Earnings release
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NEWS RELEASE Extreme Networks Reports First Quarter Fiscal Year 2027 Financial Results 2026-10-28 Revenue climbs 10% on seven straight quarters of double-digit growth Strong Extreme Platform ONE Bookings help drive SaaS ARR growth up 22% MORRISVILLE, N.C.--(BUSINESS WIRE)-- Extreme Networks, Inc. (“Extreme”) (Nasdaq: EXTR) today released nancial results for its rst quarter ended September 30, 2026. “Extreme delivered its seventh consecutive quarter of double-digit year-over-year growth in Q1. Demand for Extreme Platform ONE continues to accelerate, with strong quarter-over-quarter subscription gains. Platform ONE bookings are now over 50% of subscription bookings, up 5x from the prior year. Based on the strength of our business and visibility of demand for our solutions, we are con dent in calling 10% growth next quarter and for the rest of the year. The combination of our unique enterprise fabric solution, our di erentiated Wi-Fi 7 o erings, and the most modern agentic AI management platform is giving us an advantage in the marketplace,” said Ed Meyercord, President and CEO of Extreme. “The release of our second-generation AI platform, Agent ONE Coworker, marks our shift from conversational to ambient AI. This context-aware, proactive agentic AI management platform is the most advanced in the industry. Within the rst month of availability, customer engagement was roughly 10x that of our rst-generation conversational AI platform. We are making it easy for our customers to take advantage of new AI capabilities in networking,” Meyercord continued. Kevin Rhodes, Executive Vice President and Chief Financial O cer, noted, “Our SaaS ARR accelerated to 22% year- TM 1
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over-year growth, based on strong customer adoption of Extreme Platform ONE. Fiscal 2027 got o to a better than seasonal start, and we expect to sustain this level of growth through the year. The supply chain actions we have taken allow us to take more measured, targeted pricing actions than our competitors, while o setting the incremental supply chain costs the industry is facing. Adjusted EBITDA grew 47% year-over-year fueling 50% non- GAAP EPS growth in Q1. These trends are adding to our con dence in the growth of cash ow and earnings going forward.” Fiscal First Quarter Results: Revenue $341.1 million, up 10% year-over-year SaaS ARR $264.7 million, up 22% year-over-year GAAP diluted EPS $0.12, up 200% year-over-year Non-GAAP diluted EPS $0.33, up 50% year-over-year GAAP gross margin 62.1%, compared to 60.6% last year Non-GAAP gross margin 62.6%, compared to 61.3% last year GAAP operating pro t margin 6.8%, compared to 3.6% last year Non-GAAP operating margin 17.4%, compared to 13.3% last year GAAP net income of $16.0 million, up 185% year-over-year Non-GAAP net income of $44.5 million, up 48% year-over-year Adjusted EBITDA of $65.6 million, up 47% year-over-year Share repurchases of $25.0 million during the quarter equivalent to 844,131 shares at an average price of $29.62 per share Liquidity: Q1 ending cash balance was $244.5 million, an increase of $32.7 million from the end of Q4 2026 and an increase of $35.5 million from the end of Q1 in the prior year. Q1 net cash was $44.5 million, compared to $46.8 million at the end of Q4 2026 and $7.8 million at the end of Q1 in the prior year. Recent Key Highlights: In early September, Extreme Networks announced the industry’s rst proactive, ambient, context-aware AI agent for networking with the general availability of Extreme Agent ONE Coworker for Extreme Platform ONE. Extreme Agent ONE Coworker’s “Nudge” skill combines real-time network context, historical trend analysis, and agentic reasoning that delivers recommendations directly into the work ow, telling IT teams what they need to know before they ask. Early engagement with Agent ONE Coworker was roughly 10x that of Extreme’s 2
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rst-generation conversational AI agent, signaling that enterprise organizations are ready for AI that proactively surfaces potential network issues. In the rst month of availability, users responded to 98% of critical nudges and Extreme Agent ONE helped customers resolve issues in minutes, compared to the industry average of two days. Last week, Extreme Networks previewed its roadmap for on-prem enterprise AI. Extreme Exchange zones bring enterprise AI on-premises, allowing customers to choose their level of data sovereignty and control. Enterprises can run the same AI applications locally and in the cloud, wherever their data originates and workloads run, with full control over data residency and processing. Exchange