Kevin Rhodes: Sure. So there’s what we’re doing, Mike – there’s what we’re doing in the core business to take share, my comments. Yes, I made a point of commenting on what matters the most in the market overall right now, and networks are inherently complex. And in the enterprise space, people are trying to come to grips with how do we simplify – how do we simplify the environment and how do we make sure that we have flexibility going forward, and we don’t have a vendor lock situation where we get kind of stuck in a certain technology. And do we have modern networking tools? And today Extreme is by far the simplest in terms of our solutions, the most flexibility, and we have the most modern tools in terms of modern networking tools.
So we become a very attractive alternative. So our share gain profile, and when we’re winning the kind of accounts that we’re winning with the kind of names that we’re winning for references, that bodes very well for us. And our customer names support our brand and support us in building our brand in the marketplace. So that’s just core market, market share gains. You’ll hear more about that, but we have a ton of these larger opportunities behind us, and it’s kind of success begets success. In terms of the new market opportunities, a lot of enterprise customers don’t want to be in the networking business. And so they want service provider or managed service providers, which are a lot of people on our channel to provide a managed service. The problem with managed services is that the platforms are really complicated and difficult to manage.
And a managed service provider has to have so many interfaces into so many different clouds and into so many different portals, and the billing is complicated, et cetera. So we set out over a year ago to build a managed service platform – a modern managed service platform based on simplicity. And we’ve come up with what is a very exciting platform that greatly simplifies the ability to provide a managed service from a networking perspective and all the elements that we’re providing. And so there’s been a huge amount of excitement around it. It does take a while to stand up. We started off with a goal of five service providers. We mentioned now we’re at seven. We think that’s going to scale up quite a bit. And we’re going to make it much easier for a managed service provider to deliver a networking experience, far easier.
And then with the simplicity of licensing, et cetera, the whole package will make it easier. So we’re optimistic there. It doesn’t really affect fiscal 2024 much, but it’ll start to play a role in fiscal 2025. We talked about the private subscription offers to some very large service providers to support them in their enterprise business. Very early innings here, we have a couple of large players we’re talking to. One specifically, it has a massive backlog and a pipeline of opportunities. So we’re excited about that. We’re investing in FedSerts [ph]. It’s an area that we had under-invested in previously. We have new resources that we’ve hired that have uncovered some very targeted specific opportunities that we’re pursuing that open up much higher than normal industry growth opportunities there.
We also mentioned Asia Pacific where we have been rebuilding that team. We have very strong leadership there and we see big opportunities and verticals like hospitality. And we’ve had a massive – the largest deal ever that we’ve won in Asia Pacific, $10 million deal in Indonesia. We can build on that success. We’re having a lot of success right now in Japan. Korea, where we’ve been historically strong, we have some really large opportunities with some of the large players there. So those are the areas in terms of managed service with global security and certification, the private offer as well as Asia Pacific investments. The last thing that we’re doing is we’re about 66% of our networking gear is licensed and runs in cloud. And we have a plan to make that 100%.
So we see accelerated growth and subscription as we build out our Extreme cloud, not just a cloud management platform, or a management tool, but an Extreme cloud platform as a service orchestrator. And we’ll talk about that on Investor Day as well.
Mike Genovese: Okay, that was a lot of color. Thanks for that. And then just on the margins, talk more about how the bottom line here grows a lot faster than the top?
Kevin Rhodes: Ed, you want me to cover that one?
Ed Meyercord: Go for it.
Kevin Rhodes: Yes. I think Mike, so it’s kind of rooted in our planning process, right? When we develop our annual planning process, we look at discretionary spend and what that is, and then our fixed spend. And we understand that the levers we need to pull, if we need to pull back, we can pull back on hiring, we can pull back on discretionary spend and the like, if we see the business environment changing. We were able to act quickly, which was great for us in the quarter, to this kind of evolving market environment. So that’s still enabling us to have a good second quarter from an EPS perspective, and obviously helps us for the rest of the year as well. So I would say, we feel confident in our ability to achieve that 25% growth in EPS this year.
There’s not many companies out there where you can say, hey, even if your top line is single- to high-teens revenue growth, you’re still delivering 25% profitability. And we’ve been delivering high levels of growth and profitability for quite some time, for several years. And so we think that that is an important element for shareholders to look at and realize that this company is going to get through this air pocket, still deliver good, strong, profitable growth this year. And then next year, we’ll turn back into a more mid-teens growth company and deliver that margin as well. So that’s the goal.
Mike Genovese: Great. Can I just have one quick follow up there? Could you just talk a little bit of sort of gross margin versus operating margin? The comments seemed to me focused more on the operating expenses, but I think there’s a gross margin to come as well?
Kevin Rhodes: Yes. I mean, we’re going to continue to look at ways of how we can continue to expand our gross margin for sure, Mike. I think we originally said that we’re expecting it to be somewhere in the 62% range for the full year. We’re not backing off that. We think that we will continue to see improvement throughout the year. I don’t know if it’s going to be 90 basis points sequentially every single quarter, but we are expecting that we continue to improve our gross margins throughout the year. That’s going to help.
Ed Meyercord: Yes. And Mike, what’s implied in a 62% gross margin is obviously we end the year over that and more of a 63% range. So it relates to growth margins. We continue to see gross margin stepping here as we come out of supply chain and as we see some of the mixed dynamics as it relates to subscription, et cetera.
