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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 10-Q
(Mark One)
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2025
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to ______
Commission file number 000-25711
EXTREME NETWORKS, INC.
(Exact name of registrant as specified in its charter)
delaware
77-0430270
[State or other jurisdiction
of incorporation or organization]
[I.R.S. Employer
Identification No.]
2121 RDU Center Drive, Suite 300,
Morrisville, North Carolina
27560
[Address of principal executive offices]
[Zip Code]
Registrant’s telephone number, including area code: (408) 579-2800
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading
Symbol(s)
Name of each exchange on which registered
Common Stock
EXTR
Nasdaq Global Select Market
Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§-232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of October 24, 2025, the registrant had 133,718,479 shares of common stock, $0.001 par value per share, outstanding.
FORM 10-Q
QUARTERLY PERIOD ENDED
September 30, 2025
INDEX
PAGE
PART I. CONDENSED CONSOLIDATED FINANCIAL INFORMATION
Item 1.
Condensed Consolidated Financial Statements (Unaudited)
3
Condensed Consolidated Balance Sheets as of September 30, 2025 and June 30, 2025
Condensed Consolidated Statements of Operations for the three months ended September 30, 2025 and 2024
4
Condensed Consolidated Statements of Comprehensive Income (Loss) for the three months ended September 30, 2025 and 2024
5
Condensed Consolidated Statements of Stockholders' Equity for the three months ended September 30, 2025 and 2024
6
Condensed Consolidated Statements of Cash Flows for the three months ended September 30, 2025 and 2024
7
Notes to Condensed Consolidated Financial Statements
8
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
24
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
33
Item 4.
Controls and Procedures
34
PART II. OTHER INFORMATION
Legal Proceedings
35
Item 1A
Risk Factors
Unregistered Sales of Equity Securities and Use of Proceeds
Defaults Upon Senior Securities
Mine Safety Disclosure
Item 5.
Other Information
Item 6.
Exhibits
36
Signatures
37
2
ITEM 1. Condensed Consolidated Financial Statements (Unaudited)
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
(Unaudited)
September 30,2025
June 30,2025
ASSETS
Current assets:
Cash and cash equivalents
$
209,003
231,745
Accounts receivable, net
145,801
126,708
Inventories
93,733
102,578
Prepaid expenses and other current assets
77,327
74,265
Total current assets
525,864
535,296
Property and equipment, net
48,076
44,366
Operating lease right-of-use assets, net
36,566
38,655
Goodwill
399,630
399,574
Intangible assets, net
5,432
6,541
Other assets
137,384
128,786
Total assets
1,152,952
1,153,218
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
77,765
63,939
Accrued compensation and benefits
52,470
62,895
Accrued warranty
9,625
9,684
Current portion of deferred revenue
325,115
325,078
Current portion of long-term debt, net of unamortized debt issuance costs of $714 and $729, respectively
40,536
14,271
Current portion of operating lease liabilities
11,593
11,456
Other accrued liabilities
60,384
100,552
Total current liabilities
577,488
587,875
Deferred revenue, less current portion
307,062
292,415
Long-term debt, less current portion, net of unamortized debt issuance costs of $1,104 and $1,276, respectively
158,896
163,724
Operating lease liabilities, less current portion
31,361
33,991
Deferred income taxes
7,009
7,033
Other long-term liabilities
2,573
2,596
Commitments and contingencies (Note 8)
Stockholders’ 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; 154,839 and 152,673 shares issued, respectively; 133,653 and 132,064 shares outstanding, respectively
155
153
Additional paid-in-capital
1,309,603
1,298,791
Accumulated other comprehensive loss
(9,583
)
(8,137
Accumulated deficit
(943,818
(949,429
Treasury stock at cost, 21,186 shares and 20,609 shares, respectively
(287,794
(275,794
Total stockholders’ equity
68,563
65,584
Total liabilities and stockholders’ equity
See accompanying notes to condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended
September 30,2024
Net revenues:
Product
194,041
162,284
Subscription and support
116,204
106,920
Total net revenues
310,245
269,204
Cost of revenues:
86,128
69,402
36,088
30,295
Total cost of revenues
122,216
99,697
Gross profit:
107,913
92,882
80,116
76,625
Total gross profit
188,029
169,507
Operating expenses:
Research and development
57,753
54,451
Sales and marketing
88,923
81,383
General and administrative
29,187
36,601
Restructuring and related charges
371
1,277
Amortization of intangible assets
500
512
Total operating expenses
176,734
174,224
Operating income (loss)
11,295
(4,717
Interest income
1,197
846
Interest expense
(3,653
(4,422
Other expense, net
(487
(721
Income (loss) before income taxes
8,352
(9,014
Provision for income taxes
2,741
1,490
Net income (loss)
5,611
(10,504
Basic and diluted income (loss) per share:
Net income (loss) per share – basic
0.04
(0.08
Net income (loss) per share – diluted
Shares used in per share calculation – basic
132,973
131,176
Shares used in per share calculation – diluted
135,071
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands)
Other comprehensive income (loss):
Net change in foreign currency translation adjustments
(1,446
4,101
Total comprehensive income (loss)
4,165
(6,403
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Additional
Accumulated Other
Treasury Stock
Accumulated
Total Stockholders'
Shares
Amount
Paid-In-Capital
Comprehensive Loss
Deficit
Equity
Balance at June 30, 2024
148,503
149
1,220,379
(15,483
(18,219
(237,801
(941,962
25,282
Net loss
Other comprehensive income
Issuance of common stock from equity incentive plans, net of tax withholdings
1,762
1
(5,926
(5,925
Share-based compensation
19,767
Balance at September 30, 2024
150,265
150
1,234,220
(11,382
(952,466
32,721
Balance at June 30, 2025
152,673
(20,609
Net income
Other comprehensive loss
2,166
(10,968
(10,966
Repurchase of stock
(577
(12,000
21,780
Balance at September 30, 2025
154,839
(21,186
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Cash flows from operating activities:
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation
3,799
3,941
1,111
1,136
Reduction in carrying amount of right-of-use asset
2,544
2,449
Provision for credit losses
218
14
97
39
Provision for (benefit from) excess and obsolete inventory
(624
Non-cash interest expense
306
282
Other
(76
746
Changes in operating assets and liabilities:
(19,311
(7,709
8,116
(8,669
Prepaid expenses and other assets
(14,016
3,096
13,760
14,492
(10,726
2,844
Operating lease liabilities
(2,929
(2,757
Deferred revenue
16,027
3,823
Other current and long-term liabilities
(40,317
(3,781
Net cash provided by (used in) operating activities
(13,998
18,585
Cash flows from investing activities:
Capital expenditures for property, equipment and capitalized software development costs
(6,855
(6,916
Net cash used in investing activities
Cash flows from financing activities:
Borrowings under revolving facility
25,000
Payments on debt obligations
(3,750
(2,500
Payments on debt financing costs
(695
Repurchase of common stock
Payments for tax withholdings, net of proceeds from issuance of common stock
Net cash used in financing activities
(1,716
(9,121
Foreign currency effect on cash and cash equivalents
(173
299
Net increase (decrease) in cash and cash equivalents
(22,742
2,847
Cash and cash equivalents at beginning of period
156,699
Cash and cash equivalents at end of period
159,546
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Extreme Networks, Inc., together with its subsidiaries (collectively referred to as “Extreme” or the “Company”), is a leader in providing software-driven networking solutions for enterprise customers. The Company conducts its sales and marketing activities on a worldwide basis through distributors, resellers, and the Company’s field sales organization. Extreme was incorporated in California in 1996 and reincorporated in Delaware in 1999.
The unaudited condensed consolidated financial statements of Extreme included herein have been prepared under the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted under such rules and regulations. The condensed consolidated balance sheet at June 30, 2025 was derived from audited financial statements as of that date but does not include all disclosures required by generally accepted accounting principles for complete financial statements. These interim financial statements and notes should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2025.
The unaudited condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments that, in the opinion of management, are necessary for a fair presentation of the results of operations and cash flows for the interim periods presented and the financial condition of Extreme at September 30, 2025. The results of operations for the three months ended September 30, 2025 are not necessarily indicative of the results that may be expected for fiscal 2026 or any future periods.
Fiscal Year
The Company uses a fiscal calendar year ending on June 30. All references herein to “fiscal 2026” represent the fiscal year ending June 30, 2026. All references herein to “fiscal 2025” represent the fiscal year ended June 30, 2025.
Principles of Consolidation
The unaudited condensed consolidated financial statements include the accounts of Extreme and its wholly owned subsidiaries. All inter-company accounts and transactions have been eliminated.
The Company predominantly uses the United States Dollar as its functional currency. The functional currency for certain of its foreign subsidiaries is the local currency. For those subsidiaries that operate in a local functional currency environment, all assets and liabilities are translated to United States Dollars at current month end rates of exchange and revenues, and expenses are translated using the monthly average rate.
Accounting Estimates
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates.
For a description of significant accounting policies, see Note 2, Summary of Significant Accounting Policies, to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2025. There have been no material changes to the Company’s significant accounting policies since the filing of the Annual Report on Form 10-K.
Recently Adopted Accounting Pronouncements
There were no recently adopted accounting standards which would have a material effect on the Company's condensed consolidated financial statements and accompanying disclosures.
Recently Issued Accounting Pronouncements Not Yet Adopted
In September 2025, the Financial Accounting Standards Board (“FASB") issued Accounting Standards Update ("ASU") 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. This ASU removes all references to prescriptive and sequential software development stages and requires entities to begin capitalizing software costs when management authorizes and commits to funding the software project, and it is probable that the project will be completed, and the software will be used for its intended purpose. The amendments in this ASU are effective for fiscal years beginning after December 15, 2027, and interim periods within those annual reporting periods. Early adoption is permitted. The Company is currently evaluating the impact of adopting ASU 2025-06 on its consolidated financial statements and related disclosures.