zones are planned for general availability in the rst half of CY27. Extreme displaced a major competitor at one of the largest U.S. health networks with 21 hospitals and 600 care locations across California. Extreme Switching and Campus Fabric will help the hospital strengthen clinical uptime, reduce security risk and simplify IT operations. Within the rst month of deployment, the hospital cut support tickets by more than 90%. Extreme continues to expand its footprint within the NHS in the UK with a new win at the Cambridgeshire & Peterborough NHS Foundation Trust (CPFT). What started as a wireless-only deployment last year has expanded to a signi cant switching and NAC upgrade, displacing a long-time incumbent competitor. The end- to-end Extreme network will be managed by Extreme Platform ONE, delivering enterprise security and operational resilience across the trust's clinical sites. A large state agency in Nevada deployed Extreme Wi-Fi 7, switching, and Fabric to build a modern, segmented network across multiple locations. With Fabric's exibility, the agency was able to create discrete network domains by operational function, supporting diverse user groups while maintaining isolation and control. Platform ONE provides centralized management across the entire infrastructure. New Mexico State University is deploying Extreme Wi-Fi 7 and Platform ONE to power advanced research labs, enabling real-time experimental data collection, connected lab instruments, quantum computing and remote researcher access. Wi-Fi 7 delivers the speed, low latency, and capacity that research-grade equipment requires in high-density environments. Platform ONE provides uni ed management, visibility, and AI capabilities across all facilities. Phoenix International Raceway became Extreme’s 10th NASCAR venue win, displacing major competitors in wireless and switching. The deployment delivers uni ed wired-wireless infrastructure through Extreme’s Fabric-ready architecture, seamless connectivity for 100,000+ concurrent fans, and a scalable foundation for next-generation applications including 4K streaming and real-time venue analytics. Extreme will help reduce operational overhead and enable faster deployment of innovative new digital services across the venue. regio iT GmbH, the largest municipal IT service provider in North Rhine-Westphalia, Germany, selected Extreme Wi-Fi 7 and Extreme Platform ONE™ to modernize connectivity for its public sector customers across the region. The multi-year agreement covers 1,500 Wi-Fi 7 access points and gives regio iT a single, AI- powered platform for planning, deploying and managing networks across hundreds of sites. With Extreme, 3
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the municipalities can deliver faster, more reliable digital citizen services, schools can support high-density digital learning, and energy and waste management providers can keep critical operations connected with less IT overhead. Extreme continues to gain ground in nancial services with a win-back at one of Austria’s largest banks. Working with partner A1 Telekom Austria, the bank selected Extreme over a long-time competitor to refresh its wired and wireless networks across more than 70 branches, as part of a cloud- rst strategy that is unique among Austrian nancial institutions. The bank will run its entire branch network on Extreme Platform ONE, gaining centralized, cloud-based operations at scale. Fiscal Q1 2027 Financial Results: (in millions, except percentages and per share information) GAAP Results Three Months Ended September 30, 2026September 30, 2025Change Product $ 218.3$ 194.0$ 24.3Subscription and support 122.8 116.2 6.6 Total net revenue $ 341.1$ 310.2$ 30.9Gross margin 62.1% 60.6% 1.5%Operating margin 6.8% 3.6% 3.1%Net income $ 16.0$ 5.6$ 10.5Net income per diluted share$ 0.12$ 0.04$ 0.08 Non-GAAP Results Three Months Ended September 30, 2026September 30, 2025Change Product $ 218.3$ 194.0$ 24.3Subscription and support 122.8 116.2 6.6 Total net revenue $ 341.1$ 310.2$ 30.9Gross margin 62.6% 61.3% 1.3%Operating margin 17.4% 13.3% 4.1%Net income $ 44.5$ 30.1$ 14.4Net income per diluted share$ 0.33$ 0.22$ 0.11 Extreme uses the non-GAAP free cash ow metric as a measure of operating performance. Free cash ow represents GAAP net cash provided by operating activities, less purchases of property, equipment and capitalized software development costs. Extreme considers free cash ow to be useful information for management and investors regarding the amount of cash generated by the business after the purchases of property, equipment and capitalized software development costs, which can then be used to, among other things, invest in Extreme’s business, make strategic acquisitions, and strengthen the balance sheet. A limitation of the utility of this non-GAAP free cash ow metric as a measure of nancial performance is that it does not represent the total increase or decrease in the Company’s cash balance for the period. The following table shows the non-GAAP free cash ow calculation (in millions): 4
