Extreme Networks, Inc. (EXTR)

Investor Day 2021

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Feb 23, 2021

Welcome everyone to the 2021 Extreme Networks Investor Day. I'm Stank Hoveler, Vice President of Corporate Strategy and Investor Relations. And we have a great lineup for you today. We're thrilled to share with you our vision, talk to you about our growth prospects and really explain how we are the industry's only pure play cloud networking provider. We're going to speak to you for about an hour 45 today and then go into questions and answers. And before I begin, I do have to remind you of some forward looking statements. So during today's call, we'll our discussion may include some forward looking statements. And as you know, they involve risks and uncertainties. For additional information, please take a look at our 10 ks, 10 Q and 8 ks filings on our website. You can follow along the slides if you're on audio only. We've we're going to post them on our website afterwards. And we encourage you to take a look at our web page that we've set up for the Investor Day. There are some additional assets there, some videos about our products and solutions and some other testimonials as well. Let's get to the agenda. So presenting today, we have our CEO, Ed Meyercord, And Ed is going to talk to you about how we are pivoting towards growth and investing in innovation. That's really the stage of where we are as a company. And then following that, our Chief Operating Officer, Norman Rice, will discuss conversation with Major League Baseball. We have Atumu Boyes with us from Major League Baseball to talk about what we're doing in our recent win that we announced last week. After that, our Chief Technology and Product Officer, Nabeel Bukari, is going to talk to you about what we call the Infinite Enterprise and about some of our products and solutions that we're building and bringing to market such as the Universal platform and how we differentiate with Cloud, Fabric and Universal. And then we'll take a short break and come back with our Chief Administrative and Sustainability Officer, Kathy Mote, talking to you about our sustainability efforts, our corporate social responsibility mission and really what we're all about in that perspective. Then we'll have Joe Vitalone, our Chief Revenue Officer and Wes Thoreau, our Chief Marketing Officer, tell you about our go to market efforts, what we're doing to build a channel engine and at the tail end of that, we'll get a partner testimonial from Ed Walton, who is the CEO of StepCg, one of Extreme's largest North American partners here. Once that's done, we'll conclude with Remi Thomas, our CFO, talking to you about our margin profile, growth prospects and really all those things that you want to hear. And after Remi, we will go straight into Q and A. So without further ado, Let me introduce the CEO of Extreme Networks, Ed Meyercord. Ed, take it away. Thank you, Stan, and thank you everybody for joining us today. We have so much going on at Extreme and we're really excited to share this with you outside the normal earnings call track and to let you see the players at Extreme and to understand and have a deeper dive As to what's going on. We are truly a different company than we were a year ago. And it's hard to believe just what has happened over the course of last year. And I know Everyone here is probably feeling the same way. At our case, it was about this time last year that we found out that there was a virus in China and it was spreading rapidly. And our first concern was, are we going to be able to get product out of the country? And it was a big concern. And then immediately we saw people tapping on the brakes as far as demand. Opportunities that we knew were real were just being pushed out and pushed out Further in time, so these things were happening. We wanted to be take all the precautions we could. We drew down our revolver. We had to make tough decisions. We accelerated the reorganization of our product engineering group, Our go to market teams in the field, we had to reduce headcount, we took salary reductions. But then from there, it's been pretty amazing. We have come out. We're now 3 quarters in a row, top line growth, gross margin expansion, earnings expansion. We have record cash flow generation in December. And we paid off our revolver and it looks like we'll be covenant compliant here in the March quarter. So It is really we've come a long way. What I'm most excited about is the technology differentiation, Our market position, the trends that are happening in the industry and why we're poised for growth, including some new growth vectors. So looking forward to jumping in With everybody here. Let's just take a high level and take a step back and look at kind of what's going on and where we are right now. Hard to believe it's 25 years that Extreme has been in business. And I think as we go into this year, we're going to be breaking records for the company and its history. When we think about the environment and what's going on, all of us are working from home. The enterprise has become More and more distributed. And then when we think about what's going on with COVID, it's only accelerated people working from home and then this new normal that is has fundamental impacts on networking and on our industry. Fortunately, our time could not be better with our cloud investment, because we have the 2nd largest cloud in the industry, but the industry leading cloud, and really the cloud is the platform that enables Distributed Networking. And we'll talk about Pippen Enterprise and how we see the future of the enterprise and why we think that's so important. Again, 3rd year in a row, Gartner Magic Quadrant, that is a big deal for us. We think about how that plays out in the And how that matters. Finally, corporate social responsibility, a lot of things happening out in the world, driving this focus. And you'll be happy to know Extreme is a leader on this front. We've got metrics to prove what we're doing. The energy inside the company for things like Extreme Academy, standing up our teams on the D and I front, The progress we're making, the energy it's generating is great. So we're turning the corner into 2021 as we go into our 25th year And a really strong position with a lot of things to look forward to. If I take a longer range perspective, We started off with an acquisition strategy to get critical mass. That was really important to us. And then Aerohive was really about getting world class cloud. We got the industry's leading cloud with that acquisition. The good news for us is we think about all the work we've done, all the money that we poured into The consolidation of assets, I mean, there's the physical integration of all of our systems. It's all one extreme. How do we bring together our product and technology roadmaps, Very complicated. Now we have the universal hardware platforms and then how do we bring everything to cloud and we're ahead of schedule. So at this point now, we're a fundamentally different place where we're looking at, hey, we can now invest in innovation, we can invest in growth. And this is an exciting time for people inside of Extreme getting energized behind that as well as our partner community and as well as our customers. If I take a look at the major trends that are affecting our industry and networking as we look forward, obviously, cloud. I talked about it Earlier, but this is the last part of the IT infrastructure to move to cloud. And this is going to simplify networking and reduce complexity, Which is a big deal. It is going to create new insights and new opportunities to reduce costs and it's also going to provide new services for cloud. So This is a big one for us. Data in the cloud age, data is the new currency and that we have the ability for the first time to untap data from the network. And this becomes strategic. The network becomes more strategically important if it is the connective tissue of all the applications and all the users And then what are the insights we can gain and then how can we change business outcomes. This is a big focus. And then mobility, this is what enables it all. As we look at the distributed Enterprise, that edge is moving out to become more the mobile edge and I'll hit on that. This is what we're calling the new edge. Instead of the new edge being a corporate remote corporate office or a remote branch office, the edge is now going to be the individual The individual's device and that could be in a home, it could be in an office, it could be on an iPad, it could be on a laptop. It doesn't matter where you are. The network is going to connect to you. And now the enterprise, instead of the consumer being responsible for that connection, The enterprise is going to take ownership of the user experience in the distributed environment. And so this is what we mean when we talk about The Infinite Enterprise, we talk about kind of what happens as it expands. In the middle of this is cloud, because you can manage this Very, very easily from a cloud platform and you can't manage it from the traditional on prem platforms. So this is why we're excited about the cloud and the opportunity it brings and this is our vision of where the enterprise is going. And let me just give you a few examples. We're really proud of our partnership with Aldine, just outside of Houston, One of the largest independent school districts in Texas. And they're a role model, not only for Texas, But for the whole United States, really for the world for that matter, for all the great things that they're doing, bridging the digital divide, investing in technology And their digital transformation and the acceleration of that, they had a 3 year plan in Chromebooks for lower school And then bring Ipass to middle school and then laptops for upper school. This is for 70,000 students. And they took a 3 year project and they smush it into 10 months, and they executed on that. And then with people going home from COVID, they still had to provide access, Access to that school network. So they put up a 1,000 APs around all their school locations to bring free internet access, Not only to their students and their families, but communities. They are moving everything to the cloud, big multimillion dollar Customer and we consider them a partner. In South Korea, if this is a high technology company, 75% market share in search in that market. When Neighbor came to us, they said, we want a partner who can move with us and innovate with us. And that's what they're doing. And so they're doing this With our automated campus technology in the data center, this is an example where Extreme is innovating and we're innovating at the highest level with technology companies globally. Here, I would look at this a great example of A distributed retail branch system, where Extreme is providing the very first cloud as a service in the industry. PNC is a growing bank. They are taking share and they're investing in their infrastructure And they chose Extreme Cloud IQ. Our cloud certification and the fact that we have security with ISO and our competitors don't have it, That's a big factor. That becomes a factor in enterprise selling. And then also, it's just the fact that we can provide choice. We could give them their own cloud instance. They put it in AWS, but it's their own instance of Extreme Cloud IQ that they wanted to have. That cloud choice is important to a lot of enterprise customers, an example of what we were able to deliver to PNC To win that multimillion dollar customer. And then in healthcare, I think we all know what's been going on with our healthcare system the midst of the COVID pandemic, here we're seeing more and more care being delivered to the home. Another example, when we talk about The acceleration of digital transformation, it's happening here. Hospitals and healthcare systems have to stand up Remote medical care and how do they do that and how do they marry clinicians with patients and then connect them with all the data in a secure way, Extreme Cloud IQ. So this is another example of how we're innovating and working with our customers in the healthcare arena and another customer win. If I take a step back for a moment and we go back to the market that we're playing in, I mentioned enterprise, I've been talking about those enterprise customers and then There's 5 gs. As we look at the market for enterprise, we're peeling away markets where we don't really compete effectively, China being an example. We're not really competing in those big cloud data centers. So we removed that to get down to our $15,000,000,000 TAM. The nice thing about the market, it's still a big market, but within that is our cloud segment. And cloud is expected to go from 2.7 $1,000,000,000 a year to over $7,000,000,000 a year by calendar 2023. And Extreme has the highest quality cloud, The largest cloud capable of ML and AI. And here we are in the highest growth segment of this industry that's growing in general. So we like our position As it relates to enterprise, on the 5 gs side, we have very specific use cases that are designed towards Telecom Infrastructure and supporting service providers. And that's what these opportunities are. You're going to hear from Nabil, you'll hear him talk about that. We see these opportunities gaining traction as we move into our fiscal 22 year. And I would say some of the largest growth opportunities I've seen since I've been at Extreme And this will ramp quickly in what we see is $50,000,000 to $100,000,000 a year. As we look at the cloud and the enterprise side, we have 1,500,000 devices being managed from Extreme Cloud IQ. And from this, we have a unique opportunity to go to our existing customer base, where we have over 5,000,000 devices to go after. So we can convert existing customers and move them into cloud. That's one of our big initiatives. As we move people in the cloud, we get those cloud subscriptions. And then we can go after 3rd party networking devices. Many of you may be familiar with our Extreme Management Center, where we have the capability