In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets to address challenges encountered when applying the guidance in Topic 326, Financial Instruments—Credit Losses, to current accounts receivable and current contract assets arising from transactions accounted for under Topic 606, Revenue from Contracts with Customers. ASU 2025-05 is effective for fiscal years beginning after December 15, 2025, and interim periods within those annual reporting periods. Early adoption is permitted. The Company is currently evaluating the impact of adopting ASU 2025-05 on its consolidated financial statements and related disclosures.
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses to improve disclosures about public business entities’ expenses and to provide more detailed information around the types of expenses included in commonly presented expense captions. Additionally, in January 2025 the FASB issued ASU 2025-01 to clarify the effective date of ASU 2024-03. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods for fiscal years beginning after December 15, 2027, and can be applied on a prospective basis or on a retrospective basis to all periods presented. Early adoption is permitted. The Company is currently evaluating the impact of adopting ASU 2024-03 and ASU 2025-01 on its consolidated financial statements and related disclosures.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740), Improvements to Income Tax Disclosures to enhance income tax disclosures primarily through changes in the rate reconciliation and income taxes paid information. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024 on a prospective basis. Early adoption is permitted. The Company is currently evaluating the impact of adopting ASU 2023-09 on its consolidated financial statements and related disclosures.
The Company accounts for revenues in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers. The Company derives the majority of its revenues from sales of its networking equipment, with the remaining revenues generated from sales of subscription and support, which primarily includes software subscriptions delivered as software as a service (“SaaS”) and additional revenues from maintenance contracts, professional services and training for its products. The Company sells its products, SaaS and maintenance contracts to customers and partners in two distribution channels, or tiers. The first tier consists of a limited number of independent distributors that stock the Company's products and sell primarily to resellers. The second tier of the distribution channel consists of non-stocking distributors and value-added resellers that sell primarily to end-users. Products and subscription and support may be sold separately or in bundled packages.
Revenue Recognition
Performance Obligations. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in ASC 606. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Certain of the Company’s contracts have multiple performance obligations, as the promise to transfer individual goods or services is separately identifiable from other promises in the contracts and, therefore, is distinct. For contracts with multiple performance obligations, the Company allocates the contract’s transaction price to each performance obligation based on its relative standalone selling price. The stand-alone selling prices are determined based on the prices at which the Company separately sells these products. For items that are not sold separately, the Company estimates the stand-alone selling prices using other observable inputs.
The Company’s performance obligations are satisfied at a point in time or over time as the customer receives and consumes the benefits provided. Substantially all of the Company’s product sales revenues are recognized at a point in time. Substantially all of the Company’s subscription and support revenues are recognized over time. For revenues recognized over time, the Company primarily uses an input measure, days elapsed, to measure progress.
As of September 30, 2025, the Company had $632.2 million of remaining performance obligations, which is primarily comprised of deferred SaaS subscription and deferred support revenues. The Company expects to recognize approximately 43% of its deferred revenue as revenue in the remainder of fiscal 2026, an additional 27% in fiscal 2027, and the remaining 30% of the balance thereafter.
9
Contract Balances. The timing of revenue recognition, billings and cash collections results in billed accounts receivable and deferred revenue in the condensed consolidated balance sheets. Services provided under renewable SaaS subscription and support arrangements of the Company are billed in accordance with agreed-upon contractual terms, which are either billed fully at the inception of contract or at periodic intervals (e.g., quarterly or annually). The Company generally receives payments from its customers in advance of services being provided, resulting in deferred revenues. These liabilities are reported on the condensed consolidated balance sheets on a contract-by-contract basis at the end of each reporting period.
Revenue recognized for the three months ended September 30, 2025 and 2024 that was included in the deferred revenue balance at the beginning of each period was $104.7 million and $100.3 million, respectively.
Contract Costs. The Company recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets that the Company otherwise would have recognized is one year or less. Management expects that commission fees paid to sales representatives as a result of obtaining subscription and support contracts and contract renewals are recoverable and therefore the Company’s condensed consolidated balance sheets included capitalized balances in the amount of $28.6 million and $26.9 million as of September 30, 2025 and June 30, 2025, respectively. Capitalized commissions are included within other assets in the condensed consolidated balance sheets. Capitalized commission fees are amortized on a straight-line basis over the average period of service contracts of approximately three years, and are included in “Sales and marketing” in the accompanying condensed consolidated statements of operations. Amortization recognized during the three months ended September 30, 2025 and 2024 was $3.4 million and $3.0 million, respectively.
Estimated Variable Consideration. There were no material changes in the current period to the estimated variable consideration for performance obligations, which were satisfied or partially satisfied during previous periods.
Revenues by Geography
The Company operates in three geographic regions: Americas, EMEA (Europe, Middle East and Africa) and APAC (Asia Pacific). The following table sets forth the Company’s net revenues disaggregated by geographic region (in thousands):
Americas:
United States
136,384
153,253
12,875
12,182
Total Americas
149,259
165,435
EMEA
121,246
84,918
APAC
39,740
18,851
Geographic Concentrations
For the three months ended September 30, 2025 and 2024 no foreign country accounted for 10% or more of the Company's net revenues.
Customer Concentrations
The Company performs ongoing credit evaluations of its customers and generally does not require collateral in exchange for credit.
The following table sets forth customers accounting for 10% or more of the Company’s net revenues for the periods indicated below:
Jenne, Inc.
18%
21%
TD Synnex Corporation
16%
22%
Westcon Group, Inc.
15%
10
The following table sets forth major customers accounting for 10% or more of the Company’s net accounts receivable balance:
J's Communication Co., Ltd.
11%
*
Ericcson, Inc.
* Less than 10% of accounts receivable
Cash and Cash Equivalents
The Company considers highly liquid investments with maturities of three months or less at the date of purchase to be cash equivalents.
The following table summarizes the Company's cash and cash equivalents (in thousands):
Cash
206,606
225,656
Cash equivalents
2,397
6,089
Total cash and cash equivalents
The following table summarizes the Company's inventory by category (in thousands):
Finished goods
54,665
57,770
Raw materials
39,068
44,808
Total inventories
Property and Equipment, Net
The following table summarizes the Company's property and equipment, net by category (in thousands):
Computers and equipment
83,684
80,782
Software
65,949
62,089
Office equipment, furniture and fixtures
8,015
8,031
Leasehold improvements
48,133
47,962
Total property and equipment
205,781
198,864
Less: accumulated depreciation and amortization
(157,705
(154,498
Deferred Revenue
Deferred revenue represents invoiced amounts for deferred subscription and support and other deferred revenue including professional services and training when the revenue recognition criteria have not been met.
Guarantees and Product Warranties
The majority of the Company’s hardware products are shipped with either a one-year warranty or a limited lifetime warranty, and software products receive a 90-day warranty. Upon shipment of products to its customers, the Company estimates expenses for the cost to repair or replace products that may be returned under warranty and accrues a liability in cost of product revenues for this amount. The determination of the Company’s warranty requirements is based on actual historical experience with the product or product family, estimates of repair and replacement costs, and any product warranty problems that are identified after shipment. The Company estimates and adjusts these accruals at each balance sheet date in accordance with changes in these factors.
11
The following table summarizes the activity related to the Company’s product warranty liability during the following periods (in thousands):
Balance at beginning of period
10,942
New warranties issued
3,025
2,487
Warranty expenditures
(3,084
(3,190
Balance at end of period
10,239
To facilitate sales of its products in the normal course of business, the Company indemnifies its resellers and end-user customers with respect to certain matters. The Company has agreed to hold the customer harmless against losses arising from intellectual property infringement or other claims made against certain parties. These agreements may limit the time within which an indemnification claim can be made and the amount of the claim. It is not possible to estimate the maximum potential amount under these indemnification agreements due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. Historically, payments made by the Company under these agreements have not had a material impact on its operating results or financial position.
Concentrations
The Company may be subject to concentration of credit risk as a result of certain financial instruments consisting of accounts receivable. See Note 3, Revenues, for the Company’s accounts receivable concentration. The Company does not invest an amount exceeding 10% of its combined cash in the securities of any one obligor or maker, except for obligations of the United States government, obligations of United States government agencies, and money market accounts.
A three-tier fair value hierarchy is utilized to prioritize the inputs used in measuring fair value. The hierarchy gives the highest priority to quoted prices in active markets (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels are defined as follows:
The following table presents the Company’s fair value hierarchy for its financial assets and liabilities measured at fair value on a recurring basis (in thousands):
Level 1
Level 2
Level 3
Total
Assets
Certificates of deposit
Foreign currency derivatives
109
Total assets measured at fair value
2,506
Liabilities
74
Total liabilities measured at fair value
June 30, 2025
298
6,387
12
Level 1 Assets and Liabilities:
The Company’s financial instruments consist of cash, accounts receivable, accounts payable, and accrued liabilities. The Company states accounts receivable, accounts payable, and accrued liabilities at their carrying value, which approximates fair value due to the short time to the expected receipt or payment.
Level 2 Assets and Liabilities:
The Company's level 2 assets consist of certificates of deposit and derivative instruments. Certificates of deposit do not have regular market pricing and are considered Level 2. The fair value of derivative instruments under the Company’s foreign exchange forward contracts are estimated based on valuations provided by alternative pricing sources supported by observable inputs, which is considered Level 2.
As of September 30, 2025 and June 30, 2025, the Company had investment in certificates of deposit of $2.4 million and $6.1 million, respectively, with maturity of three months at the date of purchase, which are recorded as cash equivalents in the condensed consolidated balance sheets. The Company considers these cash equivalents to be available-for-sale and, as of September 30, 2025 and June 30, 2025, their fair value approximated their amortized cost.
As of September 30, 2025 and June 30, 2025, the Company had foreign exchange forward contracts that were not designated as hedging instruments with a total notional principal amount of $65.1 million and $57.2 million, respectively. Changes in the fair value of these foreign exchange forward contracts not designated as hedging instruments are included in “Other expense, net” in the condensed consolidated statements of operations. For the three months ended September 30, 2025 and 2024, the net gains and losses recorded in the condensed consolidated statement of operations were net losses of $1.4 million and net gains of $0.8 million, respectively. As of September 30, 2025 and June 30, 2025, there were no outstanding foreign exchange forward contracts that were designated as hedging instruments. See Note 12, Derivatives and Hedging, for additional information.
