Extreme Networks, Inc. (NASDAQ:EXTR) Q4 2023 Earnings Call Transcript

Dave Kang: Thank you. But I guess my follow up question is, they’ve been very vocal about their AI capability. What is your strategy AI strategy going forward?

Ed Meyercord: Yes, I mean, look, we, Extreme and Juniper, are the leaders in the space in terms of AIOps. And so, we have different capabilities, but this is, I go to Kroger, right? I mean, we won Kroger and obviously, they want to build the grocery store of the future. And that hinges on AI capabilities and AIOps. They’re looking to automate their environments. They’re looking for unique insights actionable insights. When we look at our differentiation versus Juniper, I’d say it’s about the quality of actionable insights that come from our AIML tool. But yes, this is where we’re focused Dave, And I would say, Juniper is very good at marketing their capabilities here.

Dave Kang: Thank you.

Operator: Thank you. And our next question coming from the line of, Greg Mesniaeff with West Park Capital. Your line is now open.

Greg Mesniaeff: Thank you. Thank you for taking my question. Ed just a high level question for you. If just for argument’s sake one of your strategic goals were to come true in its entirety and your entire subscription base transition to a subscription model, how would that impact product revenue and revenue growth and the timing of revenues? Thanks.

Ed Meyercord: Thanks, Greg. And it’s a good question. If you look at – if you look at today, if you look at our portfolio and what we can manage from the cloud it’s about – it’s less than – it’s less than 50% of our installed base, but in terms of what we’re selling it’s probably in the 60% range. So the idea that we could – we could increase the volume from 60% to a 100% is obviously a big deal for us. There will also be an opportunity for migrations of our existing base, which would accelerate the subscription revenue as well. And our solutions – the current solutions that we’re offering today where we have our subscriptions being tied to hardware, some of the new growth initiatives we have we are un-tethering the hardware in a way where we’ll be able to sell subscription, cloud subscriptions and software subscriptions that are un-tethered to our hardware and that obviously will create a unique growth opportunity.

Greg Mesniaeff: Thanks. But as you – as the sales mix continues to transition to software and subscription, would the impact on hardware revenue be in any way impacted negatively?

Ed Meyercord: Well, for us it’s, yes, we still need hardware in a network. And so I think it’s our subscription differentiation – our cloud differentiation, our fabric capabilities that, that when – when we win – when we win because of our cloud story and our AIOps tools and our AIOps stories it pulls through the hardware. So as people are looking at building the network of the future and modernizing their infrastructure, and they consider our capabilities as it relates to software and what we can do with our cloud. It helps us take share and it helps us in winning that business that pulls through hardware. So I would say, no, this is – this is really about us picking up share. We can lead with our software capabilities, our cloud capabilities, AIOps and then when we win, we pull through the hardware.

Greg Mesniaeff: Great. Thank you.

Operator: Thank you. Now our next question coming from the line of Mike Genovese with Rosenblatt Securities. Your line is open.

Mike Genovese: Thank you very much. Can we get just an update on the backlog? Last quarter you said five times normal, do we have a metric for this quarter?