to manage 3rd party networking devices or switches, etcetera. We are bringing that into the cloud to make it easier for people to make the move to Extreme And to our cloud. Once we get people into our cloud, we become very sticky. And then IoT, that's even bigger with tens of billions of devices. We're building a multi domain cloud and you'll be hearing from Nadeel and we'll be talking about the fact that we can manage non extreme devices Outside of the networking ecosystem from Extreme Cloud. And this is something that we're very excited about And we think brings enhanced and new revenue opportunities, recurring revenue opportunities. As we drill down into 5 gs, I think people are familiar with 5 gs and what it brings. We're talking about 3 to 5 times the speed And we're talking about 2 to 3 times the data and we're talking about new applications in terms of fixed wireless. What does it mean for us From an enterprise strategy, anytime you have higher speeds and more data, it means you need to upgrade, refresh and build networking. That's good for us. So that's good for the health of the overall industry. And then what does it mean for the infinite enterprise? It means that we'll be riding 5 gs As part of connecting to that infinite enterprise at the edge, that individual device and we have specific investments that we're targeting For that, then to be able to talk about. On the infrastructure side, we see a large majority of the infrastructure investment in 5 gs moving And overall radio access networks moving to 5 gs. And that's what we're highlighting here. We're at the early stages of a long term opportunity. So more exciting news for us because it's a new growth vector. And then finally, wrapping up, As we think about the pivot to growth, moving into double digit growth as we head into the second half of our fiscal 2021, It's really being driven by the changes that we're making on the inside of Extreme. You're going to hear from Jovan alone, you'll hear from Westenro In terms of how we've reorganized sales and the sales motions there, in terms of what we've done with marketing, we have a brand new state of the art marketing platform that's being rolled out. And then channel self serve make it easier and effortless to work with Extreme if you're a partner or a customer of Extreme. I've talked about the opportunities that we have And the fact that we're taking share, we're taking share in cloud because of the competitive differentiation. If you're an enterprise customer, you have to be thinking about cloud. And then you have to be thinking about choices and who do I consider for cloud. And now you have to consider extreme. So we're seeing more at bats. We're seeing our funnel grow and we're also converting on those. And then we have these new longer term growth vectors and growth opportunities. Nabil will touch on these where we're investing now instead of consolidating all these assets, We're investing in innovation and growth and that also drives the conversation. It up levels extremes And it creates new opportunities for us. So with that, I thank you. I appreciate all of you Giving your time to us at Extreme, this is where I'm obviously excited about it. And I think you'll feel that from our team as we go through it. And I'll look forward to having the opportunity to answer questions in Q and A and then see you in the breakouts. And Stan, I'll send it back to you. Thanks. Thank you, Ed, for that great overview of what's changed at Extreme and how we're well positioned to take market share over the next several years. Let's go over to Norman Rice and his discussion with Major League Baseball. Take it away, Norman. Thanks, Ken. I'm so excited. I'm here with Truman Boyce, Senior Vice President, Infrastructure and Technology for Major League Baseball. Truman, welcome and thank you for Thanks, Norman. Happy to be here. Thanks for the invite. All right. So tell us a little bit about your role at Major League Baseball. So I run all the technology and infrastructure for MLB, which is a broad portfolio of all the technologies at the ballparks, That's everything from all our high frame rate cameras and all of the replay technologies through our cloud and delivery to the customers. So it's really From the beginning of the ballpark to the fan experience. Yes. And what a strange year you've been through. No fans, fans, Bubble for the playoffs, half season, everything going on. How did you deal with that? What were some of the big things you noticed? Well, I think it was quite a somber year for many of us, but there was definitely some optimism. We were able to get through the season. We Had just launched our flagship offices in New York City, only to have all of our employees sent home. So we had to scramble trying to figure out how we would get All of our services launched, how we get the ballparks ready. And we ended up having most of the employees within our technology team basically running Broadcast operations and delivery of all of our services remotely out of their homes. So we're so happy that we're able to launch the season, a shorter season than usual, but definitely a successful one. Great. And one thing that a lot of People want to know is what's the relationship between 5 gs and WiFi? I think they're quite symbiotic. So the technologies themselves have a common goal, Which is really to have high bit rate services available in a ubiquitous nature. So the intention of here is to have All of our fans have great connectivity in our parks, in our offices. And so both of these technologies together are offering similar services. So we're looking at 5 gs as being definitely continuing to grow throughout the next few years And WiFi 6 is dominating within our parks. So I think together they offer a seamless experience from a fan perspective so that they're able to leverage both. Yes. Last week, we announced a partnership between Extreme and Major League Baseball. Tell us why did you select Extreme to partner with Selections, we spend a lot of time looking at the company itself. We take a look at the technology. And we're really happy to see what Extreme has done for the NFL And some of their other customers. And then just looking at the technology itself within our ballparks, we knew that we were going to Need to partner with the best in class. And with that, it really comes down to where is the technology going beyond just what it Philip delivers today. And where we see it going towards cloud, having a mobile experience and having continued innovation for insights in wireless, Continuing to move into the cloud is definitely of interest to us. We want to know about the experience and know that the quality is substantial when we're delivering this on such a large scale. Great. Thank you. And just in closing, Truman, what are your World Series predictions? I think it's going to be a fantastic season. I think we're going to see 30 teams playing well and To getting to the playoffs and from there as a New Yorker, I'm hoping that I can see some local cheer, but I look, I Support everyone, and I hope they have a great season. How about you, Norman? Yes. I'd go with either the Red Sox or my hometown, the Troy Tigers, I've been out east so long, can't help but love the Red Sox as well. Either way, it's a win. We're so excited to be partnered with Major League Baseball. Thank you, and thanks for your time, Truman. Take care. Thank you, Norman. That was great. We truly have a great partnership with Major League Baseball, And it's just great to hear how customers are deploying Xstream's differentiated wireless and wireless analytics solution. Let's go over to Nabil to discuss our technology vision. Thank you, Stan. Ian, welcome everybody. I'm glad you could join us and I hope you're staying safe and staying warm. As you can see, I wear 2 hats here at the company. I'm the Chief Product As well as the CTO. Today, I will be talking to you as the CTO. But part of my team, they will be adding a lot of Product and technology related details and video vignettes that we will post on the Investor Day website and I encourage you to go look at that later after this presentation. So earlier today, you heard Ed and Ed laid out the direction of the company. He talked about the massive opportunity that lies in front of us and he also talked about a very crucial pivot, a pivot for the company towards innovation. So in the next 20 odd minutes, I'm going to lay out the vision for that innovation. I'm going to talk about what do we believe is the future of technology? What do we believe is the future of enterprises, the future of businesses And how are we investing to make sure that that future happens? In technologies that enable that future and how are we investing that puts us in a position to realize the opportunity that Ed talked about. Now we all know that we are living in a unique world. You're living in a world that is fast changing. We have all been impacted by the pandemic in one way or another. It has changed the way we do everything. It has actually changed the behavior of the end of which the way we work, the way we go to school, the way we shop, the way we receive our healthcare services, Pretty much every aspect of that life. Now businesses who deal with these individuals must also change because now they have to provide for this new behavior of the individual. We know we are not going back to the world the way it used to be, But we also don't think that the whole world is going to start working from home. So yes, they're not all going to go back to the offices, They're not all going to stay in the world. So we are heading towards a world that is going to be hybrid in nature. And businesses have to adapt to that. And we know every time businesses have to transform, That means they have to select the right technology, they have to deploy the right technology and they have to employ the right technology. Now what that means for technology vendors like ourselves? Well, it provides an opportunity. In this new world, The advantages of incumbency and size, they have been mostly neutralized. So a company like Extreme, which is at the forefront of these technologies is in a unique position to lead this change. So what is this change? Before we talk about How enterprises have to evolve, let's just quickly take a look at how they are today. We already live in a pretty connected world. We can get online. We can do a lot of different things. But all of this connectivity, the businesses and pretty much our entire life is centered around this concept of centers. It is built around centers, better centers of population, whether this is big huge campuses where all the workers come in, Whether they are schools and universities or big hospitals, we like to come to the centers. And these centers provide you an experience. The farther away you are from the center, the experience changes. This is the fundamental nature in which enterprises work and that is how the networks that enable these enterprises are also developed. But as we move forward, that fundamental nature is going to change is changing because people are working from home. People are getting their medical services from home. People are getting educated from home. But as the pandemic gets settled down or we get out of it, people are going to want to be in a hybrid world, a world where they can do all of these things from anywhere in the world and we call that the infinite enterprise. Enterprises must change to Infinite Enterprise. And what are the characteristics of Infinite Enterprise? There are 3 main characteristics. Number 1, Infinitely distributed connectivity, a connectivity that is available everywhere, so you can take the enterprise to the user. Number 2, an infinitely scalable cloud, a cloud that scales in every aspects, which enables this distributed enterprise. And Importantly, that this enterprise must maniacally be focused on an effortless experience for their consumers. You heard Ed talk earlier about 3 mega trends, the mobility, the cloud and the data. They also happen to be the building blocks of this Infinite Enterprise. So how are we leading in each one of these trends? Let's start from mobility. I know when we talk about mobility, the first thing people think about is your cellular phone form, but mobility is more than that. Mobility is freedom. Mobility is the state of being where people can be anywhere and they can do anything from anywhere. And how do we enable that? We enable that through infinitely distributed connectivity, but this is not just any connectivity. This is not the free Wi Fi In your coffee shop where you don't really know who's listening in. This is enterprise grade trust, enterprise grade Technology, enterprise grade assurance, but matched with a consumer centric experience available anywhere and everywhere. Yes, there are a lot of connecting technologies that will be part of it from wired to wireless and LTE and 5 gs And cable and so many other technologies. But what are the things that really come together to produce this infinitely distributed connectivity? There are 3 things, three kind of technologies that are used for this. 1st and foremost, you have to have an infinitely Scalable cloud, because how are you going to deploy? How are you going to onboard? How are you going to manage, operate, observe and troubleshoot and assure This connectivity, if you do not have a cloud that can scale and provide all of those technologies and that is why we have been investing in a StreamCloudIQ, which is the Fastest growing cloud in our industry at this point in time. Number 2, fabric. All of this connectivity, it has to work together. If every device works separately, independently as its own, then it is going to be chaos. It requires a fabric that spans across wide wireless and branch technologies. And that is why Extreme has the world's most deployed fabric, 1,000 and thousands of users out there who use this fabric and we are bringing our wireless technologies, our cloud technologies and our branch technologies into that fabric. And lastly, all of this has to be built on some