The fair value of borrowings under the Amended Credit Agreement (as defined in Note 7) is estimated based on valuations provided by alternative pricing sources supported by observable inputs which is considered Level 2. Since the interest rate is variable in the Amended Credit Agreement, the fair value approximates the face amount of the Company’s indebtedness of $201.2 million and $180.0 million as of September 30, 2025 and June 30, 2025, respectively.
Level 3 Assets and Liabilities:
Certain of the Company’s assets, including intangible assets and goodwill, are measured at fair value on a non-recurring basis if impairment is indicated.
As of September 30, 2025 and June 30, 2025, the Company did not have any assets or liabilities that were considered Level 3.
There were no transfers of assets or liabilities between Level 1, Level 2, or Level 3 during the three months ended September 30, 2025 and 2024. There were no impairments recorded for the three months ended September 30, 2025 and 2024.
Intangible Assets
The following tables summarize the components of gross and net intangible assets (in thousands, except years):
Weighted Average
Remaining Amortization
Gross Carrying
Net Carrying
Period
Amortization
Developed technology
2.9 years
170,492
166,506
3,986
Customer relationships
0.8 years
64,825
63,468
1,357
Trade names
0.0 years
10,700
License agreements
1.2 years
1,282
1,193
89
Total intangible assets, net*
247,299
241,867
* The carrying amount of foreign intangible assets are affected by foreign currency translation
13
3.0 years
170,480
165,908
4,572
1.0 years
64,824
62,961
1,863
1.4 years
1,176
106
247,286
240,745
The following table summarizes the amortization expense of intangible assets for the periods presented (in thousands):
Amortization of intangible assets in “Total cost of revenues”
611
624
Amortization of intangible assets in “Total operating expenses”
Total amortization expense
The amortization expense that is recognized in “Total cost of revenues” primarily consists of amortization related to developed technology and license agreements.
The estimated future amortization expense to be recorded for each of the respective future fiscal years is as follows (in thousands):
For the fiscal year ending June 30:
2026 (the remainder of fiscal 2026)
2,427
2027
1,450
2028
1,287
2029
268
The Company had goodwill in the amount of $399.6 million as of September 30, 2025 and June 30, 2025.
The Company’s debt is comprised of the following (in thousands):
Current portion of long-term debt:
Term Loan
16,250
15,000
Revolving Facility
Less: unamortized debt issuance costs
(714
(729
Current portion of long-term debt
Long-term debt, less current portion:
160,000
165,000
(1,104
(1,276
Total long-term debt, less current portion
Total debt
199,432
177,995
On June 22, 2023, the Company entered into a Second Amended and Restated Credit Agreement (the “2023 Credit Agreement”), by and among the Company, as borrower, BMO Harris Bank, N.A., as an issuing lender and swingline lender, Bank of America, N.A., JPMorgan Chase Bank, N.A., PNC Bank, National Association, and Wells Fargo Bank, National Association, as issuing lenders, the financial institutions or entities party thereto as lenders, and Bank of Montreal, as administrative agent and collateral agent, which amended and restated the Amended and Restated Credit Agreement, dated August 9, 2019, by and among the Company, as borrower,
several banks and other financial institutions as Lenders, BMO Harris Bank N.A., as an issuing lender and swingline lender, Silicon Valley Bank, as an Issuing Lender, and Bank of Montreal, as administrative agent and collateral agent for the Lenders. The 2023 Credit Agreement provides for i) a $200.0 million first lien term loan facility in an aggregate principal amount (the “2023 Term Loan”), ii) a $150.0 million five-year revolving credit facility (the “2023 Revolving Facility”) and, iii) an uncommitted additional incremental loan facility in the principal amount of up to $100.0 million.
Borrowings under the 2023 Credit Agreement bear interest, and at the Company’s election, the initial term loan may be made as either a base rate loan or a Secured Overnight Funding Rate (“SOFR”) loan. The applicable margin for base rate loans ranges from 1.00% to 1.75% per annum, and the applicable margin for SOFR loans ranges from 2.00% to 2.75%, in each case based on the Company’s consolidated leverage ratio. All SOFR loans are subject to a floor of 0.00% per annum and spread adjustment of 0.10% per annum. The Company paid other closing fees, arrangement fees, and administration fees associated with the 2023 Credit Agreement.
The 2023 Credit Agreement requires the Company to maintain certain minimum financial ratios at the end of each fiscal quarter. The 2023 Credit Agreement also includes covenants and restrictions that limit, among other things, the Company’s ability to incur additional indebtedness, create liens upon any of its property, merge, consolidate or sell all or substantially all of its assets. The 2023 Credit Agreement also includes customary events of default which may result in acceleration of the outstanding balance.
On August 14, 2024, the Company entered into an Amendment Number One to the 2023 Credit Agreement (the 2023 Credit Agreement as amended by that certain Amendment Number One, the “Amended Credit Agreement”). Under the Amended Credit Agreement, the Company modified the definition of the consolidated EBITDA for the purposes of evaluating compliance with financial covenants under the 2023 Credit Agreement. The amended definition of consolidated EBITDA modifies the amount and type of add-backs that are allowable to better align with the Company's operations and activities. Further, the Amended Credit Agreement provided a waiver for the Company's compliance with the consolidated interest charge coverage ratio for each of the quarters ended June 30, 2024, September 30, 2024, and December 31, 2024. As of September 30, 2025, the Company was in compliance with the modified terms and financial covenants under the Amended Credit Agreement.
Financing costs incurred in connection with obtaining long-term financing are deferred and amortized over the term of the related indebtedness or credit agreement. Amortization of deferred financing costs is included in “Interest expense” in the accompanying condensed consolidated statements of operations was $0.3 million for each of the three months ended September 30, 2025 and 2024, respectively. The interest rate was 6.54% and 7.52% as of September 30, 2025 and 2024, respectively.
During the three months ended September 30, 2025, the Company borrowed $25.0 million against the 2023 Revolving Facility which was subsequently paid out in October 2025. The Company had $110.8 million of availability under the 2023 Revolving Facility as of September 30, 2025. During the three months ended September 30, 2025 and 2024, the Company did not make any additional payments against its term loan facility other than the scheduled payments per the terms of the Amended Credit Agreement.
The Company had $14.2 million of outstanding letters of credit as of September 30, 2025.
Purchase Commitments
The Company currently has arrangements with contract manufacturers and suppliers for the manufacture of its products. Those arrangements allow the contract manufacturers to procure long lead-time component inventory based upon a rolling production forecast provided by the Company. The Company is obligated to purchase long lead-time component inventory that its contract manufacturer procures in accordance with the forecast, unless the Company gives notice of order cancellation outside of applicable component lead-times. As of September 30, 2025, the Company had commitments to purchase $48.8 million of inventory.
The Company may from time to time be party to litigation arising in the course of its business, including, without limitation, allegations relating to commercial transactions, business relationships, or intellectual property rights. Such claims, even if not meritorious, could result in the expenditure of significant financial and managerial resources. Litigation in general, and intellectual property litigation in particular, can be expensive and disruptive to normal business operations. Moreover, the results of legal proceedings are difficult to predict.
In accordance with applicable accounting guidance, the Company records accruals for certain of its outstanding legal proceedings, investigations or claims when it is probable that a liability will be incurred, and the amount of loss can be reasonably estimated. The Company evaluates, at least on a quarterly basis, developments in legal proceedings, investigations or claims that could affect the amount of any accrual, as well as any developments that would result in a loss contingency to become both probable and reasonably estimable. When a loss contingency is not both probable and reasonably estimable, the Company does not record a loss accrual. However, if the loss (or an additional loss in excess of any prior accrual) is at least reasonably possible and material, then the Company would disclose an estimate of the possible loss or range of loss, if such estimate can be made, or disclose that an estimate cannot be made. The assessment of whether a loss is probable or a reasonable possibility, and whether the loss or a range of loss is estimable, involves a series of complex
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judgments about future events. Even if a loss is reasonably possible, the Company may not be able to estimate a range of possible loss, particularly where (i) the damages sought are substantial or indeterminate, (ii) the proceedings are in the early stages, or (iii) the matters involve novel or unsettled legal theories or a large number of parties. In such cases, there is considerable uncertainty regarding the ultimate resolution of such matters, including the amount of any possible loss, fine or penalty. However, an adverse resolution of one or more of such matters could have a material adverse effect on the Company's results of operations in a particular quarter or fiscal year.
SNMP Research, Inc. and SNMP Research International, Inc. v. Broadcom Inc., Brocade Communications Systems LLC, and Extreme Networks, Inc.
On October 26, 2020, SNMP Research, Inc. and SNMP Research International, Inc. (collectively, “SNMP”) filed a lawsuit against the Company in the Eastern District of Tennessee for copyright infringement, alleging that the Company was not properly licensed to use its software. SNMP sought actual damages and profits attributed to the infringement, as well as equitable relief. On March 2, 2023, SNMP filed an amended complaint adding claims against Extreme on additional products for copyright infringement, breach of contract, and fraud. The parties reached a settlement, and on July 29, 2025, the case was dismissed with prejudice.
Mala Technologies Ltd. v. Extreme Networks GmbH, Extreme Networks Ireland Ops Ltd., and Extreme Networks, Inc.
On April 15, 2021, Mala Technologies Ltd. (“Mala”) filed a patent infringement lawsuit against the Company and its Irish and German subsidiaries in the District Court in Dusseldorf, Germany. The lawsuit alleges indirect infringement of the German portion of a patent (“EP ‘498”) based on the offer and sale in Germany of certain network switches equipped with the ExtremeXOS operating system. Mala is seeking injunctive relief, accounting, and an unspecified declaration of liability for damages and costs of the lawsuit. On December 20, 2022, the trial court ruled that the Company did not infringe the EP ‘498 patent and dismissed Mala’s complaint entirely. Mala has filed an appeal. On December 9, 2024, the Higher Regional Court stayed the matter until the nullity action has been finally decided.
