Good morning and thank you for standing by. Welcome to the Extreme Networks Second Quarter Fiscal Year 2022 Financial Results. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Stan Kovler, Vice President of Corporate Strategy and Investor Relations. Please go ahead.

Thank you, operator and welcome to the Extreme Networks Second Fiscal Quarter 2022 Earnings Conference Call. I'm Stan Kovler, Vice President of Corporate Strategy and Investor Relations. With me today are Extreme Networks' President and CEO, Ed Meyercord; CFO, Remi Thomas, and Chief Technology and Product Officer, Nabil Bukhari. We just distributed a press release and filed an 8-K detailing Extreme Networks' financial results for the quarter. For your convenience, a copy of the press release which includes our GAAP to non-GAAP reconciliations is available in the Investor Relations section of our website at extremenetworks.com. I would like to remind you that during today's call, our discussion may include forward-looking statements about Extreme's future business, financial, operational results, growth expectations and strategies, go-to-market planning related to our acquisition of Ipanema, the impact of the COVID pandemic and continued challenges of our supply chain as they relate to chip shortages and other materials. We caution you not to put undue reliance on these forward-looking statements as they involve risks and uncertainties that can cause actual results to differ materially from those anticipated by these statements, as described in our risk factors in our 10-K report for the period ending June 30th, 2021, filed with the SEC. Any forward-looking statements made on this call reflect our analysis as of today and we have no plans or duty to update them, except as required by law. Now, I will turn the call over to Extreme's President and CEO, Ed Meyercord.

Thank you, Stan and thank you all for joining us this morning. Q2 was characterized by double-digit bookings and revenue growth that led to an all-time high quarterly record revenue and net income. We achieved these record results despite the challenging environment and built an incremental $90 million in backlog which now sits at approximately $300 million in total. We see strong demand as we turn the corner into calendar '22 for both our enterprise and 5G solutions. This marks the fourth consecutive quarter of double-digit bookings and revenue growth, including the fourth consecutive quarter of double-digit product revenue growth, led by wireless adoption since our first-to-market introduction of WiFi 6E and the highly successful launches of our universal hardware switching platforms. In this calendar year, we continue to expect double-digit organic revenue growth, given the strength of demand and the size of our backlog. SaaS annual recurring revenue was $88 million this quarter, up 55% year-over-year and 11% quarter-over-quarter, driven by significant interest in our cloud technology which is also reflected in our 13% market share and number two position in cloud networking. We're larger than number three and number four competitors combined. We believe this puts Extreme in a very strong position as the secular trend toward cloud networking continues to gain momentum with enterprise customers. This is the second quarter we are disclosing the ARR for our subscription business. We will be reporting on ARR, as we diversify our business by adding new software subscriptions. I've asked Nabil Bukhari to join us on the call today to provide an update on the highly successful adoption of our cloud management platform and the introduction of our new cloud-based WAN-X subscription services. For the fourth year in a row, we were named a leader in the Gartner Magic Quadrant for wired and wireless networking. We surpassed the largest competitor in the industry in both execution and vision and strengthened our relative position to the rest of the field. This is meaningful third-party validation from the number one enterprise IT industry analyst firm. In our service provider business, we're in the early stages of 5G network deployments and this is just the beginning of a multi-year investment cycle. We are on pace to exceed our goal of attaining $20 million of incremental business in 5G for fiscal '22 in line with our expectations. Both of our 5G solutions, Packet Broker and Cloud-Native infrastructure create attractive new growth opportunities for Extreme. Nabil will provide more color on this growth opportunity as well. The consistency of our execution, the growth opportunities that we have, the level of innovation we produce and the record results are enabling us to attract the highest levels of talent in the industry. At the same time, our employee retention continues to be among the best in the industry. Net-net, we're leveling up our game and it's also evident in the quality and the magnitude of our customer engagement. I'm also proud to say we completed the systems integration of Ipanema ahead of schedule and we integrated Ipanema technology into our product portfolio in record time within a quarter. We're on pace to introduce our Extreme cloud branded SD-WAN solutions this quarter. We view these very strong quarterly results in the context of the Infinite Enterprise. And what do we mean by the Infinite Enterprise? It's the future for our enterprise customers in a post-pandemic world. The Infinite Enterprise delivers three main outcomes for our customers: infinite distribution, consumer or user centricity and unlimited scale, as we operate through the cloud. We deliver this through our portfolio that brings all our enterprise networking and WAN Edge products and services into a single framework. Data is becoming increasingly critical for our customers in delivering better business outcomes across all our verticals. For example, retailers connecting supermarkets, warehouses, corporate offices are relying on cloud analytics to deliver contextual insights that drive operational efficiencies, inform sales strategies and drive business growth. Our government customers are creating smart roads and highways to deploy advanced transportation technology, digital speed signs that improve motorist safety. And there is no better example of the value of our data analytics than in our sports and entertainment vertical. As we announced today, we just added Manchester United and the NHL to our list of value customers who have named Extreme their exclusive Wi-Fi data analytics provider. We already have this designation of Major League Baseball, NASCAR and the NFL and will power the analytics for the ninth consecutive Super Bowl in a few weeks. Our analytics solution provides real-time visibility into network data, giving customers instant business intelligence and insights regarding fan preferences, foot traffic flow, mobile sports betting, application usage and network security. These are but a few examples of how our customers are leveraging our intuitive insights from networking data to drive better business outcomes. And with that, I'll turn the call over to our Chief Technology and Product Officer, Nabil Bukhari to elaborate on our vision on the innovations in our cloud, our infrastructure, WAN edge and 5G.

