Extreme Networks (EXTR) Stock Forecast & Price Target

Extreme Networks Inc. is projecting significant revenue growth, with 2Q26 revenues expected to reach between $309 million and $315 million, reflecting a year-over-year increase of 12% at the midpoint, and full-year guidance of $1.25 billion to $1.26 billion indicates a 10% increase year-over-year. The company has reported a robust performance in 4Q25, with sales increasing by 20% year-over-year and 8% quarter-over-quarter, culminating in the strongest bookings in two years, while also enhancing its cash position with $232 million in cash and equivalents, a notable rise from $185 million in the previous quarter. Furthermore, the acceleration in subscription sales, which drove a 24% year-over-year growth in annual recurring revenue (ARR) to $216 million, coupled with a strategic focus on innovative cloud and AI solutions, positions Extreme Networks favorably to capitalize on market share gains and achieve its target operating margin amidst a shifting competitive landscape.

Extreme Networks Inc. reported a cash flow from operations (CFFO) of ($14 million) and a free cash flow (FCF) of ($21 million) for the quarter, marking a decline attributed to one-time legal payments. The company faces challenges such as economic uncertainty, customer financial difficulties, and decreased spending on network expansion, all of which could lead to reduced revenues and profits. Additionally, the gross margin decreased by 100 basis points quarter-over-quarter to 61.3% due to industry-wide price increases for essential components, and ongoing supply chain issues may continue to hinder revenue growth and negatively affect gross margins.