What Extreme Networks (EXTR) said on its Q1 earnings call. October 28, 2026 Key points. * Extreme Networks reported strong Q1 fiscal 2027 results, with revenue up 10% year over year to $341 million, non-GAAP EPS rising 50% to $0.33, and significant gross- and operating-margin expansion. * Platform ONE adoption accelerated, accounting for more than half of subscription bookings, while larger enterprise deals and AI tools such as Agent ONE strengthened the company's growth prospects. * Management raised its fiscal 2027 outlook to $1.402 billion-$1.412 billion in revenue and $1.35-$1.39 in non-GAAP EPS, citing stronger subscription demand, product availability and a growing sales pipeline. * Five stocks to consider instead of Extreme Networks. Extreme Networks NASDAQ: EXTR reported first-quarter fiscal 2027 revenue growth of 10% year over year, extending its streak of double-digit growth in total revenue and product revenue to seven consecutive quarters. The networking company also raised its outlook for the second quarter and full fiscal year, citing demand visibility, expanding enterprise opportunities, product availability and increasing adoption of its Platform ONE offering. Revenue for the quarter reached $341 million, exceeding the high end of the company's guidance range, according to Executive Vice President and CFO Kevin Rhodes. Product revenue rose 12% to $218 million, while recurring revenue increased 7% to $119 million. SaaS annual recurring revenue grew 22% year over year to approximately $265 million. Non-GAAP earnings per share increased 50% from a year earlier to $0.33. Gross margin was 62.6%, up 130 basis points year over year, while operating margin expanded 410 basis points to 17.4%. Adjusted EBITDA rose 47% to $66 million, representing a 19.2% margin. Platform ONE adoption and enterprise expansion. President and CEO Ed Meyercord said Platform ONE accounted for more than half of subscription bookings during the quarter. The company expects more than 50% of its customers to be using the platform by the end of fiscal 2027, compared with 10% at the end of the prior fiscal year, and expects adoption to approach 80% in the following year. "Customers want a single AI-powered platform that integrates security and networking to help reduce complexity, simplify operations, and manage their wired and wireless environments in one place," Meyercord said. The company said it is gaining traction with larger customers, booking 44 customers with transactions exceeding $1 million during the quarter, compared with 36 a year earlier. Meyercord said the funnel of opportunities worth more than $1 million had grown by more than 20%, depending on the period measured. Discover more MarketBeat All Access MarketBeat Research Tools Extreme cited several customer wins, including a campus transformation for a large U.S. integrated healthcare network across 21 hospitals and about 600 care locations. The company said the customer reported support tickets fell by more than 90% in the first month after deployment. Hard Rock Stadium in Miami also selected Extreme for a Wi-Fi 7 and switching upgrade, while an Austrian bank chose the company to refresh wired and wireless networks across more than 70 branches. Management said its Agent ONE Coworker AI tool, introduced to Platform ONE customers in early September, generated a 10-fold increase in adoption versus the company's prior AI product. Meyercord said 98% of critical "Nudges," or proactive recommendations provided by the system, received a response. He added that 58% of support cases opened through Agent ONE Coworker included the information engineers needed to begin troubleshooting. The company plans to introduce Agent ONE Operator Mode in calendar 2027. Management said the feature is expected to execute tasks independently within defined governance limits and create a new revenue stream through "agent actions," which it described as token-based economics. Extreme also expects to introduce Exchange zones in the first half of calendar 2027, enabling customers to run enterprise AI applications on premises or in the cloud while retaining control over data residency. Supply position and margins. Management emphasized its supply-chain position as component availability and memory costs remain a concern across the technology industry. Rhodes said Extreme made strategic memory purchases and ended the quarter with $36 million of memory on its balance sheet. Meyercord said the company has supply coverage extending into fiscal 2028 and does not believe its revenue outlook is constrained by supply. "The higher cost of memory is built into the gross margin that we just reported and our guide," Meyercord said during the question-and-answer session. He said the company has been able to pass along some component-cost increases through pricing while remaining less aggressive on price increases than larger competitors. Rhodes said future margin improvement could be supported by a larger mix of higher-margin subscription revenue, scale and potential reductions in component costs over time. Extreme generated $39 million in free cash flow during the quarter and ended the period with $245 million in cash and $45 million in net cash. The company repurchased $25 million of shares during the quarter. Raised fiscal 2027 outlook. For the second quarter of fiscal 2027, Extreme forecast: * Revenue of $345.8 million to $350.8 million. * Gross margin of 62.2% to 62.7%. * Operating margin of 16.4% to 17.4%. * Non-GAAP earnings per share of $0.32 to $0.34. For the full fiscal year, the company raised its revenue outlook to a range of $1.402 billion to $1.412 billion, representing 10% year-over-year growth at the midpoint. It projected gross margin of 62.3% to 62.8%, operating margin of 17.2% to 17.6%, and non-GAAP earnings per share of $1.35 to $1.39. Management attributed the increased outlook to stronger-than-expected Platform ONE subscription adoption, product demand and a growing sales funnel. Rhodes said bookings growth was particularly strong in education, manufacturing, healthcare, and sports and entertainment. While Asia-Pacific revenue declined against elevated prior-year comparisons, the company said it continued to win large deals in the region and expects growth across all regions during fiscal 2027. About Extreme Networks (NASDAQ:EXTR). Extreme Networks, Inc develops networking solutions that help organizations connect, manage and secure users, devices and applications across campus, data center and distributed environments. Its portfolio includes wired and wireless network infrastructure, Ethernet switches, access points, software-defined wide-area networking (SD-WAN), network access control and cloud-based network management. The company's ExtremeCloud platform supports centralized monitoring, configuration, analytics and automation for network operations. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. Before you consider Extreme Networks, you'll want to hear this. 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Extreme previews on-prem AI zones for enterprise networks. Thu, 22nd Oct 2026 (Yesterday) Extreme Networks has previewed Exchange zones, an on-premises artificial intelligence infrastructure for enterprise networking. The product is due for general availability in the first half of CY27. The system is designed to let businesses run the same AI applications locally and in the cloud while controlling where data is processed and stored. Extreme is targeting organisations that want tighter oversight of data residency, less reliance on cloud links and greater use of hardware already installed across branch and edge sites. Under the design outlined by Extreme, each Exchange zone would combine either an Extreme Universal Compute Platform or a qualifying customer-owned server with spare processing capacity from access points and switches. Workloads would then be placed automatically according to customer rules on latency, resilience and data residency. Models would run locally by default, with cloud inference available only when policy allows. Any such cloud use would be logged, according to Extreme. The announcement reflects a broader shift in enterprise AI from centralised cloud deployments to distributed computing closer to where data is generated. That trend has been shaped by regulation, the cost of moving large volumes of data and the need for systems to keep operating when network connectivity is disrupted. Extreme is positioning the product around those pressures, particularly for regulated industries and businesses with dispersed operations that may need AI workloads to remain within a defined site and country boundary rather than flow to external cloud infrastructure. Edge focus The proposed architecture is also aimed at environments such as retail stores, warehouses and branch offices, where local decision-making can matter when links to central systems are weak or unavailable. In those settings, businesses have increasingly looked for ways to run AI tasks at the edge without building separate, dedicated infrastructure at each location. Exchange zones would allow organisations to pool compute resources from networking equipment already in place, including spare capacity on deployed access points and switches. Extreme argues that capacity can be redirected to AI applications and plug-ins. "We've spent decades building networks that reach every corner of the enterprise, and those networks hold a lot of idle compute. Exchange zones will put that compute to work, letting AI run locally on infrastructure customers already own. That delivers sovereignty, local inferencing, and better economics than sending everything to the cloud. Customers control their data, inference, and cost inside a boundary they define, with a record of every exception. No one is better positioned to bring AI to the edge than Extreme. We already run the networks where that work happens," said Nabil Bukhari, Chief Technology Officer and President of AI Platforms, Extreme Networks. Extreme said its networking products generate large volumes of operational data that can be used not only for network management but also for areas such as security, logistics and business operations. Exchange zones are intended to keep that data on premises for AI use cases that, in Extreme's view, are harder to support in a cloud-only model. Market context The move comes as infrastructure providers compete to define where enterprise AI workloads should run and who controls the software layer through which customers access models and applications. Many suppliers have focused on public cloud services, while others are trying to build hybrid systems that can move workloads between customer sites and remote infrastructure. For networking vendors, the case for edge AI rests partly on installed base. Access points, switches and related hardware are already spread across large enterprises, giving suppliers a route to offer local processing without requiring a full rebuild of branch technology estates. Brandon Butler, IDC Senior Research Manager, Networking and Infrastructure Services, said the approach addressed a gap in current AI distribution models. "As AI moves toward the distributed sites where enterprise data is generated, organisations need to run AI applications on-premises to meet data sovereignty requirements and control inferencing cost - yet many AI marketplaces still assume a cloud-only model. Exchange zones is an innovative approach that brings a marketplace of AI applications to customer premises, using spare capacity in existing network infrastructure to keep data local," said Butler. Extreme said Exchange zones will sit within a broader enterprise software stack that includes its network infrastructure, Platform ONE management and security layer, AI tools and Agent ONE interface, as well as Exchange for AI applications. The company is seeking to tie those layers together around the idea that data originates in the network and can be processed closer to that source rather than being sent automatically to the cloud. Whether customers adopt that model at scale is likely to depend on how much unused compute exists in current deployments, how easily workloads can be orchestrated across mixed hardware, and whether the operational savings outweigh the added complexity of managing AI across distributed sites. Each zone would be bound to a single site in a single country, with records showing what remained local, what crossed the boundary and why, and which model was resident, according to Extreme.