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Free Cash Flow Three Months Ended September 30, 2026September 30, 2025 Cash ow provided by (used in) operations$ 45.4$ (14.0)Less: Capital expenditures for property, equipment and capitalized software developmentcosts (6.8) (6.9) Total free cash ow $ 38.6$ (20.9) SaaS ARR: SaaS ARR is an operating metric used by management to measure the annualized value of customer arrangements for our software solutions, which are delivered via cloud-based subscription (such as Extreme Platform ONE, generally available July 2025, and ExtremeCloud IQ) or term-based software deployed on-premises by the customer. We include term-based license arrangements in SaaS ARR because they provide time-bound access to our software solutions and are operationally and economically similar to our cloud-based subscriptions, even though they are accounted for di erently under U.S. GAAP. SaaS ARR is calculated using the annualized value of quarterly subscription revenue plus the trailing twelve months of the software license portion of term-based license arrangements, which includes revenue recognized during the applicable period with respect to multi-year term-based license arrangements. The Company has not adjusted SaaS ARR to allocate revenue from these multi-year term-based license arrangements over their contractual term because they have historically been immaterial to SaaS ARR and doing so would not be expected to materially a ect reported SaaS ARR or related growth rates. For those software solutions that include embedded support as part of a bundled o ering, including Extreme Platform ONE and term-based license arrangements, the quarterly revenue recognized in the period with respect to the support portion of the o ering is annualized and included in SaaS ARR. SaaS ARR excludes perpetual licenses, professional services revenue, support revenue associated with hardware or standalone maintenance contracts, and other non-recurring or non-subscription revenue streams. Management evaluates and manages support revenues from maintenance contracts primarily through analysis of the related GAAP revenue trends, renewal activity, and customer support operations, together with broader business performance indicators, rather than through a single standalone metric, in part due to the Company’s go-to-market model in which many customers transact through distributors and resellers, limiting consistent visibility into end- customer usage and renewals. Management uses SaaS ARR to evaluate the scale and trajectory of the Company’s subscription-based o erings and progress against customer adoption initiatives. We believe this metric is useful to investors for the same reasons, as it provides insight into our ability to acquire new customers and to maintain and expand our existing customer relationships. SaaS ARR should be considered independently of revenue or deferred revenue under U.S. GAAP, does not have a standardized meaning, and is not a substitute for, or a forecast of, revenue. 5
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Gross debt: Gross debt is de ned as long-term debt and the current portion of long-term debt as shown on the balance sheet plus unamortized debt issuance costs, as applicable. Net cash: is de ned as cash and cash equivalents minus gross debt, as shown in the table below (in millions): September 30, 2026 Cash and cash equivalentsGross debtNet cash $ 244.5$ 200.0$ 44.5 Business Outlook: Extreme’s business outlook is based on current expectations. The following statements are forward-looking, and actual results could di er materially based on market conditions and other risks and uncertainties, including the factors described under “Forward-Looking Statements” below. For its second quarter of scal 2027, ending December 31, 2026, the Company is targeting: (in millions, except percentages and per share information)Low-EndHigh-EndFQ2'27 Guidance – GAAP Total net revenue $ 345.8$ 350.8Gross margin 61.8% 62.3%Operating margin 9.1% 10.2%Earnings per share $ 0.19$ 0.22 FQ2'27 Guidance – Non-GAAP Total net revenue $ 345.8$ 350.8Gross margin 62.2% 62.7%Operating margin 16.4% 17.4%Earnings per share $ 0.32$ 0.34 The following table shows the GAAP to non-GAAP reconciliation for Q2 FY'27 guidance: FQ2'27 Gross MarginOperating MarginEarnings per Share GAAP 61.8% - 62.3%9.1% - 10.2%$0.19 - $0.22Estimated adjustments for:Share-based compensation 0.3% 6.6% - 6.7%0.17Amortization of intangibles 0.1% 0.1% —System transition costs — 0.5% 0.01Non-GAAP tax adjustment — — (0.06) - (0.05)Non-GAAP 62.2% - 62.7%16.4% - 17.4%$0.32 - $0.34The total percentage rate changes may not equal the total change in all cases due to rounding. For the full year scal 2027, ending June 30, 2027, the Company is targeting: 6