The Company filed a nullity complaint against EP ‘498 with the German Federal Patent Court on September 24, 2021. The German Federal Patent Court issued a decision finding that the patent was invalid on November 20, 2024. Mala appealed the decision on March 3, 2025, and filed its Grounds of Appeal on June 5, 2025. The Company filed its response to the Grounds of Appeal on October 6, 2025.
Steamfitters Local 449 Pension & Retirement Security Funds v. Extreme Networks, Inc., et al.
On August 13, 2024, a putative securities class action (the “Class Action”) was filed in the United States District Court for the Northern District of California captioned Steamfitters Local 449 Pension & Retirement Security Funds v. Extreme Networks, Inc., et al., Case No. 5:24-cv-05102-TLT, naming the Company and certain of its current and former executive officers as defendants. The lawsuit is purportedly brought on behalf of purchasers of Extreme Networks securities between July 27, 2022 and January 30, 2024 (the “Class Period”). The complaint alleges claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, based on allegedly false and misleading statements about the Company's business and prospects during the Class Period. The lawsuit seeks unspecified damages. On December 30, 2024, the Court selected Oklahoma Firefighters Pension and Retirement System, Oklahoma Police Pension and Retirement System, Oakland County Voluntary Employees’ Beneficiary Association, Oakland County Employees’ Retirement System as the lead plaintiffs. The Company's Motion to Dismiss was granted on August 15, 2025, but the plaintiffs were granted leave to file a second amended complaint. Plaintiffs filed a second amended complaint on September 9, 2025. The Company filed a motion to dismiss the second amended complaint on October 3, 2025.
On February 27, 2025, a shareholder derivative case was filed in the United States District Court for the Northern District of California captioned Turner v. Brown et al., Case No. 3:25-cv-02101. On March 6, 2025, a shareholder derivative case was filed in the United States District Court for the Northern District of California captioned Hemani v. Meyercord et al., Case No. 3:25-cv-02318-AGT. On March 25, 2025, a shareholder derivative case was filed in the United States District Court for the Eastern District of North Carolina captioned Miller v. Meyercord et al., Case No. 5:25-cv-00161. Each of these cases (collectively, the “Derivative Cases”) names current and former officers, directors, and employees of the Company as defendants, and seeks recovery on behalf of the Company based on substantially the same allegations as the Class Action. These cases remain stayed pending a decision on the motion to dismiss the second amended complaint in the Class Action.
Indemnification Obligations
Subject to certain limitations, the Company may be obligated to indemnify its current and former directors, officers, and employees. These obligations arise under the terms of its certificate of incorporation, its bylaws, applicable contracts, and applicable law. The obligation to indemnify, where applicable, generally means that the Company is required to pay or reimburse, and in certain circumstances the Company has paid or reimbursed, the individuals’ reasonable legal expenses and possible damages and other liabilities incurred in connection with certain legal matters. The Company also procures Directors and Officers liability insurance to help cover its defense and/or indemnification costs, although its ability to recover such costs through insurance is uncertain. While it is not possible to estimate the maximum potential amount that could be owed under these governing documents and agreements due to the Company’s
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limited history with prior indemnification claims, indemnification (including defense) costs could, in the future, have a material adverse effect on the Company’s consolidated financial position, results of operations and cash flows.
Equity Incentive Plan
The Compensation Committee of the Board unanimously approved an amendment to the Extreme Networks, Inc. Amended and Restated 2013 Equity Incentive Plan (the “2013 Plan”) on September 14, 2025 to increase the maximum number of available shares by 6.8 million shares, which is pending ratification by the stockholders of the Company at the annual meeting of stockholders to be held on November 12, 2025.
Common Stock Repurchases
On February 18, 2025, the Company announced that the Board had authorized management to repurchase up to $200.0 million of shares of the Company's common stock over a three-year period, commencing July 1, 2025 (the “2025 Repurchase Program”). Purchases may be made from time to time in the open market or pursuant to a 10b5-1 plan.
During the three months ended September 30, 2025, the Company repurchased a total of 577,281 shares of its common stock on the open market at a total cost of $12.0 million with an average price of $20.79 per share. During the three months ended September 30, 2024, the Company did not repurchase any shares of its common stock. As of September 30, 2025, approximately $188.0 million remains available for share repurchases under the 2025 Repurchase Program.
As a provision of the Inflation Reduction Act enacted in the U.S., the Company is subject to an excise tax on corporate stock repurchases, which is assessed as one percent of the fair market value of net corporate stock repurchases after December 31, 2022. The Company had no excise tax liability for fiscal 2025 and expects the impact of the excise tax on net corporate stock repurchases will not be material for fiscal 2026.
Shares Reserved for Issuance
The Company had the following reserved shares of common stock for future issuance as of the dates noted (in thousands):
2013 Equity Incentive Plan shares available for grant
6,276
10,935
Employee stock options and awards outstanding
9,060
7,566
2014 Employee Stock Purchase Plan
5,418
5,952
Total shares reserved for issuance
20,754
24,453
Share-based Compensation Expense
Share-based compensation expense recognized in the condensed consolidated financial statements by line-item caption is as follows (in thousands):
Cost of product revenues
752
618
Cost of subscription and support revenues
727
689
4,447
4,213
7,513
6,882
8,341
7,365
Total share-based compensation expense
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Stock Options
The following table summarizes stock option activity for the three months ended September 30, 2025 (in thousands, except per share amount and contractual term):
Number of Shares
Weighted-Average Exercise Price Per Share
Weighted-Average Remaining Contractual Term (years)
Aggregate Intrinsic Value
Options outstanding at June 30, 2025
496
6.70
1.16
5,580
Granted
Exercised
(71
Canceled
Options outstanding at September 30, 2025
425
0.91
5,923
Vested and expected to vest at September 30, 2025
Exercisable at September 30, 2025
There were no stock options granted during the three months ended September 30, 2025 and 2024.
Stock Awards
Stock awards may be granted under the 2013 Plan on terms approved by the Compensation Committee of the Board. Stock awards generally provide for the issuance of restricted stock units (“RSUs”) including performance-condition or market-condition RSUs which vest over a fixed period of time or based upon the satisfaction of certain performance criteria or market conditions. The Company recognizes compensation expense on the stock awards over the vesting period based on the awards’ fair value as of the date of grant. The Company does not estimate forfeitures, but accounts for them as incurred.
The following table summarizes stock award activity for the three months ended September 30, 2025 (in thousands, except grant date fair value):
Weighted- Average Grant Date Fair Value
Aggregate Fair Value
Non-vested stock awards outstanding at June 30, 2025
7,070
19.53
4,129
19.57
Released
(2,520
18.85
(44
19.56
Non-vested stock awards outstanding at September 30, 2025
8,635
19.73
Stock awards expected to vest at September 30, 2025
170,378
The RSUs granted under the 2013 Plan vest over a period of time, generally one to three years, and are subject to participant's continued service to the Company.
During the three months ended September 30, 2025, the Company granted 0.8 million stock awards with vesting based on market conditions (“MSU”) to certain of the Company’s employees. The MSUs vest based on the Company’s total shareholder return (“TSR”) relative to the TSR of the Russell 2000 Index (“Index”). The MSU award represents the right to receive a target number of shares of common stock of up to 150% of the original grant. The MSUs vest based on the Company’s TSR relative to the TSR of the Index over performance periods of three years from the grant date, subject to the grantees’ continued service through the certification of performance.
The grant date fair value of each MSU was determined using the Monte Carlo simulation model. The weighted-average grant-date fair value of the TSR MSUs granted during the three months ended September 30, 2025 and 2024 was $22.23 per share and $17.22 per share, respectively. The following assumptions used to determine the grant-date fair values of the MSU during the following periods:
Expected term
Risk-free interest rate
3.70
%
3.86
Volatility
45
48
Dividend yield
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As of September 30, 2025, there was $137.3 million in unrecognized compensation cost related to non-vested stock awards, including performance and market condition awards. This cost is expected to be recognized over a weighted average period of 1.95 years.
Employee Stock Purchase Plan
There were approximately 0.5 million shares issued under the ESPP during each of the three months ended September 30, 2025 and 2024, respectively. The following assumptions were used to determine the grant-date fair values of the ESPP shares during the following periods:
0.5 years
4.12
5.04
50
The weighted-average grant-date fair value of shares under the ESPP during the three months ended September 30, 2025 and 2024 was $5.83 and $3.74 per share, respectively.
The Company has one reportable segment, the development, marketing, and sale of network infrastructure equipment and related software. The Company conducts business globally and is managed geographically. Revenues are attributed to a geographical area. The Company operates in three geographical areas: Americas, EMEA, and APAC. See Note 3, Revenues, for additional information on the Company's revenues by geographic region.
Measure of segment profit or loss:
The Company’s chief operating decision maker (“CODM”), who is its Chief Executive Officer, reviews financial information presented on a consolidated basis and uses consolidated non-GAAP net income to measure segment profit or loss and to monitor period-over-period results to decide where to allocate and invest additional resources within the business.
Consolidated non-GAAP net income is exclusive of certain items that are non-recurring or not consistent with the Company's operations. The CODM reviews and utilizes functional expenses (costs of revenue, research and development, sales and marketing, and general and administrative) at the consolidated level to manage and assess the Company's operations. Other segment items included in consolidated non-GAAP net income are interest income, interest expense, other expense, net, and the provision for income taxes, which are reflected in the condensed consolidated statements of operations.
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A reconciliation of consolidated GAAP net income (loss) to consolidated non-GAAP net income is shown in the table below:
GAAP net income (loss)
Adjustments:
Share-based compensation expense
Litigation charges(1)
1,937
10,715
System transition costs(2)
4,925
5,345
Amortization of intangibles
1,093
1,118
Debt refinancing charges, Other expense
79
Tax effect of non-GAAP adjustments
(5,573
(5,398
Total adjustments to GAAP net income (loss)
24,533
32,903
Non-GAAP net income
30,144
22,399
(1)Litigation charges consist of estimated settlement and related legal expenses for non-recurring litigation offset by any proceeds received or expected to be received from insurance.