Thank you, Ed and good morning, everyone. We continue to execute on our vision of the Infinite Enterprise, ExtremeCloud IQ, our cloud management platform is the cornerstone of this vision, delivering on our commitment to reduce operational complexity, decrease risk and increase reliability for our customers, of course, at Cloud Speed. In Q2, we introduced instant stacking which enables automated deployment, management and troubleshooting of stack switching from ExtremeCloud IQ. This differentiated single-click feature brings much-needed simplicity and reliability compared to our competitors' solutions, saving our customers time and effort. Customers' experience and their trust in our technology is central to our vision of Enterprise Networking. IT teams are increasingly using mobile devices to operate their networks. In Q2, we further enriched that experience. Now users can view topology, onboard any wired or wireless device right from their XIQ mobile app, greatly simplifying the rollout of network devices across the entire enterprise. We are integrating ExtremeCloud CoPilot, our explainable AI platform into the mobile app as well. So valuable and up-to-date AI/ML driven insights are instantly available to enterprise IT teams no matter where they are. Trust is a central theme in cloud networking. We announced the completion of SOC 2 Type 2 and SOC 2 Type 3 certifications for ExtremeCloud IQ which puts us years ahead of our competition and reduces security risk for our customers. Digital transformation is accelerating and every customer is defining their unique journey. We at Extreme differentiate ourselves by providing choice and flexibility to these customers. In Q2, we added an additional deployment option for our ExtremeCloud IQ customers. ExtremeCloud IQ Site Engine can now be deployed in an air gap environment which enables customers to use XIQ without tapping into a public cloud environment, providing an additional way to satisfy specific security mandates for example in healthcare and government. Similarly, we enhanced our API framework with additional SDKs for Java, Go, Python, and JavaScript so our customers and technology partners can easily integrate ExtremeCloud IQ into the broader ecosystem of their choice. We continue to refresh our infrastructure portfolio both wired and wireless with universal platforms. As part of this universal platform strategy, we were first to market with WiFi 6E solutions in Q1. In Q2, we expanded this WiFi 6E portfolio with new mid-range universal AP4000 series. With the introduction of 5500, 5400 and upcoming 5300 series switching platforms, we will complete the refresh cycle of our edge switching portfolio this fiscal year from the entry level all the way to the premium tier. Customers in healthcare, education and other verticals are embracing our universal portfolio of WiFi 6E APs. The universal switches with their software-upgradable features like high-density multi-rate ports and high-powered POE are a perfect complement to the WiFi 6E wireless. These universal platforms both wired and wireless are fully managed from ExtremeCloud IQ, making this an attractive all-inclusive solution for our customers as they start to upgrade the edge of their networks. Earlier, Ed provided an update on the integration of Ipanema. We have integrated the Ipanema technology into our portfolio in record time. We are on track to launch ExtremeCloud SD-WAN this quarter. This combines the industry-leading capabilities of ExtremeCloud IQ and the feature-rich SD-WAN from Ipanema into a single subscription. This is another proof point of our strategy to have our entire portfolio, now inclusive of SD-WAN fully managed from XIQ. This continues to differentiate us from our competitors. ExtremeCloud SD-WAN will provide simplified licensing, deployment flexibility and advanced features to address the needs of a vast variety of customers across multiple verticals and markets. Existing Extreme customers will find it operationally easy and financially attractive to add ExtremeCloud SD-WAN to their existing DAQ deployments. With the introduction of ExtremeCloud SD-WAN, our subscription offerings continue to expand and now include enterprise-wide cloud management, AI and ML driven insights and SD-WAN. We expect these services and offerings to enhance our subscription growth profile going into fiscal '23. Finally, I would like to provide an update about our solutions for 5G use cases, Network Packet Broker and cloud-native infrastructure. These solutions combine cutting-edge programmable platforms, carrier-rate orchestration and advanced features like Trusted Delivery. We have seen better-than-expected market interest in these solutions as our initial customers move from proof-of-concepts to successful deployment in production, marking our marketing as a major milestone for us. Given the strength of our relationship with our partner in this space, we are seeing new opportunities beyond our initial use cases. With that, I will turn the call back over to you, Ed.