Acture Solutions acquires Digital BackOffice, its second MSP deal of 2026. Acture Solutions, a New York-based managed services provider backed by Stonepeak Credit, announced in early October 2026 that it has agreed to acquire Digital BackOffice, a Connecticut MSP and internet service provider that has served K-12 school districts and municipalities across the Northeast since 1991. Terms were not disclosed. The deal is Acture's second acquisition of the year, following its purchase of cybersecurity-focused MSP Artilus, and it extends a pattern that is becoming the default growth motion for private-equity-backed MSP platforms: buy specialized capability in a regulated vertical rather than buy undifferentiated revenue. Digital BackOffice brings managed WAN, leased fiber connectivity, network design, monitoring, and security services, along with an established partnership with Extreme Networks. None of that is exotic technology. What it is, is infrastructure that regulated, resource-constrained buyers cannot easily assemble themselves - and that is precisely the point of the acquisition. Why K-12 and municipal customers are the target. Acture CEO Gabriel Stacy framed the rationale around fit rather than scale: "Digital BackOffice has built an outstanding reputation as a trusted technology partner to K-12 school districts and municipalities across Connecticut and beyond. Their technical expertise, customer-first culture and long-tenured relationships make them an exceptional fit for Acture." That is standard acquisition language, but the underlying logic holds up. School districts and municipalities are exactly the kind of customer that MSP platforms are converging on: budget-constrained, understaffed on IT, and carrying a compliance and security burden that has grown faster than their internal capacity. Alec Buchenic, VP at martinwolf - the advisory firm that represented Digital BackOffice in the sale - put a number on that burden: districts in this segment receive on the order of 1,200 phishing emails a day on average, while also managing a growing footprint of connected classroom devices and cloud applications. Buchenic's read is that these customers increasingly want connectivity, network infrastructure, and security delivered by a single trusted partner rather than stitched together from point vendors. That is the same demand shift driving consolidation across much of the channel, just expressed in a vertical that rarely gets attention in cloud-partner coverage. The financing pattern behind the deal. Acture's acquisition pace is not organic growth funded out of cash flow. It follows a strategic growth financing arrangement with Stonepeak Credit, and before Digital BackOffice the company had already acquired Computer Systems Integrators and Artilus. Stacy acquired Acture itself from private equity in 2019, and the company reports roughly 174% revenue growth over three years. That trajectory - PE-backed roll-up, sequential bolt-on acquisitions, each one adding a specific capability rather than simply more customers - is the same playbook described in recent coverage of MSP platforms standardizing around AI-ready managed services, applied here to connectivity and network infrastructure instead of AI tooling. The capability-first logic is worth sitting with. Acture did not need Digital BackOffice's customer count to move its revenue needle meaningfully; it needed the managed WAN and broadband connectivity practice that it did not already have at depth, attached to a customer base in a vertical it was already courting. That mirrors the distribution-layer acquisition logic covered in ScanSource's purchase of MicroAge earlier this year - a different scale and a different layer of the channel, but the same underlying thesis: services capability is the asset being bought, and the existing customer relationships are the delivery mechanism for deploying it faster than organic buildout would allow. What this means for the regulated-industry MSP segment. Buyers serving schools, municipalities, and other regulated or budget-constrained segments are not a niche curiosity in the channel; they are a structurally attractive segment precisely because they cannot self-serve their IT needs. Compliance and risk requirements compound in these environments, and a provider that can show up with network, security, and connectivity already integrated has a real advantage over one asking the customer to coordinate three separate vendor relationships. That advantage is durable in a way that pure price competition is not - it is the same reasoning covered in analyses of MSP margin stacking, where bundling adjacent services into a single managed contract is what actually protects margin as commodity IT services compress. For other MSPs operating in similar regulated verticals, the signal is less about this specific transaction and more about the rate at which PE-backed consolidators are moving. Acture has done three deals in roughly two years since its 2019 buyout and is openly stating an intent to keep building a "specialized MSP in highly regulated industries." Independent MSPs serving schools, municipalities, healthcare, or other compliance-heavy segments without comparable backing should expect more offers like the one Digital BackOffice accepted - and should have a clear view of whether their own capability gaps make them a target or a survivor in that consolidation wave. Common questions. What did Acture Solutions acquire? Acture Solutions acquired Digital BackOffice, a Connecticut-based managed services provider and internet service provider founded in 1991 that serves K-12 school districts, municipalities, and commercial customers across the Northeast. The deal was announced in early October 2026; terms were not disclosed. Why is Acture Solutions acquiring MSPs serving schools and municipalities? Acture is building a specialized MSP platform for regulated and resource-constrained industries. Digital BackOffice adds managed WAN, broadband connectivity, network design, monitoring, and security expertise that complements Acture's existing managed IT and cybersecurity practice, letting it offer K-12 and municipal customers infrastructure, connectivity, and security from one vendor. What does this deal signal about MSP consolidation? It is Acture's second acquisition of 2026, following Artilus, and comes after a strategic growth financing round from Stonepeak Credit. The pattern reflects a broader trend: private-equity-backed MSP platforms consolidating specialized capabilities rather than simply buying revenue, as regulated customers increasingly prefer a single integrated provider over point services.