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(in millions, except percentages and per share information)Low-EndHigh-EndFY'27 Guidance – GAAP Total net revenue $ 1,402.3$ 1,412.3Gross margin 61.9% 62.4%Operating margin 9.2% 9.7%Earnings per share $ 0.77$ 0.83 FY'27 Guidance – Non-GAAP Total net revenue $ 1,402.3$ 1,412.3Gross margin 62.3% 62.8%Operating margin 17.2% 17.6%Earnings per share $ 1.35$ 1.39 The following table shows the GAAP to non-GAAP reconciliation for FY'27 guidance: FY'27 Gross MarginOperating MarginEarnings per Share GAAP 61.9% - 62.4%9.2% - 9.7%$0.77 - $0.83Estimated adjustments for:Share-based compensation 0.3% 6.2% - 6.3%0.66 - 0.67Amortization of intangibles 0.1% 0.1% 0.01Restructuring and related charges— 0.7% 0.07Litigation charges — 0.1% 0.01System transition costs — 0.5% 0.05Other non-recurring costs — 0.3% 0.03Debt re nancing charges — — 0.02Non-GAAP tax adjustment — — (0.29) - (0.28)Non-GAAP 62.3% - 62.8%17.2% - 17.6%$1.35 - $1.39The total percentage rate changes may not equal the total change in all cases due to rounding. Conference Call: Extreme will host a conference call at 8:00 a.m. Eastern (5:00 a.m. Paci c) today to review the rst quarter results of scal 2027 as well as the business outlook for the second quarter of scal 2027 and the full year scal 2027, ending June 30, 2027, including signi cant factors and assumptions underlying the targets noted above. The conference call will be available to the public through a live audio web broadcast via the internet at http://investor.extremenetworks.com and a replay of the call will be available on the website for at least 7 days following the call. To access the call, please go to this link (Registration Link) and you will be provided with dial-in details. If you would like to participate in the Q&A, please register here: Q&A Registration Link. To avoid delays, we encourage participants to dial into the conference call fteen minutes ahead of the scheduled start time. About Extreme: Extreme Networks, Inc. (EXTR) is a leader in AI-powered cloud networking, focused on delivering simple and secure solutions that help businesses address challenges and enable connections among devices, applications, and users. We push the boundaries of technology, leveraging the powers of arti cial intelligence, analytics, and automation. Tens of thousands of customers globally trust our AI-driven cloud networking solutions and industry-leading 7
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support to enable businesses to drive value, foster innovation, and overcome extreme challenges. For more information, visit Extreme’s website at https://www.extremenetworks.com/ or LinkedIn, YouTube, X (Formerly Twitter), Facebook or Instagram Extreme Networks, ExtremeCloud, Extreme Platform ONE, and the Extreme Networks logo are trademarks of Extreme Networks, Inc. or its subsidiaries in the United States and/or other countries. Other trademarks shown herein are the property of their respective owners. Non-GAAP Financial Measures: Extreme provides all nancial information required in accordance with U.S. generally accepted accounting principles (“GAAP”). The Company is providing with this press release non-GAAP gross pro t, non-GAAP gross margin, non-GAAP operating margin, non-GAAP operating income, non-GAAP net income, non-GAAP net income per diluted share, adjusted EBITDA (calculated as GAAP net income excluding interest, income taxes, depreciation and amortization as well as costs or bene ts that are not re ective of the Company’s ongoing or expected future operational performance as noted below), net cash and free cash ow. In preparing non-GAAP information, the Company has excluded, where applicable, the impact of share-based compensation, amortization of intangibles, restructuring and related charges (bene t), system transition costs, litigation charges, other non-recurring costs, debt re nancing charges and the tax e ect of non-GAAP adjustments. The Company believes that excluding these items provides both management and investors with additional insight into its current operations, the trends a ecting the Company, the Company’s marketplace performance, and the Company’s ability to generate cash from operations. Please note the Company’s non-GAAP measures may be di erent than those used by other companies. The additional non-GAAP nancial