Thanks, Nabil. On top of the strong demand in the first half of our fiscal year, our business momentum is increasing. The funnel of opportunities is strengthening both from a new bookings perspective and a substantial backlog of business we built. We're attracting new customers at an unprecedented pace and this gives us confidence in our ability to capitalize on our growth objectives. We expect to grow our market share and drive record double-digit organic growth rates into the foreseeable future. And with that, I will turn the call over to our CFO, Remi Thomas.

Thanks, Ed. As Ed noted, fiscal '22 continues to be a strong year for Extreme and we're executing well across the board. Q2 total revenue of $281 million grew 16% year-over-year. Strong demand for our wired and wireless portfolio drove year-over-year revenue growth of 15% per product and 18% for services and subscription. We saw another quarter of double-digit year-over-year growth in total bookings, driven by 47% growth in SaaS subscription bookings. SaaS annual recurring revenue or SaaS ARR reached $88 million, up 55% year-over-year and 11% quarter-over-quarter. The historical ARR data can be found on Page 16 of the Q2 earnings deck posted on our website. We also reported SaaS deferred revenue of $136 million, up 49% year-over-year and 11% quarter-over-quarter. Non-GAAP earnings per share was $0.21, up from $0.13 in the year ago quarter and flat from last quarter. On a geographic basis and looking at total company revenue, the Americas enjoyed the strongest year-over-year growth in revenue, followed by APAC and EMEA. From a vertical standpoint and looking at total company bookings, the highest year-over-year growth came from sports and entertainment, followed by transportation and logistics, retail, e-rates and higher education. Turning to product trends, Wireless enjoyed a strong recovery both year-over-year and sequentially and accounted for close to a third of total product revenue this quarter. Wired maintained healthy double-digit year-over-year growth in both bookings and revenue. Services and subscription revenue reached a new high at $89.8 million, up 18% from the year ago quarter and 9% sequentially, largely driven by the strength of cloud subscriptions. Total Q2 recurring revenue including maintenance, managed services and subscription rose to $85.2 million or 30% of total company revenue and that was up from 29% last quarter. The growth of cloud subscription and service renewals drove the total deferred revenue sitting on our balance sheet to $373 million, up 20% year-over-year and 5% sequentially. Our non-GAAP gross margin came in at 58.2% in line with our guidance. The year-over-year and sequential decline in the company's gross margin was driven for the most part by higher supply chain and freight costs, partially offset by the price increases we implemented in October. Q1 non-GAAP operating expenses were $126.8 million, up from $122.9 million in the year ago quarter and from $124.5 million in Q1, reflecting higher R&D expenses and sales and marketing spending from the acquisition of Ipanema. OpEx as a percentage of revenue was 45.2%, well ahead of the long-term target range of 46% to 49% we set at our Investor Day last year. All in all, we delivered an operating margin of 13.1%, up 2.9 percentage points from 10.2% in the year ago quarter and down slightly from 13.8% in Q1. Our cash conversion cycle of 22 days was down substantially from 44 days in the year ago quarter but up from a historically low level of just nine days in Q1. That was driven by reduction in payables to support timely delivery of component supplies. This quarter, we executed a $25 million share repurchase program for 1.8 million shares at an average price of $13.65. This was part of our previously authorized $100 million share buyback program, with $30 million remaining. Our net debt increased to $149 million, up from $139 million in Q1, largely driven by the share buyback. Had we not done the buyback, our adjusted net debt would have seen a $14 million reduction. Now, turning to guidance. As we enter the second half of fiscal '22, we expect our product book-to-bill ratio to move closer to one and our backlog to stabilize. We reiterate our outlook for fiscal '22 of double-digit revenue growth and a 10% to 15% operating margin. For Q3, we expect revenue to be in the range of $276 million to $206 million, up 11% year-over-year at the midpoint. Q3 non-GAAP gross margin is anticipated to be in the range of 57.3% to 59.3% as we expect elevated expedite fees and freight costs to continue to impact our business. Q3 non-GAAP operating expenses are expected to be in the range of $129.3 million to $133.3 million. Q3 non-GAAP earnings are anticipated to be in the range of $21.3 million to $28.7 million or $0.16 to $0.21 per diluted share. We anticipate that the reduction in expedite and shipping fees, combined with the full impact of our recent pricing actions will lead to some gross margin recovery in Q4, with further improvement expected in fiscal year '23. With that, I will now turn it over to the operator to begin the question-and-answer session.

