Extreme Networks Oppenheimer 29th Annual Technology, Internet & Communications Conference
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Good morning, everybody. Tim Horan. I am the Digital Infrastructure and Communications Analyst here at Oppenheimer. My pleasure to be hosting Stan Kovler from Extreme Networks. He is the Senior Vice President of Finance and, importantly, Corporate Development. We're going to be able to ask him all sorts of really interesting questions. As always, an exciting time in the industry and never lack of volatility in the stock, Stan. Thanks for that. Keeps us all busy.
Yeah. It's small cap tech, so that's kind of the world that we live in.
That is the world that we live in. The most important thing that matters, just what's the long-term growth rate and what's the long-term free cash flow, right, which we're going to get into.
Yeah. Before we get into that, what's the biggest trends going on for enterprise networking at a really high level?
Yeah. So, Tim, obviously, it's been an exciting place to be recently. A lot of our customers are upgrading to all sorts of next-generation technology. On the wireless side, you've got companies that are transitioning to next-generation wireless Wi-Fi 7, and that's bringing forth a lot more bandwidth, a lot more power, more deterministic connectivity for users, and we're taking that now to the next level. We've got some really interesting, unique antenna technology that we've developed and are introducing to some of our largest customers. Our large venue customers are really loving some of these capabilities that are producing really great results for them at the stadiums.
On the switching side, it's preparing a lot of our customers for next-generation technology, and over the next 3 to 5 years, they'll see a lot more traffic flow on their networks from not just users and the prevalence of additional devices that come on the network. That's been the driver for us historically, but it's this notion of the agent-to-agent workflow that is on the come in our industry, and that will be another driver of growth and complexity. As networks become more complex, that drives the need for a lot of our automation software technology and the AI-based platform solutions that we're delivering to customers now. As you're well aware, we have a platform called Extreme Platform ONE that we developed and launched last year, and we keep upgrading this.
There's another upgrade coming later this month, where it'll create even more automation and more introductions later in the year where it's not just focusing on devices anymore, but it's really focusing on making the network engineer's life easier and allowing agents to connect and work together and solve these problems more autonomously. That's a lot of what's happening in the network right now. We're mainly benefiting from driving AI for networking. It's not networking for the AI build-out, but it's allowing our users and customers to use AI to make their life easier in a very complex network world.
AI, we have a lot of things going on. We have fundamental major improvements in networks just from Wi-Fi 7 and switching we can talk about. Then we have lots of new, hopefully potential use cases for the networks with AI- Right whether the enterprises want it or not, because it seems like we're going from people-to-people communications to machine-to-machine, which could be orders of magnitude more traffic.
Then we need ways to basically manage all this in a much better way, which your AI platform is kind of doing. Maybe we can just discuss each one of them, take those one at a time. What are you seeing in terms of just improvements from Wi-Fi 7 in terms of amount of capacity, latency, features, and use cases? I think the same, and if you can discuss some of the same thing on your switching side. What type of fundamental improvements are you seeing?
Yeah. On the Wi-Fi 7 side, again, what we're seeing is just being able to deliver higher bandwidth applications to users, and in some cases where it was not tenable. Wi-Fi is just getting more predictable, it's getting more reliable, and it's getting to a much higher level of reliability and throughput for a lot of our customers, and that's what's driving the upgrade. A lot of our customers, they never went to Wi-Fi 6 or Wi-Fi 6E. These are customers that are upgrading from Wi-Fi 4, Wi-Fi 5, and making that leap all the way to Wi-Fi 7 now as the next generation is developing some of these capabilities. Now, the technology itself is interesting because for a long time, Wi-Fi operated at two bands, the 2.5 and 5 gigahertz bands.
As you get into 6E and 7, now we have a completely new, almost like HOV lane, if you want to think about it that way, with six gigahertz. That opens things up for other use cases and new technologies, new capabilities where you can run things on a clean spectrum. It's all unlicensed spectrum, obviously, because you operate in both your coverage is licensed and unlicensed companies.
But it really opens things up where you can use that- I think we've almost doubled the amount of spectrum that Wi-Fi can operate on, and obviously the processing power is getting better and better, and some of the other underlying technologies.
With Wi-Fi 7, are people seeing a quadrupling of, you think, actual useful capacity, or any way to measure that?
Yeah. It just allows the users to do more video. A lot of what we're seeing from our stadium customers is that people are live streaming, they're recording video and sending video, and sharing where they are. It just supports the users and those types of experiences where you can be at an event and then share the event back home to people that are not with you, and then multiply that across, you're at The Swamp, you've got 90,000 fans that need concurrent access. The other trend that we're seeing is that in the past, not everyone was connected at the stadium, and you might have 20%, 30% of the people that have been connected at the stadium. Now pretty much everyone is on Wi-Fi at a lot of these events, and so you need that to support the users. That's at the user experience level.
There's also, if you go to the events or I go to events, everything's getting more expensive. I think there's a lot of pressure on venue operators to make things more interesting, delivering additional experiences or driving more automation. It could be as something simple as ordering food or concessions to just multimedia activities. Also, facial recognition when you're entering a stadium for security reasons, for access. Video is becoming more important, security is becoming more important, and in order to support 4K video, then you're going over to the other side of our business that you started talking about, which is the switching part. That's driving a lot of the upgrades as well. Speeds and feeds are very much relevant in high bandwidth video, and you need to be able to deliver that.
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