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Extreme Networks (NASDAQ: EXTR) stock is posting big gains in Wednesday’s trading following the company’s recent quarterly report. The networking specialist’s share price was up 13.9% as of 1:30 p.m. ET.

Before the market opened this morning, Extreme Networks published results for the first quarter of its 2025 fiscal year, which ended Sept. 30. The company delivered sales and earnings that beat the market’s expectations, and it also issued encouraging forward guidance.

Extreme Networks’ results suggest the business could be turning a corner

Extreme Networks reported non-GAAP (adjusted) earnings per share of $0.17 on revenue of $269.2 million in fiscal Q1, beating the average analyst estimate’s call for per-share earnings of $0.13 on revenue of roughly $261.3 million. Even though revenue declined 23.8% in the quarter, it still came in significantly ahead of Wall Street’s target and was up 4.9% on a sequential quarterly basis. The company’s annualized recurring revenue for software as a subscription (SaaS) stood at $174.1 million at the end of fiscal Q1, up 23.4% year over year and $4.3% on a sequential quarterly basis.

Extreme Networks guides for more sequential quarterly growth

For the second quarter of its current fiscal year, Extreme Networks is guiding for sales to come in between $273 million and $283 million. If the business were to hit the midpoint of that guidance range, it would mean delivering a sales decline of roughly 6% and a sequential quarterly increase of about 3%.

Meanwhile, management guided for an adjusted gross margin between 62.2% and 63.2% in the current quarter. For reference, the business posted an adjusted gross margin of 63% in this fiscal year’s first quarter and a margin of 62.5% in Q2 last year.

Adjusted earnings per share for the current quarter are projected to be between $0.16 and $0.20. Hitting the midpoint of that target range would mean a 25% year-over-year decline for earnings, but it would also mean a roughly 6% increase over last quarter’s earnings.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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