Shares of Extreme Networks Inc. closed 14% higher today after it posted financial results that topped expectations across the board.

The company, which makes network equipment and software for managing it, generated $307 million in revenue during the fiscal fourth quarter ended June 30. That’s almost 20% more than a year earlier and 2% above the consensus estimate. About 40% of Extreme Networks’ bookings come from the public sector, while the manufacturing, healthcare and hospitality industries account for 10% each.

The company sells more than a half-dozen stackable network switch lineups. Multiple such switches can be linked together in a manner that allows them to function as one device, which simplifies maintenance. Extreme also sells optical cables and transceivers, which turn the data-carrying light beams that travel through optical cables into electricity and vice versa.

The company’s hardware lineup is rounded out by a portfolio of access points. They can be used to provide Wi-Fi coverage in offices and at outdoor locations such as sports stadiums.

Extreme has cited its devices’ subsecond convergence feature as a contributor to customer demand. When a switch malfunctions, the network that it supports usually requires several minutes to restore service. Extreme’s switches facilitate recovery times of under a second, which reduces the disruption to business users. 

Alongside hardware, the company sells software-as-a-service applications that have emerged as a major source of revenue growth. In the fiscal fourth quarter, the annualized recurring revenue of Extreme Networks’ SaaS business reached $207.6 million. That represents a year-over-year increase of 24%.

The company launched the latest addition to its software portfolio, Extreme Platform ONE, in mid-July. The platform can visualize the devices that make up a corporate network and highlight malfunctions. An artificial intelligence assistant identifies legacy systems that should be replaced.

Extreme also provides a suite of network management tools under the ExtremeCloud IQ brand. The software allows companies to centrally manage network equipment from Extreme and several competing hardware makers. Another software tool, Business Insights for Venues, helps venue operators monitor how visitors use their Wi-Fi networks.

“Five consecutive quarters of revenue growth and ARR jumping 24 percent year-over-year are clear indicators that our subscription model is gaining traction,” said Chief Executive Officer Ed Meyercord. “Increased customer engagement in EMEA and APAC underscores our global momentum, highlighted by sizable wins this quarter.”

Extreme ended the quarter with net income of $33.5 million. That corresponds to adjusted earnings of 25 cents per share, a major improvement over the eight-cent loss the company posted a year earlier. Analysts had expected earnings of 22 cents per share.

For the current quarter, Extreme is forecasting adjusted earnings of 20 to 23 cents per share on between $292 million and $300 million in revenue. The company expects to generate $1.22 billion to $1.23 billion in sales during fiscal 2026.

Image: Extreme Networks