infrastructure. And that is why late last year, we introduced the universal infrastructure, the universal platforms. And in a nutshell, what is a universal platform? It is a platform that allows you to use that investment in whatever shape or form you want, Single license, single platform that's been used in multiple different use cases. Why? Because in this fast changing world, one of the big risks is the risk of making the wrong choice, the risk of obsolescence and Universal Platform reduces that risk. So these three technologies are the one that come together to enable this infinitely distributed connectivity and Extreme has already been investing in it And we will continue to invest in there. I said whenever we talk about mobility, we think about LTE and 5 gs. So let's talk about 5 gs. 5 gs is the big spend cycle. We all know it is one of the biggest infrastructure rollouts that we have seen in the past many decades and it's just getting started. In a nutshell, on the infrastructure side, 5 gs is essentially virtualization of the mobile networks. And what it means is it requires network function virtualization infrastructure as well as cloud native infrastructure And not only just infrastructure, robust networking in it, but also the management part of that. And those are technologies that we have been investing in for the last couple of years with our key partners and we will play Our role in this big spend cycle in the infrastructure rollout that is happening and actually just getting started. Now of course, 5 gs will enable a lot of use cases for enterprises later down the road, but those use cases are a little bit farther out in time. We are just at the start of the spend cycle. So the next part, cloud. And of course, we are the cloud experts. I don't think I need to talk about why cloud at this point. I don't think I need to talk about that Cloud brings simplicity and cloud brings scale. Those are things that are well known, well understood, but it is time for cloud to move into the next phase, which is the phase of flexibility and flexibility in multiple dimensions. What do I mean by that? Multi cloud, a cloud that is built not on just one infrastructure provider, but all of the major ones. We are the only cloud out there that runs on AWS, GCP and Azure simultaneously around the globe. Why is that important? First, of course, it provides you multiple, multiple layers of reliability, but it also allows you data sovereignty. It also allows you to choose based on your corporate reasons or any other reason that you have, choice and flexibility. Multi domain. Multi domain is the age old Promise of having everything in one pane of glass. And yes, nobody is there, but multi domain starts bringing you towards that. You heard talk about the massive opportunity in front of XIQ, where not only our own networking devices, but Other manufacturers' networking devices can be managed and can be seen in XAQ, but that's just the start. The multi domain really starts happening when we have technologies From return to work safely sensors all the way to handhelds and keep an eye on that. That is something that we'll be talking about extensively because Extreme Cloud IQ has the promise of bringing all of these different domains of technologies and devices under one pane and we're just getting started on that. Multi duration, Data is of no use if you can't hold it, but different people want to hold it for different times of length. So multiple durations From 90 days to unlimited, that is something that we already introduced last year. And then most importantly, multi deployment. We all know that because of this pandemic, people are moving towards cloud. There is a higher propensity, But not all people are at the same place. They are all going to move to the cloud, be it individuals, be it enterprises, Be it schools, universities, state and local governments, they're all going to move there at their pace in their own way and providing that multi deployment is really critical. We are already the only cloud in the industry that allows you public, private and local, but we are taking it a step forward. We are bringing the cloud to you wherever you are, Extreme Cloud Edge, industry's first Cloud that is ISO certified and can actually run directly on edge devices wherever they are, bringing that simplicity, that scalability, that flexibility straight to you. And the difference here is this is Available as a service, a turnkey offering. So no, you do not have to go and set up an environment and hire people or retrain your people to now learn the cloud languages. All of that is done for you through our cloud ops. This is our first as a service offering. It is launching later next quarter. And at the very Chart, at the time of the launch, it will run all of our Extreme Cloud IQ applications directly on Extreme Cloud Edge and later down the road, Any application that is available in the marketplace. That is the future of cloud. That is the future of flexibility. Next one, data. We all know data is the new currency. Data is something that goes hand in hand with Cloud. But not all data is created equal and not all data is treated equal. We all know that enterprises and businesses need to take advantage of this data. This data can provide you insights, valuable insights That can increase your efficiency or reduce your risk or bring in new revenue. But before you can do that, You need to treat this data properly. And what does that mean? That means data duration. As I said, what is the use of data if you cannot hold it? Unlimited data duration, we introduced that last year. Data durability, well, what's the use of that data if that data is corrupted or not available when you need it. The multi cloud availability in Extreme Cloud IQ that makes Sure. No matter where you are, your data is available to you with that data sovereignty And with your corporate strategy behind it, whatever you need, it is available for you. And then data diversity. Data from networking devices is awesome. It's really cool. But how about data from all networking devices? How about data from The handhelds, how about the data from IoT sensors? How about data from other devices? When you can bring them together, That data diversity enhances the useful of that data. We are leading in each and every front of this data framework. But then data unused is data wasted. So what is the point of having all of this data and not being able to use it? So how do you use it? Yes, you have insights and yes, you have Pretty graphs and that's you have a lot of ML and AI, which is within the network itself or within Extreme Cloud IQ itself, But you should be able to exchange data between ecosystems. And that exchange of data between ecosystems has to be driven by open API, Not just any API, but open API, high speed, near real time APIs that can exchange data bidirectionally between ecosystems. You also need to have explainable AI. I know AI and ML is a big market income right now and everybody is talking about it. But look, An AI that you cannot figure out, an AI that cannot describe to you why It is giving you the insight it is giving to you is actually more trouble than use. Plus trust gap, People are still not used to letting AIs run their network. Why? Because they still don't trust it. So how do you bring in an AI that number 1 is explainable and number 2, people can actually trust it. That is by bringing artificial intelligence and human knowledge together And that is our co pilot program, which has been running out there in a beta with our customers for over 9 months, where we use AI, explainable AI to find patterns. And then we find them, we work with our customers to make sure that they actually are true and that in turn allows us to update our algorithms. This is an AI that's actually usable and actually reduces costs. And then ISO certifications. We are the only networking cloud provider out there that doesn't have one, not to the 3 ISS certifications and more to come. Why? Because people don't use data or people don't use cloud if they don't trust it. So the use of data should reduce complexity, should reduce cost and reduce risk, all the areas in which Extreme is leading this transformation. A lot about technology, A lot about infinitely distributed connectivity and this cloud and data, but we should never lose The main vision and the main vision is that this is all for experience. This is all for the Experience of the consumer, whoever that consumer is, those consumer could be the people that work in your company. It could be the people that you sell to. It could be the people who are selling it. It could be your partners. It could be individuals out there in various capacities, Whoever the consumer is, a simple, intuitive and consistent experience for them across the enterprise for users, buyers, sellers and partners. And the key part here is we have to look At the enterprise as a whole. I know a lot of our friends and other companies, they think about enterprises in terms of data centers and campus and then VAN and branches. We believe that as you move into the world of infinite enterprise, The enterprise must work as a whole. The infinitely distributed connectivity, it goes wherever the user goes. It must have the intelligence from onboarding, management, observability and assurance from one place, a cloud that scales with it and it must provide an experience that is consistent no matter where in that enterprise network you are. And that is the vision of Infinite Enterprise and that is the vision that we at Extreme are investing for. This is the vision that is enabled by technologies like cloud, like data, like mobility in which we are leading and we will continue to lead. It's a bold vision, but we are on our way. I encourage you to go and watch some of those video vignettes that I talked about earlier, which will dive a little bit deeper into the product. And also when we post this presentation up on the Investor Day website, we will add a little bit more product level detail in there. A world that is changing fast, a world where the individual is changing, the businesses are changing and that allows Extreme to leapfrog and lead this change. I thank you for joining us today and I hope you find this interesting and useful and there's a lot more content for the rest of the day. Stay safe, stay warm. Thank you very much. Thank you, Nabil. Wow, there's some really exciting things happening on the technology front at Extreme. We have an unmatched combination of cloud capabilities plus fabric universal platform. It's so simple, yet so differentiated. Okay, let's take a short break and then hear from Katu Mote discuss our CSR Welcome to the show, where fans share deep connections to their favorite teams. This season, we're powering up From all of us here at the Boston Red Sox, welcome to the show. Welcome to the Welcome back, everyone. We hope you had a great break. And now let's turn it over to Kathy Mote, our Chief Administrative and Sustainability Officer, to talk to you about our corporate social responsibility efforts and sustainability at Extreme. Hi. My name is Kathy Mody. I'm the Chief Administrative and Sustainability Officer as well as the Corporate Secretary to the Board of Directors here at Extreme. I'm now also leading an incredible group of employees who are working all around the globe on a number of corporate social responsibility 2020 was a challenging year given COVID-nineteen as well as the Black Lives Matter movement, which was a wake up call for everyone around the globe, including at Extreme. We decided to include inclusion in one of our core values. We also rolled out our Corporate Social Responsibility Council As well as publishing our 1st corporate social responsibility report, which is on our website. Here, we talk about the work of 5 pillars: D and I, philanthropy, environmental, data privacy, business ethics. And for each of them, We have rolled out 3 to 5 year ambitious goals that we are keeping track of and reporting to our Board of Directors regularly. Through the work of a number of ERG groups, we have 6 ERG groups now, you'd be so proud to know. The oldest one is our female our women's council, which has been in place since January of 2018. This group has Increased our female population by an incredible 18% to 24%. We're also really focused on improving our gender our racial diversity, And we are at the same time very mindful of making sure that we are being inclusive and that we have pay equity for all of these groups. We're focused on our environmental and sustainability efforts. We're keeping track and holding our suppliers accountable By ensuring that they are reducing their greenhouse gas emissions, we're also focused on Ourselves and making sure that we are reducing our corporate our carbon footprint, excuse me, as well as reducing our Operating expenses. These are through initiatives like moving more and more of our freight from air to sea. We've put in place Microgrids in our San Jose office through Bloom, and we're really actively focusing right now on our return to work our return to office, excuse me, plan post pandemic. Our Extreme CloudIQ, which you've heard a lot about on this Investor Day, has received 3 ISO certifications by a third party, Which basically means that there's over 100 auditable controls to ensure the privacy and security of customer data as more and more of our customers are moving from On prem to the cloud. Additionally, we have a number of philanthropic efforts. We have put in we have a long standing well, a few years, We have a relationship with the America India Foundation. We have now partnered with the United Way, and we're really, really focused on closing the digital divide through our Extreme Academy program, which provides an educational program for the future networking population of the world. And finally, we have put together a group of employees who are working cross functionally and they're geographically dispersed. There's 29 in total, and these are group employees that are evangelists for doing the right thing for our customers, whether