM
CommScope Holding
16.45
10.16
161.53%
VIAV
Viavi Solutions
12.24
3.77
44.51%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.