information the Company presents should be considered in conjunction with, and not as a substitute for, the Company’s GAAP nancial information. The Company has provided a non-GAAP reconciliation of the results for the periods presented in this release, which are adjusted to exclude certain items as indicated. These measures should only be used to evaluate the Company’s results of operations in conjunction with the corresponding GAAP measures for comparable nancial information and understanding of the Company’s ongoing performance as a business. Extreme uses both GAAP and non-GAAP measures to evaluate and manage its operations. Forward-Looking Statements: This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including, among others, statements regarding our outlook, targets, and guidance; our expectations regarding demand, product adoption, competitive dynamics, revenues, margins, cash ow and other operating or nancial results; and our plans, objectives and assumptions. These forward-looking statements speak 8
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only as of the date of this release. There are several important factors that could cause actual results and other future events to di er materially from those suggested or indicated by such forward-looking statements. These include, among others, risks related to global macroeconomic, industry and business trends; variability in demand, sales cycles and pipeline conversion; the Company’s failure to achieve targeted nancial metrics; a highly competitive business environment for network switching equipment and cloud management of network devices; changes in trade policies, tari s, export controls, and sanctions; supply chain challenges and component shortages; concentration of suppliers and manufacturing partners; the Company’s e ectiveness in controlling expenses; the possibility that the Company might experience delays in the development or introduction of new technology and products; customer response to the Company’s new technology and products; risks associated with AI performance, adoption, and evolving regulation; cybersecurity incidents, data breaches, and privacy and data- protection requirements; reliance on channel partners and third-party technology and service providers; risks related to pending or future litigation; and political and geopolitical factors. For more information about factors that could cause actual results and other future events to di er materially from those suggested or indicated by such forward-looking statements, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” included in the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and other documents of the Company on le with the Securities and Exchange Commission (available at www.sec.gov). As a result of these risks and others, actual results could vary signi cantly from those anticipated in this press release, and the Company’s nancial condition and results of operations could be materially adversely a ected. Except as required under the U.S. federal securities laws and the rules and regulations of the Securities and Exchange Commission, Extreme disclaims any obligation to update any forward-looking statements after the date of this release, whether as a result of new information, future events, developments, changes in assumptions or otherwise. EXTREME NETWORKS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except per share amounts) September30, 2026June 30,2026 (unaudited)ASSETS Current assets:Cash and cash equivalents $ 244,520$ 211,758Accounts receivable, net 167,654164,593Inventories 100,02869,950Prepaid expenses and other current assets 158,729103,495 Total current assets 670,931549,796Property and equipment, net 61,27558,095Operating lease right-of-use assets, net 23,69825,700Goodwill 397,417397,769Intangible assets, net 2,571 3,066Other assets 146,179143,395 Total assets $ 1,302,071$ 1,177,821 9
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LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities:Accounts payable $ 112,665$ 89,389Accrued compensation and bene ts 49,89969,827Accrued warranty 11,48510,953Current portion of deferred revenue 338,997329,713Current portion of long-term debt — 19,341Current portion of operating lease liabilities 9,950 11,341Other accrued liabilities 135,77162,109 Total current liabilities 658,767592,673Deferred revenue, less current portion 327,257323,077Long-term debt, less current portion 200,000144,382Operating lease liabilities, less current portion18,24719,502Deferred income taxes 7,585 7,404Other long-term liabilities 2,234 2,193Commitments and contingenciesStockholders’ equity:Convertible preferred stock, $0.001 par value, issuable in series, 2,000 shares authorized; none