Extreme Networks surges on strong Q2 earnings, Platform ONE demand
Company raises full-year outlook as cloud networking platform bookings double expectations
Extreme Networks shares jumped in Tuesday trading after the networking equipment maker reported better-than-expected fiscal second-quarter results and raised its full-year outlook, citing accelerating demand for its cloud-based Platform ONE solution.
The San Jose-based company reported adjusted earnings per share of $0.26 for the quarter ended December 31, 2025, surpassing analyst estimates of $0.24. Revenue reached $317.9 million, beating the consensus forecast of $312.3 million and exceeding the company's own guidance range of $309 million to $315 million.
The results mark Extreme Networks' seventh consecutive quarter of sequential revenue growth, a streak driven by what Chief Executive Edward Meyercord described as "Extreme Platform ONE bookings in the quarter were twice our plan". The platform, which offers cloud-managed networking and AI-powered automation, has become the centerpiece of the company's strategic turnaround.
"We're taking share from largest players," Meyercord told analysts, positioning Extreme Networks as an alternative to larger competitors amid what he described as disruption in the networking market. The CEO pointed to confusion at HPE and Juniper and ongoing changes at Cisco Systems as creating opportunities for Extreme to win business from large enterprise customers.
The company's transformation toward higher-margin recurring revenue streams gained momentum during the quarter. SaaS Annual Recurring Revenue surged 25.2% year-over-year to $226.8 million, reflecting growing customer adoption of subscription-based services. Operating leverage was evident in the results, with earnings growth outpacing revenue growth by approximately 10 percentage points.
Building on the strong second-quarter performance, Extreme Networks raised its fiscal 2026 revenue guidance to a range of $1.26 billion to $1.27 billion, representing approximately 10% year-over-year growth at the midpoint. The company now targets SaaS ARR growth in the low-20% range, with recurring revenue expected to comprise about 35% of total revenue by year-end.
For the third quarter, management projects revenue of $309 million to $314 million, with EPS between $0.23 and $0.25, slightly below analyst expectations for sequential growth. The guidance reflects typical seasonal patterns in the networking business, according to company executives.
The strong quarterly performance and raised outlook come as Extreme Networks competes in a cloud networking market estimated to exceed $60 billion annually. The company differentiates itself through what Meyercord calls "true cloud choice and deployment flexibility," contrasting its approach with competitors that are "locked into public cloud-only and expensive purpose-built architectures."
Analysts remain largely bullish on the stock, with a consensus target price of $24.25—representing significant upside from current levels—according to market data. The company's ability to maintain momentum in Platform ONE adoption and execute on its 10% revenue growth target will be key factors driving investor sentiment in the coming quarters.
The federal sector represents another growth opportunity, with Meyercord noting "much larger opportunities" in government contracts as agencies modernize their network infrastructure. This diversification beyond traditional enterprise customers could provide additional revenue stability and growth potential.