(2)System transition costs consist of costs related to direct and incremental costs incurred in connection with our multi-phase transition of our customer relationship management solution, our configure, price, quote solution and our enterprise resource planning tools that were not capitalizable.
Measure of segment assets:
The measure of segment assets that is reviewed by the CODM is reported within the condensed consolidated balance sheets as “Total assets.” Depreciation expense recorded for the three months ended September 30, 2025 and 2024 was $3.7 million, and $3.9 million, respectively. Total expenditures for additions to property, plant and equipment recorded for each of the three months ended September 30, 2025 and 2024 was $6.9 million.
The Company’s long-lived assets are attributed to the geographic regions as follows (in thousands):
Segment long-lived assets:
Americas
178,693
167,499
38,900
40,299
9,865
10,550
Total segment long-lived assets
227,458
218,348
Foreign Exchange Forward Contracts
The Company uses derivative financial instruments to manage exposures to foreign currency risk that may or may not be designated as hedging instruments. The Company’s objective for holding derivatives is to use the most effective methods to minimize the impact of these exposures. The Company does not enter into derivatives for speculative or trading purposes. The Company enters into foreign exchange forward contracts to attempt to mitigate the effect of gains and losses generated by foreign currency transactions related to certain operating expenses and remeasurement of certain assets and liabilities denominated in foreign currencies.
For foreign exchange forward contracts not designated as hedging instruments, the fair value of the Company’s derivatives in a gain position are recorded in “Prepaid expenses and other current assets” and derivatives in a loss position are recorded in “Other accrued liabilities” in the accompanying condensed consolidated balance sheets. Changes in the fair value of derivatives are recorded in “Other expense, net” in the accompanying condensed consolidated statements of operations. As of September 30, 2025 and June 30, 2025, foreign exchange forward contracts not designated as hedging instruments had a total notional principal amount of $65.1 million and $57.2 million, respectively. For the three months ended September 30, 2025 and 2024, the net gains and losses recorded in the condensed consolidated statement of operations from these contracts were net losses of $1.4 million and net gains of $0.8 million, respectively. Changes in the fair value of these foreign exchange forward contracts are offset largely by remeasurement of the underlying assets and liabilities.
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There were no foreign exchange forward contracts that were designated as hedging instruments as of September 30, 2025 or June 30, 2025.
For the three months ended September 30, 2025 and 2024, the Company recognized foreign currency transaction net gains of $0.9 million and foreign currency transaction net losses of $1.4 million, respectively, related to the change in fair value of foreign currency denominated assets and liabilities.
The Company recorded restructuring charges of $0.4 million and $1.3 million during the three months ended September 30, 2025 and 2024, respectively. These charges primarily included severance and benefits costs and professional fees related to the restructuring plans executed in prior years.
During the third quarter of fiscal 2024, the Company executed a global reduction-in-force plan targeted towards the reorganization of the Company's research and development and sales and marketing functions to align the Company's workforce with its strategic priorities and to focus on specific geographies and industry segments with higher growth opportunities (the “Q3 2024 Plan”). During the three months ended September 30, 2025 and 2024, the Company recorded restructuring charges of $0.4 million and $0.7 million related to the Q3 2024 Plan, which primarily consisted of additions to severance and benefits expenses, legal and consulting fees.
During the second quarter of fiscal 2024, the Company executed a global reduction-in-force plan to rebalance its workforce to create greater efficiency and improve execution, in alignment with the Company's business and strategic priorities, while reducing its ongoing operating expenses to address reduced revenue and macro-economic conditions (the “Q2 2024 Plan”). During the three months ended September 30, 2024, the Company recorded restructuring charges of $0.5 million related to the Q2 2024 Plan, which primarily consisted of severance and benefits expenses, legal and consulting fees.
Through September 30, 2025, the Company has incurred $28.7 million in restructuring charges under the Q2 2024 Plan and Q3 2024 Plan which primarily related to severance and benefits costs. The Company expects to complete these ongoing restructuring plans by the end of calendar year 2025 and does not expect to incur any significant additional charges.
During the third quarter of fiscal 2023, the Company initiated a restructuring plan to transform its business infrastructure and reduce its facilities footprint and the facilities related charges (the “2023 Plan”). As part of this project, the Company moved engineering labs from its San Jose, California location to its Salem, New Hampshire location. This move is expected to help reduce the cost of operating the Company's labs. During the three months ended September 30, 2024, the Company recorded restructuring charges of approximately $0.1 million related to the 2023 Plan. The Company expects to complete the 2023 Plan by the end of fiscal year 2026 and expects the charges related to the completion to be immaterial.
Restructuring liabilities are recorded in “Other accrued liabilities” in the accompanying condensed consolidated balance sheets. As of September 30, 2025 and June 30, 2025, the restructuring liability was $0.6 million and $0.7 million, respectively related to these restructuring plans.
The following table summarizes the activity related to the Company’s restructuring and related liabilities during the following periods (in thousands):
693
11,469
Period charges
437
1,573
Period reversals
(67
(296
Period payments
(445
(8,353
4,393
For the three months ended September 30, 2025 and 2024, the Company recorded an income tax provision of $2.7 million and $1.5 million, respectively.
The income tax provisions for the three months ended September 30, 2025 and 2024, consisted of (1) taxes on the income of the Company’s foreign subsidiaries, (2) state taxes in jurisdictions where the Company has no remaining state net operating losses (“NOLs”), (3) foreign withholding taxes, and (4) tax expense associated with the establishment of a U.S. deferred tax liability for amortizable goodwill resulting from the acquisition of Enterasys Networks, Inc., the wireless local area network business from Zebra Technologies Corporation, the Campus Fabric Business from Avaya and the Data Center Business from Brocade. The interim income tax provisions for the three months ended September 30, 2025 and 2024 were calculated using the discrete effective tax rate method as
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allowed by ASC 740-270-30-18, Income Taxes – Interim Reporting. The discrete method is applied when the application of the estimated annual effective tax rate is impractical because it is not possible to reliably estimate the annual effective tax rate. The discrete method treats the year-to-date period as if it was the annual period and determines the income tax expense or benefit on that basis. The Company believes that, at this time, the use of this discrete method is more appropriate than the annual effective tax rate method as (i) the estimated annual effective tax rate method is not reliable due to the high degree of uncertainty in estimating annual pretax earnings on a jurisdictional basis and (ii) the Company’s ongoing assessment that the recoverability of certain U.S. and Irish deferred tax assets is not more likely than not.
The Company has provided a full valuation allowance against all of its U.S. federal and state deferred tax assets as well as a portion of the deferred tax assets in Ireland. Significant judgment is required in determining any valuation allowance recorded against deferred tax assets. In assessing the need for a valuation allowance, the Company considers all available positive and negative evidence to determine whether it is “more likely than not” that deferred tax assets are recoverable including past operating results, estimates of future taxable income, changes to enacted tax laws, and the feasibility of tax planning strategies; such assessment is required on a jurisdiction-by-jurisdiction basis. The Company's inconsistent earnings in recent periods, including historical losses, tax attributes expiring unutilized in recent years and the cyclical nature of the Company's business provides sufficient negative evidence that require a full valuation allowance against its U.S. federal and state net deferred tax assets as well as a portion of the deferred tax assets in Ireland. These valuation allowances will be evaluated periodically and can be reversed partially or in whole if business results and the economic environment have sufficiently improved to support realization of some or all of the Company's deferred tax assets. In the event the Company changes its determination as to the amount of deferred tax assets that can be realized, it will adjust its valuation allowance with a corresponding impact to the provision for income taxes in the period in which such determination is made.
The Company had $18.1 million of unrecognized tax benefits as of September 30, 2025. If fully recognized in the future, $0.1 million would impact the effective tax rate and $18.0 million would result in adjustments to deferred tax assets and corresponding adjustments to the valuation allowance with no impact to the effective tax rate. The Company does not anticipate any events to occur during the next twelve months that would materially reduce the unrealized tax benefit as currently stated in the Company’s condensed consolidated balance sheets.
The Company’s policy is to accrue interest and penalties related to the underpayment of income taxes as a component of tax expense in the accompanying condensed consolidated statements of operations.
In general, the Company’s U.S. federal income tax returns are subject to examination by tax authorities for fiscal years 2004 forward due to NOLs and the Company’s state income tax returns are subject to examination for fiscal years 2005 and forward due to NOLs. In general, the Company’s Irish tax returns are subject to examination by tax authorities for fiscal years 2022 and forward.
The Company is currently under examination in the U.S. by the Internal Revenue Service for the tax year ended June 30, 2023. Management believes that adequate provision has been made in the financial statements for any potential assessments that may result from tax examinations and other tax-related matters for all open tax years.
On July 4,2025, federal legislation commonly referred to as the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. The OBBBA includes numerous changes to existing tax law including provisions providing current deductibility of domestic research and development costs, modifications to the limitation on deductibility of business interest expense and modifications to the international tax framework. This legislation has multiple effective dates, with certain provisions effective for the Company's fiscal year ended June 30, 2026 and others for the Company's fiscal year ended June 30, 2027. ASC 740, Income Taxes, requires the effects of changes in tax rates and laws to be recognized in the period in which the legislation is enacted. The effects of the new legislation are reflected in the condensed consolidated financial statements for the period ended September 30, 2025.
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Basic net income (loss) per share is calculated by dividing net income (loss) by the weighted-average number of shares of common stock outstanding during the period. Diluted net income (loss) per share is calculated by dividing net income (loss) by the weighted-average number of shares of common stock used in the basic net income (loss) per share calculation plus the dilutive effect of shares subject to repurchase, options and unvested RSUs.