it's direct or indirect, Our suppliers, our employees, our communities and all of you shareholders. Thank you so much for joining us on Investor Day, And I'm so proud to be leading a change of culture and mindset here at Extreme through our corporate social responsibility initiatives. Thank you. Thanks, Kathy. So CSR is really helping inject some new energy into our employee base. It's amazing how people are embracing these initiatives. Employees, customers, suppliers and really all of Extreme's stakeholders and our Board were all better aligned with today's business climate. Okay. Now over to Joe and Wes to discuss our go to market. Take it away, gentlemen. Hey, thanks, Stan. It's great for me to be here. I'm Wes Terrell. I'm going to have a chat here with my friend, Joe Vinalone. It was about a year ago, Joe, that you and I were Sitting in a famous Italian restaurant in Dallas, I was telling you how excited I was to be joining Extreme as Chief Marketing Officer. And I was going through the growth opportunity and what really made it unique was this notion of culture, product and this opportunity to go to the cloud. So you were looking actually at trying something different. Ed had been our acting CRO at the time. And before I know it, you're full on right behind me as our CRO. So share with me kind of that experience over the last year, what you've learned, what it's been like. I'd really like to hear your perspective. Yes. I can't believe it's been a year, Wes. And I remember that lunch at Campisi's really well, and you told me you had a great opportunity with a great company. And then I was fortunate to follow along a little bit after. And since then, we've just been on fire. I walked into a Situation with a really great management team, first of all, Pete and John and Rob and Matt and John Barger, Just a great group and an executive leadership team that had great culture. And so we got off to a really great start early on, 3 quarters in a row where we hit product Subscription and our services revenue, our margins rose and our inventories came down. But one of the key drivers for me, as we discussed in that lunch, This move to the cloud with Extreme really resonated and it's resonating now in the marketplace and it's been accelerated now by COVID. So that was a real big upside for me. And then we cleaned up the funnel going back a year ago and Our top line funnel had a lot in it, but it wasn't that great and we cleaned it up and our weighted pipeline is outstanding and we're looking now quarters down the road, which is really great to see. And then we improved our brand a lot. I know small measure, thanks Your department, our brand is highly recognizable, not just with our customers and partners, but even with our own And employees and the industry and pundits. And so it's getting us in a lot of deals, almost all deals now, and we're up into the right In the Neuromagic Quadrant perennially now 3 years in a row and that's certainly helping. And we're building a real strong 3 to 5 year plan, which is something that I really like to see and it gives me solace knowing that I've got a plan going out 3 to 5 years. So I had really high expectations based on that Great lunch, and it's exceeded my expectations to this point. So I'm looking forward to the next 3 to 5 years with you here, Wes. Yes. It's been interesting from my perspective as well because all those things we talked about, you just went through it, a portfolio that is poised to take this company in the category of the cloud, 100%. A route to market structure that can deliver that. And then most importantly, it's a culture, a culture that was really To drive change, Xtream, it's our 25th year, it's always been a challenge of brands, it's been a brand that's had a look around quarters, It's how to walk alongside customers to take them forward. This is such an important transition. All of that is true. And for me, as I came in, All these great assets, it was really about putting together a lot of the marketing elements. So in many ways, just wiring together our own our old kind of lead gen process Prospect or suspect to prospect to win to activation to adoption to Actually, trying to use help customers become zealots for us, just the wiring that did not really exist. So everything else was in place. But as you said, building out that wiring, making sure we can help not only automate the lead gen process, starting getting those leads automated out to partners, Automating a partner locator process, a lot of the just basic resources to put fuel on this fire And drive the transition to cloud and we're really in a great position for growth. And I'm personally excited because I see what this means to so many of the partners, but also so many of the customers we serve. We just left the Super Bowl a couple of weeks ago, where the first cashless, touchless Event in NFL history and that whole digital transformation period of time has gone from years down to months. And in many ways, Stadium is like a microcosm of a number of verticals, it's healthcare, it's hospitality, it's retail. So it's been really great and the opportunity here, It's just about accelerating growth and that's what I'm excited about. If you could, you have made Some go to market changes over the last year. And a lot of that is, as we came in and I know you looked at this, there were some blue ocean opportunities for lack of a better description. Talk a little bit about that, Joe. Yes. So while COVID changed everything, Wes, it accelerated Everything that we were doing, but during the pandemic, during a crisis, the thing to do is to simplify. So the first thing we did as a team was we simplified around 3 Pretty simple selling motions, protect and migrate our base, bolster and expand our partner program, so that we were cross selling wired and wireless products And introducing it to all new channels as well. And then 3rd was this move to the cloud, making sure that our partners and customers were transitioning with us to the cloud. But I noticed really early on and we talked about it a little bit in that lunch was there's just a lot of markets that Or underserved. And I noticed that when I came in and the team, we rallied around it and now we're focusing to make sure that we're getting average market share at a minimum And MSAs around the globe. And so we shored that up pretty quickly. We have really good service providers that we work with, Verizon being the big name, but many others that are forthcoming and those service providers will service globally and we're starting to attract bigger names, people very interested in Extreme. And then with respect to go to market, Wes, aligning our sales and marketing organization, one of the key reasons why I came here was I knew that I could work really well with you and that sales and marketing would be 1. And we've seen a really strong alignment between our sales organization and our marketing team with respect to how we spend our market development dollars around lead generation and all of the tools that our partners need to continue to grow their business. And so We're really in line there, which is nice to see. And then we automate it like crazy. We automate around channel self-service, making it really easy for partners to do quotes, for example. And we have a partner locator now, so our customers can find our partners no matter where they are, and they can get Multiple bids on jobs, for example, and know that they're going to be well taken care of in those community. And then we just hosted a Series of really strong events, our partner conference, Connect, and then we continue on now with quarterly business reviews with All our partners' town hall meetings where we're really transparent with our partners with the health and what's going on at Extreme. So It's really been a good welcome change on go to market. Your thoughts on it, Wes, you've been doing this a long time. I'd be interested in what you think a year in now. Yes. I'm more excited now than ever before. As I came in, a lot of it was really just clarifying the value proposition. And Ed had been acting CRO prior to your arrival and he one of the key things he's really championed was the notion of the playbook. We live at this intersection of cloud, Mobility and Analytics. And those the intersection of those 3 kind of technology changes is a big driver for customers going forward And it's really why you're going to choose Extreme. That's past that transition. Nobody's a better choice than that. So that playbook process really outlines the value proposition for our sellers. We've had to build on to that to make sure, okay, how do we take people from Gen 2 to Gen 3 hardware? This whole transition universal hardware It's a big driver for customers of all types in terms of bringing value. The transition to XiQ, opening up data and using it, network data for business Intelligence is a big driver in a world where customer experience matters adding on Premier Services. So everything we do and have had to do from a marketing standpoint has That'd be up level because it comes down to not just the technology, but what's the business value to all levels of customers? How do you drive the top line? How do you improve operating efficiency? How do you reduce risk? And ultimately, how do you deliver a better customer, patient, student experience? And that's the beauty of this kind of period of time. Like you said, digital transformation projects have all been consolidated from a time line perspective And created really great growth for us. When you think about the channels that have gone through this journey, and known a lot of these channels for a long time and many of them have gone through this cloud transition. But the cloud managed now being transitioned, talk about what this means for the channels and how this Opens up opportunities for them for a moment, Joe. Well, we had a lot of channels that had done this to the cloud as a service motion before WES. So they were no strangers to it. And frankly, This was a welcome change for them, an opportunity to sell and upsell into Different levels within the account to get their average selling price up. So for those channels that have done it before, this was fantastic. And those that hadn't, We're spending a lot of time helping them transition, putting together workshops, for example. We just did a 6 step workshop on how to Transition to the cloud and educating them and their companies, the sales and engineering teams how to do it. And then we had breakout sessions, example, in our partner conference, we're doing online training. We're providing them with financial tools like our LEAP program, which is our lending enabled Assistance program that helps them not only finance products, but gives them terms and certifications and trainings for free to help them transition there. And then it's opened it up to a whole new level of channel, the traditional SaaS channels, Wes, that have now come over and so given us an opportunity to bring on new channels that we probably wouldn't have had otherwise. And Now we're really focused on these managed service providers, regional, national, global managed service providers, our DMRs, Companies like CDW, SHI and others now really attracted to Extreme and then many of the big service providers, global Service providers now are big candidates for us. So it's been a really welcome change. That's great, Joe. As we kind of finish up here today, one of the favorite parts of my week It's when we actually spend time with customers. It's our purpose for Veeam. And as you described earlier, the has been leveled and we can do a briefing, a virtual executive briefing anytime of day, anywhere on the planet. And so I love to tell the Extreme story. Share with me kind of what your pitch is, like why Extreme? If you're an existing customer, why Extreme? You've never worked with Extreme before, why Extreme? I'd love to hear kind of your story of what you share with customers. Yes. Great question, Wes. We Do it every day. I'm doing it later today, as a matter of fact. And most of them know by now, given 25 years and our status with Gartner and Our reference customers like Federal Express and Lowe's and Kroger and WL Gore that we have fantastic products, but now we give them license simplicity And license flexibility. And we give them cloud choice so that they can choose AWS, GCP, Azure, unlimited data, for example. We talk a lot about that are fabric. So we can go from wire to wireless, edge to enterprise and back. And then cybersecurity, that's a big one right now, Wes. All the CIOs now are really concerned about cybersecurity. So we give them a very healthy and secure network that they can plan on long into the future. And what they like to talk about and what they like to see is their engagement with our executive team and our management team that we're very accessible. And one of the reasons why I joined Xtream for that reason and I've seen it and I see it every single day. And it resonates with customers, which is the reason why we're seeing the results that we have. And so A great time to be working at Extreme right now, wonderful to spend time with our partners and customers every single week, helping them make this transition from Gen 2 to Gen 3 and beyond and moving now into the cloud and giving them a different Choice on how they buy, whether it's in a CapEx environment or as a service environment. So that's what we talk about, Wes. Great culture, a great group of partners and a privilege to be leading the sales organization at Extreme now. It is really a great story to tell. I mean, the network has gone from being viewed by many as a commodity To being a strategic asset. This period of time has proven out, as you said, better insights, better security, how you use the network has completely been reshaped And it's a great, great, great story to tell. So thanks for sharing this. As we finish today, Joe, I actually want to share with this group A video you shot last week with one of our leading channel partners and what makes them so great with Ed Walton, President