issued— —Common stock, $0.001 par value, 750,000 shares authorized; 159,032 and 157,203 shares issued,respectively; 132,201 and 131,216 shares outstanding, respectively159 157Additional paid-in capital 1,383,0081,373,689Accumulated other comprehensive loss (16,920) (16,011)Accumulated de cit (891,331) (907,310)Treasury stock at cost, 26,831 shares and 25,987 shares, respectively(386,935) (361,935) Total stockholders’ equity 87,98188,590 Total liabilities and stockholders’ equity $ 1,302,071$ 1,177,821 EXTREME NETWORKS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) (Unaudited) Three Months Ended September 30, 2026September 30, 2025 Net revenues:Product $ 218,273$ 194,041Subscription and support 122,821 116,204 Total net revenues 341,094 310,245 Cost of revenues:Product 92,464 86,128Subscription and support 36,694 36,088 Total cost of revenues 129,158 122,216 Gross pro t:Product 125,809 107,913Subscription and support 86,127 80,116 Total gross pro t 211,936 188,029 Operating expenses:Research and development 57,820 57,753Sales and marketing 92,026 88,923General and administrative 31,501 29,187Restructuring and related charges 7,366 371Amortization of intangible assets 136 500 Total operating expenses 188,849 176,734 Operating income 23,087 11,295Interest income 1,192 1,197Interest expense (5,210) (3,653)Other expense, net (622) (487) Income before income taxes 18,447 8,352Provision for income taxes 2,468 2,741 Net income $ 15,979$ 5,611 Basic and diluted income per share:Net income per share – basic $ 0.12$ 0.04Net income per share – diluted $ 0.12$ 0.04Shares used in per share calculation – basic131,525 132,973Shares used in per share calculation – diluted134,683 135,071 10
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EXTREME NETWORKS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Three Months Ended September30, 2026September30, 2025Cash ows from operating activities: Net income $ 15,979$ 5,611Adjustments to reconcile net income to net cash provided by (used in) operating activities:Depreciation 4,141 3,799Amortization of intangible assets 484 1,111Amortization of cloud computing implementation costs2,620 —Reduction in carrying amount of right-of-use asset2,535 2,544Provision for credit losses 248 218Share-based compensation 21,458 21,780Deferred income taxes 187 97Provision for excess and obsolete inventory1,372 8Debt issuance cost write-o 2,109 —Non-cash interest expense 231 306Other 1,032 (76)Changes in operating assets and liabilities:Accounts receivable, net (3,309) (19,311)Inventories (30,769) 8,116Prepaid expenses and other assets (59,526) (14,016)Accounts payable 22,819 13,760Accrued compensation and bene ts (20,722) (10,726)Operating lease liabilities (3,178) (2,929)Deferred revenue 14,653 16,027Other current and long-term liabilities 73,060 (40,317) Net cash provided by (used in) operating activities45,424 (13,998) Cash ows from investing activities: Capital expenditures for property, equipment and capitalized software development costs(6,760) (6,855) Net cash used in investing activities (6,760) (6,855) Cash ows from nancing activities: Borrowings under revolving facility 200,00025,000Payments on debt obligations (165,000) (3,750)Payments on debt issuance cost (3,665) —Repurchase of common stock (25,000) (12,000)Payments for tax withholdings, net of proceeds from issuance of common stock(12,137) (10,966) Net cash used in nancing activities (5,802) (1,716) Foreign currency e ect on cash and cash equivalents(100) (173) Net increase (decrease) in cash and cash equivalents32,762 (22,742) Cash and cash equivalents at beginning of period211,758231,745 Cash and cash equivalents at end of period$ 244,520$ 209,003 Extreme Networks, Inc. Non-GAAP Measures of Financial Performance To supplement the Company’s consolidated nancial statements presented in accordance with U.S. generally accepted accounting principles (“GAAP”), Extreme uses non-GAAP measures of certain components of nancial performance. These non-GAAP measures include non-GAAP gross pro t, non-GAAP gross margin, non-GAAP operating margin, non-GAAP operating income, non-GAAP net income, non-GAAP net income per diluted share, adjusted EBITDA (calculated as GAAP net income excluding interest, income taxes, depreciation and amortization as well as costs or bene ts that are not re ective of the Company’s ongoing or expected future operational performance as noted below), net cash and free cash ow. Reconciliation to the most directly comparable GAAP measure of all historical non-GAAP measures included in this press release can be found in the tables included with this press release. 11