The following table presents the calculation of net income (loss) per share of basic and diluted (in thousands, except per share data):
Weighted-average shares used in per share calculation – basic
Options to purchase common stock
289
Restricted stock units
1,736
Employee Stock Purchase Plan shares
73
Weighted-average shares used in per share calculation – diluted
Net income (loss) per share – basic and diluted
The following securities were excluded from the computation of net income (loss) per diluted share of common stock for the periods presented as their effect would have been anti-dilutive (in thousands):
1,063
651
5,423
376
Total shares excluded
940
6,862
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This Quarterly Report on Form 10-Q for the first quarter ended September 30, 2025 (this “Report”) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including in particular, our expectations regarding market demands, customer requirements and the general economic environment, future results of operations, and other statements that include words such as “may,” “will,” “should,” “expect,” “plan,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue” and similar expressions. These forward-looking statements involve risks and uncertainties. We caution investors that actual results may differ materially from those projected in the forward-looking statements as a result of certain risk factors identified in the section entitled “Risk Factors” in this Report, our Annual Report on Form 10-K for the fiscal year ended June 30, 2025, and other filings we have made with the Securities and Exchange Commission. These risk factors include, but are not limited to: adverse general economic conditions; fluctuations in demand for our products and services; a highly competitive business environment for network switching equipment; our effectiveness in controlling expenses; the possibility that we might experience delays in the development or introduction of new technology and products; customer response to our new technology and products; fluctuations in the global economy, including as a result of political, social, economic, and regulatory factors, currency fluctuations, and tariff and trade policies; geopolitical tensions and conflicts; risks related to pending or future litigation and a dependency on third parties for certain components and for the manufacturing of our products.
Business Overview
The following discussion is based upon our unaudited condensed consolidated financial statements included elsewhere in this Report. In the course of operating our business, we routinely make decisions as to the timing of the payment of invoices, the collection of receivables, the manufacturing and shipment of products, the fulfillment of orders, the purchase of supplies, and the building of inventory and service parts, among other matters. Each of these decisions has some impact on the financial results for any given period. In making these decisions, we consider various factors, including contractual obligations, customer satisfaction, competition, internal and external financial targets and expectations, and financial planning objectives. For further information about our critical accounting policies and estimates, see the “Critical Accounting Policies and Estimates” section included in this “Management's Discussion and Analysis of Financial Condition and Results of Operations.”
Extreme Networks, Inc. (“Extreme,” “Company,” “we,” “us” and “our”) 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 artificial intelligence (“AI”), analytics, and automation and have industry leading support services. Tens of thousands of customers globally trust Extreme to drive value, foster innovation, and overcome extreme challenges. Extreme also designs, develops, and manufactures wired, wireless, and software-defined wide area-network (“SD-WAN”) infrastructure equipment. Our Extreme Platform ONETM solution, announced in December 2024 and made generally available in July 2025, is a technology platform that is designed to reduce the complexity for enterprises by seamlessly integrating networking, security and AI solutions into a single platform. AI-powered automation includes conversational, interactive and autonomous AI agents—to assist, advise and accelerate the productivity of networking, security and business teams—reducing the time to complete complex tasks.
Our global footprint provides service to some of the world’s leading names in business across verticals such as large sports and entertainment venues, hospitality, retail, transportation and logistics, education, government, healthcare, manufacturing and service providers. We derive all our revenues from the sale of our networking equipment, software subscriptions, and related maintenance contracts.
Industry Background
Enterprises across every industry are going through unprecedented changes, such as digital transformation initiatives, migrating their workloads to cloud-based environments, modernizing applications, finding new ways to leverage generative, multimodal and agentic AI technology, and adapting to a distributed workforce. To accomplish this, they are adopting new Information Technology (“IT”) delivery models and applications that require fundamental network alterations and enhancements spanning from the access edge to the data center. As networks become more complex and more distributed in nature, we believe IT teams in every industry will need more control and better insights than ever before to deliver secure, distributed connectivity and comprehensive centralized visibility. Networking is mission critical and touches all elements of how services are delivered to customers, employees, students, and patients. Managing networks from a single platform that integrates AI networking and security is critical to help reduce complexity and minimize the time it takes to complete tasks. A new category has emerged in the industry to address challenges related to managing the breadth and depth of complexities related to network administration, deployment and on-going management termed AI for networking. This new category is defined by innovation in generative, multimodal and agentic AI technology.
As the edge of the network continues to expand, our customers are managing more endpoints which comes with a host of challenges. This continued expansion creates issues such as a higher risk of cyberattacks and a need for more bandwidth due to an increase in applications running across the network.
Network complexity manifests itself in the form of more endpoints to manage, more applications to monitor, and more services that rely on the network for service delivery and enablement. When performance suffers, and the tug on internal systems and IT staff becomes more intense, technology is often being overworked. Resolving network problems expeditiously and identifying their root cause can improve organizational productivity and result in higher performance of operations. AI for networking is needed to improve an IT team’s agility and responsiveness to address these challenges.
We believe that the network has never been more vital than it is today. As administrators grapple with more data, coming from more places, more connected devices, and more Software-as-a-Service (“SaaS”) based applications, the cloud is fundamental to managing and maintaining a modern network. Traditional network offerings are not well-suited to fulfill enterprise expectations for rapid delivery of new services, more flexible business models, real-time response, and massive scalability. We expect Extreme Platform ONE to deliver significant productivity gains for IT teams by streamlining network design, deployment, management, and commercial operations through its generative, multimodal, and agentic AI capabilities..
As enterprises continue to migrate increasing numbers of applications and services to either private clouds or public clouds offered by third parties and to adopt new IT delivery models and applications, they are required to make fundamental network alterations and enhancements spanning from wireless access points (“APs”) to the network core. In either case, the network infrastructure must adapt to this new dynamic environment. AI and automation are key if enterprises are to derive maximum benefit from their cloud deployments. With automation applications becoming increasingly critical in manufacturing, warehousing, logistics, healthcare and other key industries, we believe this will continue to create demand for networking technology to serve as a foundation to run these services.
Service providers are investing in network enhancements with platforms and applications that deliver data insights, provide flexibility, and can quickly respond to new user demands and 5G use cases. The scale of issues and challenges seen within service provider networks is even greater than the enterprise network -- thus they too can greatly benefit from operational gains from Extreme Platform ONE.
We believe Extreme will continue to benefit from the use of its technology to manage distributed campus network architecture centrally from the cloud. Extreme has blended a dynamic network fabric architecture that delivers simplicity for moves and changes at the edge of the network together with corporate-wide role-based policy. This enables customers to migrate to new cloud-managed switching, Wi-Fi, and SD-WAN, agnostic of the existing switching or wireless equipment they already have installed. In the end, we expect these customers to see lower operating and capital expenditures, lower subscription costs, lower overall cost of ownership and more flexibility along with a more resilient network, powered by Extreme Platform ONE.
We estimate the total addressable market (“TAM”) for our networking solutions, consisting of cloud networking, wireless local area networks (“WLAN”), campus local area networks (“LAN”), Ethernet switching, data center networking, SD-WAN solutions, and elements of the Secure Access Service Edge (“SASE”), exceeded $42 billion in calendar year 2024. Based on data from 650 Group, Gartner, IDC, and Dell'Oro Group, demand is projected to grow at a five-year compound annual growth rate (“CAGR”) of approximately 7%, reaching $59 billion by 2029. Within this market, cloud-managed networking solutions are expected to grow at a CAGR of approximately 15% through 2029. And with Extreme Platform ONE, we are addressing AI Networking for the Campus, a high-growth segment forecasted to grow at a 72% CAGR over the next five years.
The Extreme Strategy
Extreme is committed to empowering organizations with new ways to simply and securely connect with Extreme's intelligent technology platform that help move their organizations forward.
Extreme Platform ONE is designed to reduce complexity for enterprises by seamlessly integrating networking, security and AI solutions. The platform’s AI-powered automation includes conversational, interactive and autonomous AI agents, to assist, advise and accelerate the productivity of networking, security and business teams—reducing the time to complete complex tasks. Extreme Platform ONE is also designed to offer the industry's simplest licensing.
Key elements of Extreme’s strategy and differentiation include:
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Results of Operations
During the first quarter of fiscal 2026, we achieved the following results:
During the first three months of fiscal 2026, we reflected the following results:
Net Revenues
The following table presents net product and subscription and support revenues for the periods presented (in thousands, except percentages):
$Change
%Change
$194,041
$162,284
$31,757
19.6 %
Percentage of net revenues
62.5%
60.3%
9,284
8.7 %
37.5%
39.7%
$310,245
$269,204
$41,041
15.2 %
We generate product revenues primarily from sales of our networking equipment. We derive subscription and support revenues primarily from sales of our subscription and support offerings which include SaaS subscription offerings, maintenance contracts, professional services and training for our products.
Product revenues increased $31.8 million or 19.6% for the three months ended September 30, 2025 as compared to the corresponding period in fiscal 2025. The increase in product revenues was primarily due to strong demand for our products, which contributed to higher bookings and higher shipments than the corresponding period in fiscal 2025.
Subscription and support revenues increased $9.3 million or 8.7% for the three months ended September 30, 2025 as compared to the corresponding period in fiscal 2025. The increase in subscription and support revenues was driven by increased adoption of our cloud network management solutions and continued growth in our subscription business.
The following table presents the product and subscription and support gross profit, and the respective gross profit percentages for the periods presented (in thousands, except percentages):
$107,913
$92,882
$15,031
16.2 %
Percentage of product revenues
55.6%
57.2%
3,491
4.6 %
Percentage of subscription and support revenues
68.9%
71.7%
$188,029
$169,507
$18,522
10.9 %
60.6%
63.0%
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Product gross profit increased $15.0 million or 16.2% for the three months ended September 30, 2025 as compared to the corresponding period in fiscal 2025. The increase in product gross profit was primarily due to higher product revenues, partially offset by higher standard costs for products and increased distribution costs.
Subscription and support gross profit increased $3.5 million or 4.6% for the three months ended September 30, 2025 as compared to the corresponding period in fiscal 2025. The increase in subscription and support gross profit was primarily due to higher subscription revenues, partially offset by higher professional services costs and higher subscription hosting costs.
Operating Expenses
The following table presents operating expenses for the periods presented (in thousands, except percentages):
$57,753
$54,451
$3,302
6.1 %
7,540
9.3 %
(7,414)
(20.3)%
(906)
(70.9)%
(12)
(2.3)%
$176,734
$174,224
$2,510
1.4 %
Research and Development Expenses
Research and development expenses consist primarily of personnel costs (which consist of compensation, benefits and share-based compensation), consultant fees and prototype expenses related to the design, development, and testing of our products.