and CEO of StepCg, They are actually, when we talk about living in this intersection of mobility, cloud and analytics, they're doing it every day. They're pulling together the pieces Existing customers, new customers to help them drive the top line, decrease risk, improve Customer experience really changes the game. So we're going to depart with that. Thanks for your time today, Joe. Yes. Thank you, Wes. Thank you, Wes. It's Joe Vitolone here. I am here with Ed Walton, the CEO of Step CG, One of our big strategic partners out of Cincinnati, Ohio. He's the CEO of StepCg. And Ed, it's a pleasure to have you here on our Investor Day, and thank you for doing this. How are things? Yes. No, glad to be here, Joe. Things are going well. We're just enjoying a nice gloomy day here in Cincinnati, a little bit of snow, but we're getting by okay. Yes, that's great. It beats Texas right now where I am at. So, hey, listen, let's get right to it. You have had An incredible journey with us at Extreme and some extraordinary wins, and I've been a part of a few of those, and I now have a front row seat to all of your success. But I'd like for you, if you could, just to share with our audience a little bit about How you win with Extreme and how you differentiate yourself and where your success comes from as a company? Yes, no problem. Well, first of all, thank you for the partnership. And we're big believers in Extreme Networks in the portfolio. And Who we are as Stepcg is we're a fast growing IT, security and cloud services provider. We're based in Covington, Kentucky. You See Cincinnati right across the skyline here. We're actually in all the states, probably about 5,000 plus customers, Full portfolio of networking, security, voice, professional services, managed services. And we've grown fast during the pandemic over the last year. We've added close to 50 folks, doubled in size. Despite the pandemic, it's actually fueled some of our core markets. And what we do is bring the best from breed approach To our customers and our core markets are government, education, medical, all of which have experienced significant Disruption, digital transformation has happened. No one really had a driver on for what's going on. But they all need secure, reliable Connectivity for their users, and we put together a full portfolio of solutions based largely on Extreme Networks for those customers. Yes. So talk a little about you've been big with 5 gs and private LTE. Ed, talk a little bit about that and how you're differentiating yourself and where you see 5 gs taking us and how you plan to participate in that huge growth. Yes. We're big believers in that. And that's kind of our differentiation is that Not only do we have the best from an engineering standpoint from traditional wireline and wireless and some of the other technologies I mentioned, but We really have invested heavily in LTE expertise. We have very close relationship with folks like Creative Point and Whatnot. We're one of their fastest growing enterprise partners. We think it's completely complementary to the Extreme portfolio and it represents a huge Opportunity because 5 gs will be the largest telecom growth spending that you will see on a global basis. We think Extreme Networks basically what it means is we're helping customers who are looking at things like 5 gs, private LTE, CBRS and so forth. And we'll be announcing some deployments here soon. Well, if you're going to build a private cellular or carrier grade network, you certainly need A carrier grade underlying network. And what Extreme Fabric and the rest of the portfolio brings is really cloud enablement, automation, security. You can extend it from core to edge and you can do common authentication for users and devices. So being able to provide that Automated carrier grade underlying network is key and critical to supporting a carrier grade cellular environment. Yes, that's great, Ed. And talk about you have a really broad customer base. I mean, it's not one specific vertical. You guys are in Small, medium business, large enterprise, state and local, government, education is really big for you, City Municipality, talk about a few of your customers and what you've done a little to differentiate yourself with Extreme. Yes. I mean, it's pretty exciting. We do some of the largest, most complex environments you'll find anywhere, Miami Dade, City of Miami, Florida, Duval County Schools. Duval County Schools is a great one. They're actually Roughly about 200 locations, all the technologies you can think of from Extreme wired and wireless, Radware for DDoS, We're doing Palo Alto support there, Avaya and really create a point for high availability failover to the fabric. And we also put in some things that complement CloudIQ from a dashboard management and whatnot. And so that's a great example of a highly complex environment that has really been a showcase for both of us. And Stephen McLaughlin and the team down there, Great reference customer. They actually just recently reached out to a few of the neighboring counties to talk about what they're doing with both Extreme and SPEP, And it's opened up new doors for us. But we do a lot in not just government and education and medical, we actually are Expanding into quite a bit of quick service restaurants. Retail, surprisingly enough, has emerged during this pandemic. Some investment, we've Taken over a lot of the cloud and managed connectivity for a number of large retailers. And what we bring to the table and that's unique from a step And point is a lot of those retailers are looking at their traditional infrastructure and saying, hey, what do I do with LTE in my wide area network? How do I move to possibly a wireless WAN? How do I automate doing that? Kind of what's the easy button to roll out thousands of stores? I understand the flexibility, the reduced CapEx, OpEx and so forth. And we're able to put together that solution Both in the traditional resale model, but also in a managed services model, but provide a lot of that automation. And then on the front end and then management on the back end, leveraging things like CloudIQ and so forth, that really gives them kind of A way to migrate to that future state smoothly and seamlessly and is of tremendous value to them. But we're also getting involved with Manufacturing do quite a bit in hospitality and gaming now. And we're seeing all sorts of Value we can bring along with Extreme into new markets as folks the spendings change, But they're solving a lot of the base connectivity issues they have as far as secure, reliable connectivity Wherever their users might be or customers. Yes. I talked to one of your big customers yesterday, as a matter of fact, and he was commenting about the Sophistication of what you're capable of doing in private LTE and fabric and Extreme Cloud IQ. So really exciting to see From my end and enjoy partnering with you. Talk about automation, we've done a number of things with automation to make life simpler for you and your team. And how has that helped you and in terms of driving your business, getting quotes out the door and responding, I guess, more quickly to a really Evolving marketplace right now that's moving very fast, especially due to COVID. Yes, it's all about speed. And if we can increase our organizational velocity, that really helps to grow our business. And what you're all doing with Extreme Quick Quote And this upcoming auto renewal process allows us to move faster, certainly on the transactional side of the house. So that part of our business is growing rapidly. So the more we can increase our organizational speed and you allow that, Making it easy to do business really in a self-service model, we can handle a lot of those small, medium sized transactions a lot faster. While we drive more strategic conversations and quality of bets on the stuff we just talked about. So really two sides of the business, More from a high level, very complex, large environments. And then you have this transactional Level of our business that's growing rapidly and for you guys as well, and you put in a lot of the tools, allow that to go faster. Yes. Talk about I came to Extreme for a lot of reasons, but one of them was as a service and to drive business To the cloud, we're seeing customers now looking to new buying patterns. You're leading that effort. You're a managed service provider and you're doing A number of huge projects right now with networking as a service. So talk a little about that, what customers are saying about it, why they're doing it and what advantages there are to it? Yes. Everything you hear about digital transformation disruption, all that means is cloud computing, mobility, Internet of Things, Connectivity in all sorts of ways, shape or form, artificial intelligence, machine learning, all that means that the network is that much more strategic. And what you guys allow us to do and we do together is offer really an automated environment that they can consume in a wide Range of ways. It can be a traditional resale, it could be as a service, it could be with unlimited data. Customers are looking for flexible consumption models. And that's really what we've done is kind of take everything that we do from a traditional resale standpoint. It could be security, it could be Structure, wire to wireless, could be LTE, whatever that might be, an offer in a managed services model. And then we're investing heavily too On back end analytics capability that complements what we do with CloudIQ to give the customers the full power of understanding Data in their environment, certainly from an artificial intelligence and machine learning standpoint. And that's really where everything is going. So You guys allow us the flexibility to kind of put together the full package to offer that in a flexible format for our customers depending on how they choose to consume The solution. Yes. And don't you think it's been accelerated exponentially due to the pandemic? Ed, you've been doing this a long time. What is your sense? I mean, it seems like the acceleration and the adoption of subscription and cloud And license simplicity, those things are becoming more important now to customers than, let's say, a year or 2 ago. Absolutely. Yes, there was no dry run for this pandemic. And every time you think that it just can't get any screens or things like Texas weather happens and the entire state gets shut down, right? So I mean, you can't beat yourself up. So the one thing it's done is force digital transformation, Right. So the cloud enabled organization, if you were relying on the cloud or had moved to the cloud, You may have adapted a lot quicker what happened in this current environment, right? You already had gone to the cloud for some things from communication A lot of our customers certainly deployed Office 365 and you got video conferencing like we're on now and so forth. So they were there, but a lot of folks weren't. So as far as supporting the network, the network is where the user is, it's totally flipped. So helping our customers Solved for these challenges. And when you think about essential services and government education and medical, a lot of dollars are flowing in now To solve the connectivity issue, be it digital inequity of in home student broadband. And that's where when we sit down with the customer and ask They're solving for. A lot of it's driven by the pandemic and their dollars to leverage. They're just looking for the right solution That solves their problem short term and long term. And then as we get through this pandemic, we're going to have some type of new hybrid environment. And those folks that have solved the issue can certainly adjust and evolve to that new, Whatever that new future is. Yes. Yes, that's great. That's wisdom that only can come from experience. So Ed, on behalf of everybody at Extreme, thank you. Thanks for the partnership. I'm looking forward to working with you. I'll be talking to you tomorrow with our regular business meeting that we have and Enjoy the partnership and keep up the great work with Extreme. Likewise. Stay safe in Texas and thank you very much for the partnership and the opportunity to talk today. That was great. Wes and Joe, thank you so much for talking to us about what it's been like joining Extreme just recently and really all the exciting things that we have going on with respect to our channel programs and growth prospects and entering new markets. And thank you, Ed Walton, CEO of StepCg, for really giving a flavor of how Extreme goes to market with some of its top partners and what we're able to do, how you're able to stitch everything together that best of breed and really drive value for your customers and our customers as well. And now let's take a look at what Remi Thomas has to say with respect to our profile of margins and growth. Take it away, Ravi. Thank you, San. Hello, everyone. At this stage of the presentation, you must be hopefully excited about the strategic vision we laid out, the technology road map And the transformation that we're achieving as a company. But you're probably thinking, how does that translate into numbers? Well, this is exactly what I'm going to talk about for the next 15 minutes or so. But before I do so, I'd like to take a bit of a look back at the financial targets that we laid out a couple of years ago at our prior Analyst Day. In all fairness, When I look at the top line growth in excess of 5%, when we provided that target, we did not assume that we'd be hit by a global pandemic. If I look at the rest of the financial metrics, we've made good progress against a number of them. If you recall, Our recurring revenue in fiscal 2018 was around 22%. We're now 31% and we see a path to get to 35% or more. Our gross margin was in the high 50s. We've been solidly above 60% And we see a path to do better. Our operating margin is fluctuated between mid to high single digits. Consensus The fiscal year 2021 has us at 10%. And as I will talk in a few minutes, we can do better than that. And finally, we put a target out to take our cash conversion cycle