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The non-GAAP measures presented in this press release are not measures of nancial performance prepared in accordance with GAAP, should not be considered alternatives to measures prepared in accordance with GAAP, and may be di erent from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. Non-GAAP measures have limitations in that they do not re ect all of the amounts associated with Extreme’s results of operations as determined in accordance with GAAP. These non-GAAP measures should only be used to evaluate Extreme’s results of operations in conjunction with the corresponding GAAP measures. Extreme believes these non-GAAP measures, when shown in conjunction with the corresponding GAAP measures, enhance investors’ and management’s overall understanding of the Company’s current nancial performance and the Company’s prospects for the future, including cash ows available to pursue opportunities to enhance stockholder value. In addition, because Extreme has historically reported certain non-GAAP results to investors, the Company believes the inclusion of non-GAAP measures provides consistency in the Company’s nancial reporting. For its internal planning process, and as discussed further below, Extreme’s management uses nancial statements that do not include share-based compensation expense, amortization of intangibles, restructuring and related charges, system transition costs, litigation charges, other non-recurring costs, debt re nancing charges, and the tax e ect of non-GAAP adjustments. Extreme’s management also uses non-GAAP measures, in addition to the corresponding GAAP measures, in reviewing the Company’s nancial results. As described above, Extreme excludes the following items from one or more of its non-GAAP measures when applicable. Share-based compensation. Share-based compensation consists of associated expenses for stock options, restricted stock awards and the Company’s Employee Stock Purchase Plan. Extreme excludes share-based compensation expenses from its non-GAAP measures primarily because they are non-cash expenses that the Company does not believe are re ective of ongoing cash requirement related to its operating results. Extreme expects to incur share-based compensation expenses in future periods. Amortization of intangibles. Amortization of intangibles includes the monthly amortization expense of intangible assets such as developed technology, customer relationships and trademarks. The amortization of the developed technology is recorded in cost of goods sold, while the amortization for the other intangibles is recorded in operating expenses. Extreme excludes these expenses since they result from an intangible asset and for which the period expense does not impact the operations of the business and are non-cash in nature. Restructuring and related charges. Restructuring and related charges consist of severance costs for 12
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employees, asset disposal costs and other charges related to excess facilities that do not provide economic bene t to our future operations. Extreme excludes restructuring expenses since they result from events that occur outside of the ordinary course of continuing operations. System transition costs. System transition costs consist of costs related to direct and incremental costs incurred in connection with our multi-phase transition of enterprise-wide business systems (e.g., our customer relationship management solution, our con gure, price, quote solution, and our enterprise resource planning and human capital management solutions) that were not capitalizable. Extreme excludes these costs because we believe that these costs do not re ect future operating expenses and will be inconsistent in amount and frequency, making it di cult to contribute to a meaningful evaluation of our operating performance. Litigation charges. Litigation charges consist of estimated settlement and related legal expenses for non- recurring litigations o set by any proceeds received or expected to be received from insurance. Debt re nancing charges. Debt re nancing charges consist of the write-o of unamortized debt issuance costs or additional costs that were not capitalizable and were incurred in connection with amendments to, re nancings of, or terminations of the Company’s current and prior credit facilities. Extreme excludes these amounts because they are incurred in connection with discrete nancing transactions rather than the ongoing operation of the Company’s business. Other non-recurring costs. Other non-recurring costs consist of certain external advisory, professional fees and other costs incurred for various non-recurring transactions and activities that occur outside of the normal course of business. Extreme excludes these costs because we believe that these