Research and development expenses increased by $3.3 million or 6.1% for the three months ended September 30, 2025 as compared to the corresponding period in fiscal 2025. The increase in research and development expenses was primarily due to a $2.1 million increase in personnel costs due to higher headcount and higher compensation and benefits costs, a $1.0 million increase in engineering project costs, and $0.8 million increase in information technology, equipment and depreciation costs, offset by a $0.6 million decrease in facilities and occupancy related costs.
Sales and Marketing Expenses
Sales and marketing expenses consist primarily of personnel costs (which consist of compensation, benefits and share-based compensation), as well as trade shows and promotional expenses.
Sales and marketing expenses increased by $7.5 million or 9.3% for the three months ended September 30, 2025 as compared to the corresponding period in fiscal 2025. The increase in sales and marketing expenses was primarily due to a $4.6 million increase in personnel costs due to higher salaries and benefits costs, a $2.0 million increase in sales and marketing costs primarily related to higher sales commissions and higher travel costs, and a $1.0 million increase in other expenses primarily related to information technology and equipment costs and professional fees.
General and Administrative Expenses
General and administrative expenses consist primarily of personnel costs (which consist of compensation, benefits and share-based compensation), legal and professional service costs, and facilities and information technology costs.
General and administrative expenses decreased by $7.4 million or 20.3% for the three months ended September 30, 2025 as compared to the corresponding period in fiscal 2025. The decrease in general and administrative expenses was primarily driven by a $8.8 million decrease in legal costs related to litigation matters, and a $0.6 million decrease in professional services, partially offset by a $2.0 million increase in personnel costs due to higher salaries, benefits and share-based compensation costs.
Restructuring and Related Charges
For the three months ended September 30, 2025, we recorded restructuring charges of $0.4 million which primarily consisted of additions to severance and benefits costs and professional services fees as well as reversals of previously established accruals related to unused severance benefits associated with the reduction-in-force actions related to the “Q2 2024 Plan”, and “Q3 2024 Plan”, each as described in Note 13, Restructuring and Related Charges, in the Notes to Condensed Consolidated Financial Statements included elsewhere in this Report.
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For the three months ended September 30, 2024, we recorded restructuring and related charges of $1.3 million, which primarily consisted of additional severance and benefits costs and professional services fees associated with the reduction-in-force actions related to the “Q2 2024 Plan”, and “Q3 2024 Plan”, each as described in Note 13, Restructuring and Related Charges, in the Notes to Condensed Consolidated Financial Statements included elsewhere in this Report.
Amortization of Intangible Assets
During the three months ended September 30, 2025 and 2024, we recorded $0.5 million of operating expenses for each period related to the amortization of intangible assets.
Interest Income
During the three months ended September 30, 2025 and 2024, we recorded $1.2 million and $0.8 million, respectively, in interest income. The increase in interest income was primarily related to the higher interest earned on our cash accounts due to higher cash and cash equivalents balances held during the first quarter in fiscal 2026.
Interest Expense
During the three months ended September 30, 2025 and 2024, we recorded $3.7 million and $4.4 million, respectively, in interest expense related to the debt obligations held under our Amended Credit Agreement. The decrease in interest expense was primarily due to lower average rates under the Amended Credit Agreement.
Other Expense, Net
During the three months ended September 30, 2025 and 2024, we recorded other expense, net of $0.5 million and $0.7 million, respectively. The other expense, net for each period primarily related to the foreign exchange impact from the revaluation of certain assets and liabilities denominated in foreign currencies into U.S. Dollars.
Provision for Income Taxes
For the three months ended September 30, 2025 and 2024, we recorded income tax provision of $2.7 million and $1.5 million, respectively.
The income tax provisions for the three months ended September 30, 2025 and 2024 consisted of (1) taxes on the income of our foreign subsidiaries, (2) state taxes in jurisdictions where we have no remaining state net operating losses, (3) foreign withholding taxes, and (4) tax expense associated with the establishment of a U.S. deferred tax liability for amortizable goodwill resulting from the acquisition of Enterasys Networks, Inc., the WLAN business from Zebra Technologies Corporation, the Campus Fabric Business from Avaya LLC and the Data Center Business from Brocade Communications System.
Critical Accounting Policies and Estimates
Our unaudited condensed consolidated financial statements and the related notes included elsewhere in this Report are prepared in accordance with accounting principles generally accepted in the United States. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted under SEC rules and regulations. The preparation of these unaudited condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. In many instances, we could have reasonably used different accounting estimates, and in other instances changes in the accounting estimates are reasonably likely to occur from period to period. Accordingly, actual results could differ significantly from the estimates made by our management. On an ongoing basis, we evaluate our estimates and assumptions. To the extent that there are material differences between these estimates and actual results, our future financial statement presentation, financial condition, results of operations, and cash flows will be affected.
As discussed in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended June 30, 2025, we consider the following accounting policies to be the most critical in understanding the judgments that are involved in preparing our consolidated financial statements:
There have been no changes to our critical accounting policies since the filing of our last Annual Report on Form 10-K.
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Liquidity and Capital Resources
The following table summarizes information regarding our cash and cash equivalents (in thousands):
As of September 30, 2025, our principal sources of liquidity consisted of cash and cash equivalents of $209.0 million, accounts receivable, net of $145.8 million, and available borrowings under our 2023 Revolving Facility of $110.8 million. Our principal uses of cash include the purchase of finished goods inventory from our contract manufacturers, payroll and other operating expenses related to the development and marketing of our products, purchases of property and equipment, repayments of debt and related interest and share repurchases. We believe that our $209.0 million of cash and cash equivalents at September 30, 2025, our cash flow from operations and the availability of borrowings from the 2023 Revolving Facility will be sufficient to fund our planned operations for at least the next 12 months and into the foreseeable future.
On February 18, 2025, we announced that our Board had authorized management to repurchase up to $200 million of shares of the Company's common stock over a three-year period, commencing July 1, 2025 (the “2025 Repurchase Program”). Under these repurchase programs, purchases may be made from time to time in the open market or pursuant to a 10b5-1 plan. The manner, timing and amount of any future purchases will be determined by our management based on their evaluation of market conditions, stock price, Extreme’s ongoing determination that it is the best use of available cash and other factors. The 2025 Repurchase Program does not obligate us to acquire any shares of our common stock, and it may be suspended or terminated at any time without prior notice and will be subject to regulatory considerations. During the three months ended September 30, 2025, we repurchased a total of 577,281 shares of our common stock on the open market at a total cost of $12.0 million with an average price of $20.79 per share. As of September 30, 2025, the Company had $188.0 million available under the 2025 Repurchase Program.
On June 22, 2023, we entered into the Second Amended and Restated Credit Agreement (the “2023 Credit Agreement”) by and among Extreme, as borrower, BMO Harris Bank, N.A., as an issuing lender and swingline lender, Bank of America, N.A., JPMorgan Chase Bank, N.A., PNC Bank, National Association and Wells Fargo Bank, National Association, as issuing lenders, the financial institutions or entities party thereto as lenders, and Bank of Montreal, as an administrative agent and collateral agent, which amended and restated the 2019 Credit Agreement. The 2023 Credit Agreement provides for i) a $200.0 million first lien term loan facility in an aggregate principal amount (the “Term Facility”), ii) a $150.0 million five-year revolving credit facility (the “2023 Revolving Facility”) and iii) an uncommitted additional incremental loan facility in the principal amount of up to $100.0 million plus an unlimited amount that is subject to pro forma compliance with a specified Consolidated Leverage Ratio tests. We may use the proceeds of the loans for working capital and general corporate purposes.
At our election, the initial term loan (the “Initial Term Loan”) under the 2023 Credit Agreement may be made as either a base rate loan or a Secured Overnight Financing Data Rate loan (“SOFR loan”). The applicable margin for base rate loans ranges from 1.00% to 1.75% per annum, and the applicable margin for SOFR loans ranges from 2.00% to 2.75%, in each case based on the Company’s Consolidated Leverage Ratio. All SOFR loans are subject to a floor of 0.00% per annum and spread adjustment of 0.10% per annum. We also agreed to pay other closing fees, arrangement fees, and administration fees.
The 2023 Credit Agreement requires us to maintain certain minimum financial ratios at the end of each fiscal quarter. The 2023 Credit Agreement also includes covenants and restrictions that limit, among other things, our ability to incur additional indebtedness, create liens upon any of its property, merge, consolidate or sell all or substantially all of its assets. The 2023 Credit Agreement also includes customary events of default which may result in acceleration of the outstanding balance.
On August 14, 2024, we entered into an Amendment Number One to the 2023 Credit Agreement the (the 2023 Credit Agreement as amended by that certain Amendment Number One, “Amended Credit Agreement”). Under the Amended Credit Agreement, we modified the definition of the consolidated EBITDA for the purposes of evaluating compliance with financial covenants under the Amended Credit Agreement. The amended definition of consolidated EBITDA modifies the amount and type of add-backs that are allowable to better align with our operations and activities.
As of September 30, 2025, the Company was in compliance with the modified terms and financial covenants under the Amended Credit Agreement.
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Key Components of Cash Flows and Liquidity
A summary of the sources and uses of cash and cash equivalents is as follows (in thousands):
Net Cash Provided by (Used in) Operating Activities
Cash flows used in operations in the three months ended September 30, 2025 were $14.0 million, including our net income of $5.6 million and non-cash expenses of $29.8 million for items such as amortization of intangible assets, share-based compensation, depreciation, reduction in carrying amount of right-of-use assets, deferred income taxes, provision for excess and obsolete inventory, provision for doubtful accounts and interest. Other uses of cash for the period included decreases in other accrued liabilities, accrued compensation and benefits, and operating lease liabilities, and increases in accounts receivable and other assets. This was partially offset by increases in deferred revenue and accounts payable and a decrease in inventory.