down to between 45 55 days. As of Q2 of fiscal 2021, we're actually at 44 days. If I look at our performance, Since COVID hit, we've been doing really well. Execution has been strong. The revenue was impacted by COVID, dropped to about $210,000,000 The quarter after quarter, it's been picking up momentum. We're back to $242,000,000 which is a 15% increase from the low points. And obviously, with certain verticals picking up momentum, We should be getting back to pre COVID levels pretty quickly. It took 2 quarters for our gross margin to get back to 60%. We dramatically reduced our breakeven points, so we benefited from operating leverage. So we saw a 15% swing In our operating margin, from a negative 5% to 10%, that drove strong free cash flow generation, enabled us to significantly reduce our net debt by $57,000,000 All of this while driving accelerated adoption of our cloud platform with the number of devices under management up 40% to almost $1,500,000 So what's next? Well, starting with the revenue drivers, We expect the enterprise networking market to grow between 3% to 5%, consistent with industry analyst forecasts. However, as you heard Ed say, we believe we're in a position to gain market share. In addition, we see 2 incremental revenue drivers. The first one is a service provider and 5 gs opportunity that both Ed And that Bill talked about, we expect incremental revenue to the tune of $20,000,000 in fiscal 2022, ramping to about $50,000,000 to $100,000,000 over the medium to long term. And the second one is the growth in our cloud subscription business. We expect our bookings to grow on average at a rate of 25% to 30% in the next 3 to 5 years. Three items for you to consider as you think about the financial model. Number 1, our subscription renewal rates should be in the range of 85% to 90%. Number 2, our maintenance attach rates should be in the range of 7% to 10%. So every time we sell $100 worth of product, expect us to generate $7 to $10 worth of maintenance revenue. And finally, the renewal On that maintenance should be in a range of 75% to 85%. I'd like to spend the next couple of minutes talking about our cloud business. As I just mentioned, bookings should be growing in a range of 25 to 30%. However, we expect an even stronger growth for revenue. This is due to the deferred Revenue currently sitting in our balance sheet, which is going to be recognized over time. And that means that the baseline For Q2 exiting Q2 on an annual run rate is actually lower. As you can see on this slide, it's $56,000,000 whereas the baseline for bookings He's $86,000,000 In any event, applying a 30% or so CAGR to that $56,000,000 baseline for the next 3 to 5 years means that the contribution from our cloud business should be meaningful as a percentage of the total company revenue in the medium to long term. So take all this And imply it into your models, you should be expecting us to generate a product growth of 4% to 6%. You should be expecting our services revenue to grow in the range of 3% to 5%. And as I just mentioned, Our subscription revenue in the range of 25% to 35%. All of that would mean that The revenue for total company would be growing at a range of 5% to 9% in the next 3 to 5 years. You should be expecting our recurring revenue, which in fiscal 2020 accounted for 31% of the total to grow to 35% or more, depending on the differential in growth between product on the one side, services and subscription on the other. Turning to the profitability metrics of the company and starting with gross margin. We expect a 5 percentage point improvement in our gross margin for product from 56% in fiscal 2020 to 61%. If you recall, in Q2 of fiscal 2021, we're already at 60.9%. So we achieved it during 1 quarter. We're now seeing we can achieve it on an annual basis. The reason for our confidence is the increase in volume, which will drive an additional 2 percentage points. The expected benefits From the expansion of the Universal Hardware platform, expected savings in our supply chain costs, mainly distribution, freight And tariff offset to an expense and extent by the change in the mix with increased contribution from service provider, which typically carries slightly lower gross margin than our enterprise networking business. We're assuming that the impact of pricing and discounting will be neutral. In other words, The competitive environment that we're facing today should be remain unchanged. We expect Services and subscription gross margin to increase by 4 percentage points to 70%. This will largely be driven by the increased subscription revenue in the mix, subscription typically a much higher carrier, a much higher gross margin Thanos Service. The support volume growth, which will drive better absorption of our fixed costs, offset to an extent only by the mix impact of more professional services, which typically carry a slightly lower gross margin. As far as non GAAP operating expenses are concerned, you've already witnessed a significant reduction as a percentage of revenue. Our consensus has us at 51% this year, down from 55%. We believe we can reduce that by another 3% to 5%. In sales and marketing, you've heard Joe and Wes talk about the significant transformation that we're driving And that will lead to further productivity gains. So we should be expecting our selling and marketing expense to drop by roughly 2% to 3%. In R and D, you heard Nabil talk about the simplification of the product portfolio, the impact of the Universal Hardware platform. This should generate a reduction in OpEx of anywhere between 0% 2% of revenue. So looking at the overall picture for the company, starting with the P and L. You should be expecting us to increase our gross margin from currently 61% to a range of 63% to 65%, which combined with a reduction in operating expenses from 51% to range of 46% to 49%, should enable us to generate an operating margin of anywhere between 15% 18%. As far as cash is concerned, we expect free cash flow, which we define as cash flow from operations minus CapEx to be in a range of 11% to 13%. This is largely consistent with our year to date performance In fiscal 2021, we're at 11.4% and will be driven by the increase in operating profit combined with a slight reduction our cash conversion cycle and a tight control on capital expenditure. I hope you won't be surprised if I tell you that the number one priority for us is to continue to deleverage our balance sheet. Besides the fact that we don't like having too much debt on our balance sheet. This will drive a reduction in interest expenses. Currently, we're paying LIBOR Plus 450 basis points under the amended terms of our bank loan. If we're able to get leverage Below 3.25, that means we'd be paying LIBOR plus 3.25 basis points, that would be savings of $4,500,000 in interest expense. If we can take it down further to $2,750,000 we'd even be paying 50 basis points less And that would be additional interest expense savings of $1,800,000 We'll continue to dedicate Significant organic resources to support our innovation strategy. As you heard Nabil mention, this will be Essentially around simplifying, clarifying the product portfolio, investing in universal hardware platform across all of our hardware platform and obviously further developing our service provider and 5 gs business. We do not expect Any transformative M and A, however, should we have an opportunity to do a tuck in acquisition and as long as it's Earnings enhancing to non GAAP EPS year 1, we would consider it. And finally, we still have $55,000,000 remaining under our share buyback authorization. Right now, it's subject to bank covenants. But as soon as we are back to the initial terms of our bank loan, this is an option that's available to us. So to sum up, we've got a bright outlook ahead of us. We believe that we're in a position to grow the top Applying between 5% to 9%. This will be driven amongst other things by the strong growth in our cloud revenue between 25% to 35%. We think our recurring revenue should be at around 35% of total within the next 3 to 5 years. Our gross margin should range between 63% to 65%, which would in turn help us generate an operating margin of between 15% 18% And drive strong free cash flow generation at anywhere between 11% to 13% of revenue. With that, I'd like to turn it back over to Stan to begin the Q and A session. All right. Thanks, everyone. Thanks, Abi, for Let's turn it over to Justin on the phone line on the operator to queue up for Questions on the phone line. So there are 2 ways to ask questions during our Q and A. One is, we have an audio line for a select number of analyst, and they can ask the question that way. For those not dialed in on the phone line, right below, you'll see or right behind our Video screen here, there's a Q and A box. So please type in your questions into the Q and A box and then we'll Go between the phone line and the Q and A box to ask a question. Justin, go ahead and keep folks up. Thank And our first question comes from Samik Chatterjee from JPMorgan. Your line is now open. Great. Thank you. And thanks everyone for taking my question. I guess just to combine a couple of questions here and then I have a follow-up for Remi. But on the presentation today, as you're talking about the opportunity here to gain market share, If I can ask you to hit on a couple of things. Firstly, as we think about market share gains, can you talk about it in relation to verticals? You talked about it in And how would you characterize that for us? And I think similarly on the service provider side, as you outlined $20,000,000 of revenue fiscal 2022 and that goes to $50,000,000 to $100,000,000 annually over the long run, like is that more of a land and Spanned opportunity with the same service provider or are you looking at multiple wins to drive that? And then I have a separate just clarification Okay. Sumeet, why don't I feel that and I'm going to farm part of that off To Nabeel. As you know, what we look at, what we call state local government education, which includes higher education K-twelve and then a sub segment of K-twelve would be programs like Giga Schools project in Japan, e rate program in the U. S, etcetera. But of all of our verticals, That is our largest vertical. You heard Ed Walton talking about Miami Dade and school districts in his own. So this is where we have strong presence and Yes, we are seeing strong growth here. So if we frame the overall enterprise market as 3% to 5% growth, Yes. This is a vertical, which happens to be one of our largest verticals, where we see the ability to take share. What's going on with cloud is very real. And so the move to cloud and then how people are rethinking their networks Based on what's just going on out there, it's definitely giving Extreme more looks and new at bats And we're executing really well in terms of what our hit rates are, what our close rates are. I'm not going to take out other verticals. I mean, obviously, I think you also heard Ed talk about, hey, we're even seeing retail starting to come back. A big mover for us is going to be sports and entertainment. I mean, obviously, there was a lot of Major League Baseball on here. That was a very small number last year. The growth rate there is going to be Much greater also we're seeing NFL buying come back. We won NASCAR. So you're going to see significant growth In some of those verticals, in general, I would say that it is a product view of cloud, but I would say across our Enterprise customers today, what we're seeing is enterprise customers are thinking, hey, I need to rethink the network and I need to consider cloud. And if I'm going to consider cloud, I should consider Extreme because of the differentiation, if that makes sense. I will say that we have in terms of the growth that we're seeing in 5 gs and then Naveen, I'll let you comment on this, but We have 2 very distinct opportunities, where in effect, The growth rates that we're putting out there and the numbers we're putting out there, you're not currently assuming that we're going out and having to win other customers. Naveel, do you want to add to that from a 5 gs perspective, maybe just a little bit more color? Yes. So I can definitely add that, Samik. Thank you for your questions. So when it comes to 5 gs, The opportunity that we mentioned, which is $20,000,000 and then scaling up from there is a net new opportunity in the 5 gs infrastructure rollout. So this is in addition to the service provider business that we already have with multiple different customers. As part of this 5 gs Opportunity or use case, we are present, as Ed mentioned, in 2 different use cases. 