costs do not re ect future operating expenses and will be inconsistent in amount and frequency, making it di cult to contribute to a meaningful evaluation of our operating performance. Tax e ect of non-GAAP adjustments. We calculate our non-GAAP provision for income taxes in accordance with the SEC guidance on non-GAAP Financial Measures Compliance and Disclosure Interpretation. We have assumed our U.S. federal and state net operating losses would have been fully consumed by the historical non- GAAP nancial adjustments, eliminating the need for a full valuation allowance against our U.S. deferred tax assets which, consequently, enables our use of research and development tax credits. The non-GAAP tax provision consists of current and deferred income tax expense commensurate with the non-GAAP measure of pro tability using our blended U.S. statutory tax rate of 24.6%. The non-GAAP e ective tax rate has typically been and is currently higher than the GAAP e ective tax rate given the Company has a valuation allowance against its US deferred tax assets due to historical losses. Once this valuation allowance is released, the non-GAAP and the GAAP e ective tax rates will be more closely aligned. 13
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Over the next year, our cash taxes will be driven by US federal and state income taxes and the tax expense of our foreign subsidiaries, which amounts have not historically been signi cant, with the exception of the Company’s Canadian, German and Indian subsidiaries which perform research and development and sales and marketing activities for the Company, as well as the Company’s Irish trading subsidiaries. EXTREME NETWORKS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS GAAP TO NON-GAAP RECONCILIATION (In thousands, except percentages and per share amounts) (Unaudited) Revenues Three Months Ended September 30, 2026September 30, 2025 Revenues – GAAP $ 341,094$ 310,245 Non-GAAP Gross Margin Three Months Ended September 30, 2026September 30, 2025 Gross pro t – GAAP $ 211,936$ 188,029Gross margin – GAAP percentage 62.1% 60.6%Adjustments:Share-based compensation expense, Product675 752Share-based compensation expense, Subscription and support550 727 Amortization of intangibles, Product 334 593 Total adjustments to GAAP gross pro t$ 1,559$ 2,072 Gross pro t – non-GAAP $ 213,495$ 190,101Gross margin – non-GAAP percentage 62.6% 61.3% Non-GAAP Operating MarginThree Months Ended September 30, 2026September 30, 2025 GAAP operating income $ 23,087$ 11,295GAAP operating margin 6.8% 3.6%Adjustments:Share-based compensation expense, cost of revenues1,225 1,479Share-based compensation expense, R&D3,678 4,447Share-based compensation expense, S&M7,842 7,513Share-based compensation expense, G&A8,713 8,341Restructuring and related charges 7,366 371Litigation charges 963 1,937System transition costs 2,410 4,925Amortization of intangibles 470 1,093 Other non-recurring costs 3,691 — Total adjustments to GAAP operating income$ 36,358$ 30,106 Non-GAAP operating income $ 59,445$ 41,401Non-GAAP operating margin 17.4% 13.3% 14
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Non-GAAP Net Income Three Months Ended September 30, 2026September 30, 2025 GAAP net income $ 15,979$ 5,611Adjustments:Share-based compensation expense 21,458 21,780Restructuring and related charges 7,366 371Litigation charges 963 1,937System transition costs 2,410 4,925Amortization of intangibles 470 1,093Other non-recurring costs 3,691 —Debt re nancing charges 2,109 — Tax e ect of non-GAAP adjustments (9,932) (5,573) Total non-GAAP adjustments to GAAP net income$ 28,535$ 24,533 Non-GAAP net income $ 44,514$ 30,144Earnings per shareGAAP net income per share – diluted$ 0.12 $ 0.04Non-GAAP net income per share – diluted$ 0.33 $ 0.22Shares used in net income per share – diluted:Shares used in per share calculation – basic131,525 132,973 Potentially dilutive equity awards 3,158 2,098 Shares used in per share calculation – diluted134,683 135,071 Adjusted EBITDA Three Months Ended September 30, 2026September 30, 2025 GAAP net income $ 15,979$ 5,611Adjustments:Depreciation expense 4,141 3,799Amortization expense 3,104 1,111Share-based compensation expense 21,458 21,780Restructuring and related charges 7,366 371Litigation charges 963 1,937System transition costs 2,410 4,925Other non-recurring costs 3,691 —Debt re nancing charges 2,109 —Interest income (1,192) (1,197)Interest expense 3,101 3,653 Provision for income taxes 2,468 2,741 Total adjustments to GAAP net income49,619 39,120 Adjusted EBITDA $ 65,598$ 44,731 Investor Relations Stan Kovler 919/595-4196 Investor_relations@extremenetworks.com Media Contact Amy Aylward 603/952-5138 pr@extremenetworks.com Source: Extreme Networks, Inc. 15