Cash flows provided by operations in the three months ended September 30, 2024 were $18.6 million, including our net loss of $10.5 million and non-cash expenses of $27.8 million for items such as amortization of intangible assets, share-based compensation, depreciation, reduction in carrying amount of right-of-use assets, deferred income taxes, provision for excess and obsolete inventory and interest. Other sources of cash for the period included a decrease in prepaid expenses and other assets and increases in accounts payable, deferred revenue and accrued compensation and benefits. This was partially offset by increases in accounts receivable, inventories as well as decreases in operating lease liabilities and other liabilities.
Net Cash Used in Investing Activities
Cash flows used in investing activities in the three months ended September 30, 2025 were $6.9 million for the purchases of property and equipment and the capitalized software development costs.
Cash flows used in investing activities in the three months ended September 30, 2024 were $6.9 million for the purchases of property and equipment.
Net Cash Used in Financing Activities
Cash flows used in financing activities in the three months ended September 30, 2025 were $1.7 million primarily due to share repurchases of $12.0 million under the 2025 Repurchase Program, payments of $11.0 million for taxes paid on vested and released stock awards net of proceeds from the issuance of shares of our common stock under our Employee Stock Purchase Plan (“ESPP”) and exercise of stock options, and debt repayments of $3.8 million, partially offset by a $25.0 million borrowing against the 2023 Revolving Facility.
Cash flows used in financing activities in the three months ended September 30, 2024 were $9.1 million primarily due to payment of $5.9 million for taxes paid on vested and released stock awards net of proceeds from the issuance of shares of our common stock under our ESPP and exercise of stock options, a payment of $0.7 million for debt financing costs related to the Amended Credit Agreement, and a debt repayment of $2.5 million.
Foreign Currency Effect on Cash and cash equivalents
Foreign currency effect on cash and cash equivalents increased in the three months ended September 30, 2025, primarily due to changes in foreign currency exchange rates between the U.S. Dollar and particularly the Indian Rupee, the UK Pound and the Euro.
Contractual Obligations
As of September 30, 2025, we had contractual obligations resulting from our debt arrangement, agreements to purchase goods and services in the ordinary course of business and obligations under our operating lease arrangements.
Our debt obligations relate to amounts owed under our Amended Credit Agreement. As of September 30, 2025, we had $199.4 million of debt outstanding, which is payable on quarterly installments through our fiscal year 2028. We are subject to interest on our debt obligations and unused commitment fee. See Note 7, Debt, in the Notes to Condensed Consolidated Financial Statements in this Report for additional information regarding our debt obligations.
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Our unconditional purchase obligations represent the purchase of long lead-time component inventory that our contract manufacturers procure in accordance with our forecast. We expect to honor the inventory purchase commitments within the next 12 months. As of September 30, 2025, we had non-cancelable commitments to purchase $48.8 million of inventory. See Note 8, Commitments and Contingencies, in the Notes to Condensed Consolidated Financial Statements for additional information regarding our purchase obligations.
We have contractual commitments to our suppliers which represent commitments for future services. As of September 30, 2025, we had contractual commitments of $15.1 million that are due through our fiscal year 2027.
We lease facilities under operating lease arrangements at various locations that expire at various dates through our fiscal year 2033. As of September 30, 2025, the value of our obligations under operating leases was $50.1 million.
We have immaterial income tax liabilities related to uncertain tax positions and we are unable to reasonably estimate the timing of the settlement of those liabilities.
We did not have any material commitments for capital expenditures as of September 30, 2025.
Off-Balance Sheet Arrangements
We did not have any off-balance sheet arrangements as of September 30, 2025.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Interest Rate Sensitivity
Our exposure to market risk for changes in interest rates relates primarily to debt and foreign currencies.
Debt
At certain points in time, we are exposed to the impact of interest rate fluctuations, primarily in the form of variable rate borrowings from the Amended Credit Agreement, which is described in Note 7, Debt, in the Notes to Condensed Consolidated Financial Statements in this Report. At September 30, 2025, we had $201.2 million of debt outstanding. During the quarter ended September 30, 2025, the average daily outstanding amount was $188.9 million, with a high of $205.0 million and a low of $180.0 million.
The following table presents hypothetical changes in interest expense for the quarter ended September 30, 2025, on the outstanding borrowings under the Amended Credit Agreement as of September 30, 2025, that are sensitive to changes in interest rates (in thousands):
Change in interest expense given a decrease ininterest rate of X bps*
Average outstanding
Change in interest expense given an increase ininterest rate of X bps*
Description
(100 bps)
(50 bps)
as of June 30, 2025
100 bps
50 bps
(1,889
(945
188,900
1,889
945
* The underlying interest rate was 6.54% as of September 30, 2025.
Exchange Rate Sensitivity
A majority of our sales and expenses are denominated in United States Dollars. While we conduct some sales transactions and incur certain operating expenses in foreign currencies and expect to continue to do so, we do not anticipate that foreign exchange gains or losses will be significant, in part because of our foreign exchange risk management process discussed below.
We record all derivatives on the balance sheet at fair value. From time to time, we enter into foreign exchange forward contracts to mitigate the effect of gains and losses generated by the foreign currency forecast transactions related to certain operating expenses and re-measurement of certain assets and liabilities denominated in foreign currencies. Changes in the fair value of these foreign exchange forward contracts are offset largely by re-measurement of the underlying foreign currency denominated assets and liabilities. As of September 30, 2025 and 2024 foreign exchange forward contracts not designated as hedging instruments, had a total notional principal amount of $65.1 million and $42.6 million, respectively. Changes in the fair value of derivatives are recognized in “Other expense, net.”
For the three months ended September 30, 2025 and 2024, the Company recognized foreign currency transaction net gains of $0.9 million and foreign currency transaction net losses of $1.4 million, respectively.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, such as this Report, is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and to ensure that such information is accumulated and communicated to our management, including the Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”), as appropriate to allow timely decisions regarding required disclosure.
Under the supervision and with the participation of our management, including our CEO and CFO, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Report. Based on this evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Report.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rules 13a – 15(f) and 15d – 15(f) under the Securities Exchange Act of 1934, as amended) during the three months ended September 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitations on Effectiveness of Controls
Our management, including the CEO and CFO, does not expect that our disclosure controls or our internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Our controls and procedures are designed to provide reasonable assurance that our control system’s objective will be met, and our CEO and CFO have concluded that our disclosure controls and procedures are effective at the reasonable assurance level. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within Extreme Networks have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events. Projections of any evaluation of the effectiveness of controls in future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures. Notwithstanding these limitations, our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives. Our CEO and CFO have concluded that our disclosure controls and procedures are, in fact, effective at the “reasonable assurance” level.
PART II. Other Information
Item 1. Legal Proceedings
For information regarding litigation matters required by this item, refer to Part I, Item 3, “Legal Proceedings” of our Annual Report on Form 10-K for the fiscal year ended June 30, 2025, and Note 8, Commitments and Contingencies, to the Notes to Condensed Consolidated Financial Statements, in this Report, which are incorporated herein by reference.
Item 1A. Risk Factors
Our operations and financial results are subject to various risks and uncertainties, including those described in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended June 30, 2025, which could adversely affect our business, financial condition, results of operations, cash flows, and the trading price of our common stock. There have been no material changes to our risk factors since our Annual Report on Form 10-K for the year ended June 30, 2025.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
There were no sales of unregistered equity securities during the three months ended September 30, 2025.
The following table provides stock repurchase activity during the three months ended September 30, 2025 (in thousands, except per share amounts):
Approximate Dollar Value
Average
Total Number of Shares
of Shares
Number of
Price Paid
Purchased as Part of
That May Yet Be Purchased
per Share
Publicly Announced
Under the Plans or Programs
Purchased
(1)
Plans or Programs
(1) (2)
Beginning amount available to repurchase
200,000
July 1, 2025 - July 31, 2025
August 1, 2025 - August 31, 2025
492,256
20.65
189,834
September 1, 2025 - September 30, 2025
85,025
21.57
188,000
577,281
20.79
Remaining amount available for repurchase(2)
Item 3. Defaults Upon Senior Securities - Not Applicable
Item 4. Mine Safety Disclosures - Not Applicable
Item 5. Other Information
Rule 10b5-1 Trading Plan
On August 28, 2025, Edward Meyercord, the Company's President and Chief Executive Officer, adopted a Rule 10b5-1 trading arrangement that is intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) for the sale of up to 900,000 shares of the Company's common stock until December 31, 2026.
On September 2, 2025, Rajendra K. Khanna, a member of the Company's board of directors, adopted a Rule 10b5-1 trading arrangement that is intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) for the sale of up to 35,000 shares of the Company's common stock until October 30, 2026.
On September 4, 2025, Katayoun ("Katy") Motiey, the Company's Chief Legal, Administrative & Sustainability Officer, adopted a Rule 10b5-1 trading arrangement that is intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) for the sale of up to 45,161 shares of the Company's common stock until January 5, 2027.
Item 6. Exhibits
Incorporated by Reference
Exhibit
Number
Description of Document
Form
Filing Date
Filed
Herewith
3.1
Amended and Restated Certificate of Incorporation of Extreme Networks, Inc.
8-K
11/18/2022
3.2
Certificate of Amendment to Amended and Restated Certificate of Incorporation.
11/9/2023
3.3
Amended and Restated Bylaws of Extreme Networks, Inc.
6/9/2023
31.1
Section 302 Certification of Chief Executive Officer.
X
31.2
Section 302 Certification of Chief Financial Officer.
32.1*
Section 906 Certification of Chief Executive Officer.
32.2*
Section 906 Certification of Chief Financial Officer.
101.INS
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.
101.SCH
Inline XBRL Taxonomy Extension Schema with Embedded Linkbase Documents.
104
Cover Page Interactive Data File (embedded within the Inline XBRL document).
* Furnished herewith. Exhibits 32.1 and 32.2 are being furnished and shall not be deemed to be “filed” for purposes of section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, nor shall such exhibits be deemed to be incorporated by reference in any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as otherwise specifically stated in such filing.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
(Registrant)
/s/ Kevin Rhodes
Kevin Rhodes
Executive Vice President, Chief Financial Officer (Principal Accounting Officer)
October 30, 2025