1 is on the infrastructure side, because as you know, when 5 gs rolls It is a virtualized environment and these applications, these core applications actually run on a very robust networking infrastructure. So that's one part where we play. And the other part is towards network assurance side or network packet brokers space, where we have had traditional play as well, But 5 gs kind of accelerates that. So hopefully that gives you an idea that where that additional incremental opportunity lies Specifically around the 5 gs infrastructure rollout. Ed, back to you. Yes. And Joe, I think I might also go over to you, Anoa, because We have we've made some we've made a key hire. We formed specific Well, you have leadership, but we formed specific teams now to build and to go after these opportunities. So we haven't had this kind of Dedicated focus and we'll have global account coverage because these are massive large global accounts. Joe, maybe just touch on that. Yes. So we brought in Marek Wasilewski to run our service provider and our alliances business, we see a really big opportunity there with some really large global service providers as well as strategic alliances as a part of our go forward. We had a smaller group working on that. So to Ed's point, now we've got a lot of focus, there's a lot of upside And I think we're going to see significant growth there. So we're rotating pretty heavily in that direction. And Suneet, I think you may have had a follow-up to Remi. Yes. Thank you. And I'm sorry for This much time, but Remi, I think when I look at the targets, obviously, quite strong targets here on the top line. I think in terms of visibility, the margin probably flows through once you hit the revenue targets. But as investors look back and given some of the Revenue top line performance in the past. How should we think about the linearity here when you're targeting to get to that 5% to 9% range that you're talking about. And is it more of a ramp as subscriptions continues to build and become larger mix? And then the rest of the targets kind of fall come through as a result of that. How should we think about just the linearity of when you start executing To that range of on the top line. So actually, yes, your reasoning makes sense, but what we see It's slightly different. We see a strong pickup in fiscal 2022, because If you look at the first half of fiscal twenty twenty one, your year over year comparison in product is going to be easy. And then you're also going to get the benefit of the ramp up of 5 gs. And we have built enough deferred revenue related to subscription on our balance sheet That the subscription revenue is going to show strong traction. So if you think about fiscal 2022 and fiscal 2023, it would be above That the midpoint of the range of 5% to 9% that I gave earlier. And as you think about fiscal 'twenty four and fiscal 'twenty five, It would be below. So I know it's a bit counterintuitive, but we're looking at a really good growth in fiscal 'twenty Great. Thank you. Thanks for taking my questions. And thank you. And our next question Comes from Erik Suppiger from JMP Securities. Your line is now open. Eric, your line is now open. All right. Can you hear me okay now? Eric, we can hear you now. Your voice is a little faint, but we can hear you. All right. First off, any updates on the component shortages, anything that investors should be aware of on that front? And then can you talk about the competitive landscape for CloudIQ? It sounds like that's a big strategic focus. Can you talk a little bit about, I think Cisco is probably your primary competitor. Any updates in terms of What you've seen from the market and how the market is evolving outside of Extreme? Sure. So I'm going to I want to hand off to Norman Rice, our COO to comment on supply chain and then I'll pick up I'll give a high level on what we're seeing with the CloudIQ and get the opportunity to the rest of the team to jump in there. Norman? Thanks, Ed, and thank you for the question. So the question around what's going on with component shortages and how are we impacted by that, You're all reading about it. There are subcomponent shortages that are happening in the market. There's been really capital expenditure contraction as opposed to Expansion and then increase in demand, which has created this, call it, rolling phenomenon. So how we're impacted, what we've been able to do is We have a strategic partnership with Broadcom. Most of our technologies are based on Broadcom's chips and that's where the shortages are most pronounced. So we've been able to really consolidate and condense lead times to be in a reasonable timeframe. And then we've also worked Really closely with our customers and with our teams to ensure that we have rollout schedules that are not impacted As a result of this. So we are seeing challenges in that space. However, we've mitigated the risk by really staying ahead of it As a team and as an organization. And so any challenges that we've seen, we factor into each quarter And we are factoring several quarters ahead at the moment in terms of where we see the product constraint values going. But this is a phenomenon that we expect According to our inputs that we're getting to run right through the summer and into the early fall, but we believe that at that point, it will start to ebb off. Thanks, Norman. Eric, we also have a very we have an unusual relationship with Broadcom. We consider that to be a strategic partner. So They work with us. And our relative size, thanks to some of the other players in the industry, it allows them to take care of us. As we talk about CloudIQ and what's going on there, I mean, you'll hear me say we have the best cloud in the industry. We're the 2nd largest cloud in the industry. So obviously, the largest is Meraki. And There's a lot of structural disadvantage that Meraki has. And then when you hear Nabil talk about ML and AI And you hear him talk about the architecture of our cloud and the platform and data being the new currency and what we're able to do with data. Yes. We have a very compelling story to tell. The other thing that's really interesting is that we've gone end to end and we've talked about Us putting our fabric in the cloud. So fabric in the core of the network running into more of that traditional Cisco enterprise business, which Keep in mind, it's divided from Meraki, 2 very different companies that are not integrated together. So the fact that We have an integrated story end to end, makes it easier for us to get The audience and to differentiate Extreme Cloud IQ relative to that story. I would say in our industry, we'd say Cisco, obviously, Amazing channel, amazing marketing. They have dominant market share today, which is where they are, but It's very, very complicated. The complexity level is high and it's very expensive And they don't have a truly integrated solution. Nabeel, maybe I'd turn to you to add to that. Yes. No, I think you pointed out the 2 key main differences. But Eric, if you really look at it, we have Kind of walked into the whole world, the whole industry is kind of walking into the next generation of cloud, which is all around flexibility. And that is based around the architecture, whether that is the fact that we can run on any large Infrastructure provider out there, we already do AWS, Azure and GCP, but also things like trust, right? So We have 27,001. We just added 27,017 and 27,701, which is about cloud operations as well as data security. So that's the trust Then as I earlier mentioned in my presentation that it is about the data in the cloud, the data that is actually Sure. That is available. That is durable. And that is available for an unlimited duration. These are all advantages that we have over not only just Meraki Cloud, but any other cloud in the industry right now. So the way to look at it is that as we really move past this pandemic and companies and businesses start thinking about how are they going to accelerate And how are they going to adjust their digital transformation? They're going to think about cloud, not just as a management platform, but pretty much as the central place around which the digital transformation is going to happen for these companies. And all of these things that I just mentioned, they are going to become critical. And we are so confident that not only are we ahead, but we are ahead by at least a couple of years than anybody else in the market. And that shows in the numbers. We are, as Ed mentioned, not just the 2nd largest cloud, we are the fastest growing cloud And we believe that, that will continue to happen. So we absolutely believe that Extreme is in a phenomenal position to not just Continue the pace at which we are innovating, but actually accelerate in the coming years. With that, Ed, I'll hand it back to you. Okay. Thanks, Eric. Is there a follow-up? Yes. I just had one last On the universal chassis, I understand the margin benefits to Extreme, but can you talk a little bit about the Benefit that this customer realizes is, are customers using different operating systems? Do they switch around? Or What is the key appeal from the customer to using that chassis? Well, I think I'll provide a high level again and then I can Flip it over to anyone else in the team who wants to jump in and maybe to Vio. But the idea that we're separating hardware that we have the NextGen latest NextGen hardware and then we're providing you that flexibility. I mean, so you have flexibility to run different personalities on that. As we look at our universal hardware platforms coming with Extreme CloudIQ Subscriptions and then the fact that we've created the simplest licensing model in the industry as far as how we license. And so Our licenses are poolable, they're transferable, they could be used. So we're taking a very different tack and trying to bring Flexibility to our customers. As Nabil mentioned, we want to be their partner on the journey. So, hey, we have this platform, we have this architecture, We can release data. We have a lot of creative things that we can do as far as new services, multi domain cloud. What are you trying to serve for? How can we work with you in solving your issues there? That's it's a difference in approach. Anybody else want to jump in? Ed, I'll just add a couple of things to it. You're spot on. Eric, one thing that I would mention is that the Universal is not Just the chassis platform that is our entire portfolio. So the universal is for all of our switching portfolio as well as our wireless portfolio. So it is much, much, much Broader, that's a characteristic of our entire hardware portfolio at this point in time. Look, I'll take a step back and from a customer's point of view, In a world that is changing so fast because of COVID and because of the digital transformation, one of the big things that customers worry about is the risk of obsolescence. They also worry about the risk of making the wrong choice when they are selecting a use case or selecting a technology. So the real value of Universal is that we really reduce that risk. It's the same piece of hardware with multiple OSs, you can We changed the use case or you can redeploy it in a different portion of your network. And then more importantly, as Ed pointed out, at no additional cost or no additional procurement complexity to the customer because it all resides under the same license Whether you use it in one use case or any other available use case. So if you look at it from a forward looking lens, This really is reducing complexity all the way from procurement to deployment and later down the road extending the life scale of your investments. So it is something that is unmatched in the industry and our entire portfolio, Everything hardware follows this universal mentality and that's something that is integral to our strategy. Ted, back to you. Thanks, Harik. Thank you. Thanks, Shajid. Thank you. And our next question comes from Paul Silverstein from Cowen. Your line is now open. Thanks guys for taking the question. And I'm going to apologize because I appreciate that you all have He answered the question to some extent. But I'm going to ask anyway, which is, I appreciate that The context is very different today. And it sounds like you're in a very different position than was the case Following the acquisitions with 3 big deals that you did in the context of that particular period in time. But the question for both You, Ed and Remi is, what are it's hard enough forecasting the future in good times. That much more challenging and bad times. And again, I appreciate that this time is different. It seems like global macro economy is opening up, and it seems like you're Doing far better than have been the case back when you were wrestling trying to do those integrations. So with that big wind up, What are the downside risks? What could go wrong over the course of the next year that would intercept Your optimism in the glide path that you're currently looking at? So, Yes. I think hopefully everybody can hear that. And I think the overarching question here from Paul is, what can go wrong, Right. So we were talking about all the positives and what could go wrong. Paul, one of the things that we always have to consider going into a year is, we would call them divots. But Last year, we had a great win, WL Gore, okay, they named Gore Tex. Over the course of a couple of quarters, you've got $9,000,000 $11,000,000 worth of business. Well, that's not an annual recurring revenue stream from that customer. So we're going to have to backfill that with other wins. So that's something that we always have to look at. Yes. As we're looking at the business, we have better visibility today. I think you've heard that from Joe. From a sales perspective, the way that we've reorganized our field, I think we have more confidence in the forecast than we've had. In prior quarters and prior years just based on the visibility we have there. Wes has come in in terms of what he's been able to do from a marketing standpoint. There's an upgrade to this infrastructure. I think We have to do a better job of up leveling Extreme. So we need to get those at bats. So we need to position Extreme so that As enterprise customers are thinking about cloud, they do think about Extreme, we get that at bat. Yes, that's something that we have to we've got to execute on that Because we are we don't have the same size in the marketplace. Those are a couple of things that come to mind To me, Remi, I don't know if you want to add anything to that from a forecasting perspective. No, I think there's Three drivers really. There's the macro environment, there's the specific competitive environment and there's our execution. As far as the macro environment is concerned, The 5% to 9% growth assumes that the economy picks up and that the verticals that are still that has still not picked up, specifically sports Retail do start to pick up. So if for any reason we're going to go back into a global recession, which is not what we see right now, that would impact it. And then there's the competitive environment. If the 2 larger players decide pricing more or change the behavior, obviously, that would impact us. We're not assuming, as I laid out earlier, any change in the competitive environment. It's tough out there, We don't see it getting tougher or getting easier. And then to your point at this, our ability to execute. We demonstrated in the past 4 quarters That both from a product road map and a go to market, we've been doing really well in