Extreme Narrows In On Cisco, Posts Robust Q1

Extreme CEO Touts No.2 Cloud-Managed Networking After Cisco

Cloud-managed network services propelled Extreme Networks to a solid first fiscal quarter of 2022 that was punctuated by a robust increase in subscription bookings.

Extreme is “the second largest cloud” on the market after Cisco Meraki, CEO Ed Meyercord touted. “In cloud-managed networking, the fastest-growing segment of our industry, we strengthened our competitive position, and our 13% market share is larger than the No. 3 and No. 4 vendor share combined.”

Extreme has spent the last few years revamping its product portfolio around cloud management. This pivot was amplified by the integration of technologies acquired with the $272 million purchase of Aerohive Networks in 2019 and Infovista’s Ipanema SD-WAN division for $73 million in August.

The acquisitions mirrored efforts by rival vendors Hewlett Packard Enterprise (HPE) Aruba and Juniper Networks’ Mist to bolster their respective SD-WAN capabilities. Last year, HPE purchased Silver Peak for $925 million, while Juniper paid $450 million for 128 Technology.

“Juniper and Aruba, they are a lot smaller than us,” Meyercord said, adding that Extreme offers more flexibility for cloud deployment, a simpler licensing structure, and unlimited data because “the new currency for cloud is really data.”

ExtremeCloud IQ’s use of machine learning and artificial intelligence (AI) provides better visibility and “explainable insights,”  he added.

While Meraki may be larger, Meyercord argued that Cisco hasn’t built on a cloud-native architecture. “It’s more difficult for them to scale, … to roll out new services,” he said. “So we have an advantage in terms of our ability to deploy new services leveraging this microservices architecture.”

ExtremeCloud IQ can also manage third-party devices including those from Cisco, he said, calling out the fact Cisco’s own Meraki product line isn’t interoperable with its Catalyst portfolio.

Strong Q1 Performance

Extreme’s subscription services accounted for $78 million in annual recurring revenue during the quarter, while subscription bookings soared 71% year over year. Meyercord expressed confidence that subscription services, including ExtremeCloud IQ, would continue to grow as the cloud evolves.

These dynamics drove Q1 revenues to $268 million, up 14% year over year, on a net income of $12.7 million.

“Q1 was characterized by unprecedented bookings growth and continued double-digit year-over-year revenue growth,” Meyercord said.

Looking to the second quarter, Extreme projects revenues in the range of $265 million to $280 million, while net income is expected to dip slightly during the quarter to $11.9 million on the high end.