terms of execution. We're assuming that we're going to continue to do well. And hopefully, you'll be able to judge us on the results. Remi, I don't want to put words in your mouth, but Is what you just said, could one translate that as the primary downside risk over the next 12 months This is macro as opposed to company specific. On the other hand, your upside opportunity to the model you've laid out Is more company specific in terms of your execution vis a vis your competitors? Again, I don't want to put words in your mouth, but is that essentially what you just said? That's a fair statement. Okay. I'll pass it on to you. And I don't know if Joe, I don't know if you want to jump in and add anything. Wes, If you want to jump in and add anything to Paul's question. Yes, I will add this. I think it is more macro. We run pretty good on a muddy track. And so I don't see anything going wrong with what we're doing. I look at product constraints, macroeconomic factors, Partner health, for example, how are our partners doing in this economy, many of them secured loans during the downturn. So yes, it's more COVID related and whether or not we go into shutdown, we're a very global company, 50% of our revenue Happens outside of the Americas in our international markets. Countries like Italy, France, Spain were hit a little bit harder, but we're starting to see them Come out of it certainly in UK and I, we're seeing that. So I think Remi's comment from my chair is a fair one. I think it's more macro Economic in terms of what I am concerned and if I lost any sleep that would be it. I would agree. I think the interest in our brand has never been stronger, traffic to the website, media signal, the We talked about everything that you've heard on this call, this discussion around cloud, cloud mobility, data, they're all central to a digital transformation strategy. Even the discussion you heard from Norman with Truman of Major League Baseball, when you think about 5 gs from an enterprise perspective, It is 5 gs plus Wi Fi. So we're being included in discussions. We weren't 18, 24 months ago and that bodes well for our future. Thank you. And our next question comes from Alex Henderson from Needham. Your line is now open. Thank you very much. A couple of questions if I could. The first one is on the security front. Clearly, your largest competitor Cisco is A much larger security company. As you've highlighted security multiple times during the presentation, but not really talked about Products or specific functionality. Can you talk about your approach to security? To what extent you're embedding it into Your products or are you using partnerships with the best in breed players? How should we think about security relative to Extreme's positioning? Thanks, Alex. I'll take the lead here and you hit the nail on the head. So this is where there are a lot of people in security space that Pete again, Cisco. This is where we find a lot of our yes, they're not formal partnerships. We had that partnering in the channel with depending on what security solution you're looking at. If it's Palo Alto, you heard Palo Alto mention, if it's Fortinet, A lot of our partners are working with competitors to Cisco. And so they build solutions, competitive solutions to Cisco Yes, that would include Extreme. Obviously, there's a lot of different layers to security. Maybe I'll, I guess, I'd shift back over to you from a product perspective, if you want to comment on Alex's question. Yes, absolutely, Ed. And Alex, thank you for the question. And you're spot on. I mean, look, we are not really a security company in the traditional sense that you think of. We don't make firewalls and security gateways and stuff like that. But in the industry, when you look, the security posture is Changing. Security is not about individual products any longer. Security is about a whole apparatus. It is about In every product, every technology, some of the recent headlines, they underline that fact. So from that point of view, we are building the security and the trust into everything that we do. I mentioned the ISO certifications on our cloud side, right? That's a big thing. I mentioned explainable AI rather than just some random AI. That's Part of the trust. And then if you look from a product point of view, through hyper segmentation all the way from our wired fabric into our wireless End to end hyper segmentation, that is a key component of any security strategy that our customers Deploy out there. In addition to that, we also have like for example, on the wireless side, air defense, that is one of the most well respected air defense or Vipps platform that is out there. We extended that to Bluetooth as well. Similarly, on our NAC side, we provide NAC capabilities directly On prem or from the cloud and I can go on and on. But to summarize that, the idea is that number 1, Security has to be everywhere. Number 2, we built it directly into the products that we create, the technologies that we create. And number 3, we provide all the hooks to integrate with what you would talk about as best of breed other technology partners all the way from Palo Alto to Fortinet And whatnot, that a lot of our partners actually put together and our customers use on a daily basis. So think of it as a holistic 360 degree view that we have around security and we are a part of the security strategy for our customers, Obviously, not a security vendor per se. Ted, back to you. Second question, if I could. You talked a lot about data and putting data in the cloud is fairly extensive proposition. To the extent that you're putting large amounts of data in the cloud and not charging for it, I'm a little perplexed at how that Can you talk a bit about the mechanics around how you charge or don't charge Customers for data and to what extent that's a cost element that we need to be considering? Nabil, I'm going to let you Yes. I was going to say, I can take that. Alex, great question. And look, that's When I say that we are architecturally at least a few years ahead of some of our other competitors, this is a great example Of where the value comes to us, which is in terms of that we can actually we have been keeping as the data in our cloud has scaled Tremendously over the last 18 months. Look, when we acquired the cloud from Aerohive, it had like around 700,000 devices in it. It is at $1,500,000 So it has doubled over the last 14 to 16 months. So just to give you an idea of the Scale at which we are and the rate at which we are growing, which also translates that we have increased the amount of data, the environmental data. By the way, just that you know, we do not carry the user data. We only carry the environmental data. That has also gone multiple, multiple petabytes that we use. So how do we keep our cost actually the same or even decrease it? That is where our architecture and the cloud comes in handy and our ability to We run on multiple cloud providers in every geography and be able to move customers across Infrastructure Providers on the fly. That is a key component that allows us to make sure that not only do we keep our costs in check, but we are also allowing longer and longer duration, actually unlimited duration at this point in time to our customers. So your question around how you should think about the cost, And based on our experience in the last 18 months, I do not think, and I'm actually pretty positive because look, I built it. So I know it, That cost is not going to be an issue as we go forward and do more things with the data and that is built Straight into the architecture, the multi cloud architecture for us. But if I can speak to the last question, sorry. They actually pay for it because they buy a subscription. So as you said, they didn't pay for it, they paid through the subscription. We just don't charge them extra based on the volume because to Nabil's point, we're able to get leverage from our partnership with the 3 leading public cloud, But the customers pay for it through the subscription. Okay. So it is part of the cost Of buying your product, it's included. The third question, if I could, and then I'll see the floor is around In modern workloads, Kubernetes and the like, clearly that is a huge trend. The combination of cloud direct And modern applications are changing how people think about almost everything associated with networking. Could you talk a little bit about your positioning in the Kubernetes modern application, microservice built application world? Thanks. Yes. So Alex, absolutely. I mean, you have all the right words there, right? You definitely understand the market pretty well. Look, from a point of view of building our applications, obviously, XiQ in the cloud is completely based on Services, it can run on any cloud out there. So that is something that we employ ourselves pretty heavily. So it's not just XAQ. As some of our previous applications, be it the XMC, be it the Erudifast, be it some of the guest services that are out there, as we Continue to cloudify them. We are containerizing them. So that's one part. The other part I would mention is, I think I briefly touched upon Extreme Cloud Edge in my presentation, which is something that we'll be launching another quarter, quarter and a half that is built on Entire Kubernetes environment running on prem, but actually being managed, lifecycle managed from our cloud ops. So that's another use Of Kubernetes and stuff. And then we talked about the 5 gs environment. Look, in the 5 gs environment, all of the core applications as they get virtualized, There are 2 different ways for them to run on this infrastructure, either as VNFs or either as containers, mostly around Kubernetes and controlled by OpenStack. And we are deeply involved in both of those use cases. So just in a nutshell, all of this, The cloud is built on microservices, containerized world is the future. Actually, beyond that, we're already doing a lot of serverless as well. So we are at the forefront of it, not just using it within our applications, but building new services, for example, Extreme Cloud Edge On top of the value that containerization actually brings. So I know we can go a lot more detail in that, but at some other forum. So I'll hand it back to Ed on this. Yes, I think it sounds like a follow-up here. I think a deeper dive into this video would make a lot of sense. Yes. I don't like that based on your questions. Yes. Thanks, Alex. And thank you. And I'm showing no further questions over the phone. Okay. And I know we're getting ready to go into breakout. Yes. Yes. And do we have one question from the webcast? Okay. Well, let's take a look. So we have one question from the Okay. Stan, do you want to roll that out? I know we have Yes. I'd room for 1 more and then I know we're going to be doing breakouts starting in that 10 minutes. That's right, Ed. So the question is around the timeline to build out some SD WAN functionality and the necessary R and D investments that will be required. So one question we have from an investor on the webcast here. I love all these product questions, they're coming right back to you. Built around technology and so are the people on this call. Look, this is a great this underlines it really well, the world that we live in And the advantage that Extreme has with all of the innovations and the investments that we have done. So SD WAN, I know this topic comes up all the time. Look, I'm going to be very candid about here around SD WAN. Look, the whole SD WAN space is going to change and it's going to change very drastically. Some of our friends who have spent a lot of money buying SD WAN, which I would call it SD WAN 1.0 companies Thinking that the branch looks a certain way, well, I believe that that's going to change very drastically based on what's happening because of COVID. We are already seeing that People are not congregating in branches as they used to. The branch is the user. The branch is The new edge user is the edge and that size is really shrinking, which essentially means that the way that Connectivity to that new branch is going to be deployed, is going to be very different than the SD WAN 1.0 companies think about or what they've built. So now having said that, I believe that in the new connectivity, the infinitely distributed connectivity, SD WAN is going to be a connectivity feature, but it's going to be tied to the cloud. And considering our investment in the cloud, I believe that we are in a great place to go and intersect this new branch and you will see lot more from us in that direction in the coming quarters. But keep an eye on the SD WAN market. I think it has changed fundamentally. I'll return it back to you Stan. All right. Well, thank you for all the questions and the interest. We appreciate you being us live with us virtually. Of course, we miss you in person at venues like NASDAQ Marketplace, but We will be there soon and we'll continue to update you on our quarterly earnings calls and future Investor Days. We have posted some great product information, supplemental videos and infomercials on the landing page of our Chris Sykes, and we'll also be posting all of the slides that the team here has spoken about during this presentation to you with, as Nabil mentioned, some additional product slides as well that will be covered related to roadmap. So that concludes our presentation. I'm going to turn it over for Ed Meyercord for any closing remarks. Thanks again. Thanks, Dan. And yes, thanks everybody for participating. We prefer to see you live. If it's not NASDAQ, maybe it's MLB. We heard about their in New York, that might be a more fun venue for all of us to gather. But, yes, we appreciate it. It's an exciting time at Extreme. We've come a long way. You can tell this team is excited about how we're pivoting and the new opportunities that we've got in front of us. And we're really looking forward to the next couple of quarters. We have a very we feel very good about Our position, we got good visibility as we turn into this calendar 2021. So thanks everybody.

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