Thank you. Our first question comes from Alex Henderson with Needham. Your line is open.

Hey, guys, nice print. It's gratifying to see the progress you're making. I wanted to talk about first the logistics cost. It should be coming down pretty steeply. I recall that back in the summer, it was as much as 50% of the supply chain cost pressures. Obviously, the parts pressures increased but it looks like those have been falling pretty steadily across the industry. Can you talk about how much the ratio of component cost to supply cost at this point?

Yes, Alex, I'll make a high-level comment and then let Remi jump in maybe with some more detail. But we have seen in terms of the supply chain incremental expense from the supply chain. We saw that step up meaningfully in the second quarter and we do expect that to persist through this quarter in Q3 and then to loosen a bit in the fourth quarter. In terms of specifics around the parts of that, Remi, I don't know if you want to add any color for Alex.

I would just say, Alex, that if I think of how we went from the Q1 gross margin to the Q2 gross margin, there was sequentially a negative impact from both expedite fees which is what we have to pay to our component suppliers to secure deliveries of key components and freight costs. In combination, these two were 4.5 points of gross margin. So if you take that 4.5x our revenue and that gives you a dollar impact. We see a stabilization of freight costs as we enter the third quarter. Unfortunately, we continue to see the expedite fees increasing slightly this quarter. They will be largely offset by the impact of the price increases which will continue to deliver some benefits in Q3. But unfortunately, when we mix the two together, they kind of neutralize each other which is the reason we're providing this guidance for Q3.

The other night, F5 Networks reported that they have experienced a significant decline in supply chain availability of components, especially chipsets that support the networking aspect of their systems business. This has led to a substantial reduction in their forecast for systems for the large quarter sequentially. They mentioned that this decline occurred in the past month. Have you observed anything similar, or is that less apparent based on your experiences?

I would say, Alex, yes, I would jump in here; Remi, just say that as it relates to chipsets, we're not seeing that. I think some of that has to do; we always talk about our relationship with Broadcom. Our supply chain teams have worked aggressively to move and establish relationships with the secondary and tertiary component providers. And they've done a nice job building, I'd say, quality relationships. So we have very healthy working relationships but it's less on the chipset side, where we're constrained and more on the smaller component parts that typically we wouldn't be out chasing; it would be our ODMs who are chasing that. So we don't see constraints on the chipset side of the equation; it's more on the smaller component parts that we're working to secure. Remi, do you want to add?

No, I was just going to add that this comes at a cost. So we're able to find these smaller components, Alex, but you've got to go and find them and they come at a premium today. And so that's what was just built in my prior comments of the fact that we will see an increase in what we call purchase price variance which is basically the cost of our components versus our initial expectation in the March quarter to make sure we get our hands on these components.

Interesting. They said that the spot market completely dried up. The second question is, I've heard Cisco has pushed through another price increase here in January. Gathering it's like they're on their almost fourth price increase over the last year. A) are you seeing that in the field? And B) we're hearing that it's creating people looking at Cisco like you're really just screwing us at this point to the point that some people are exasperated enough to say, I'm done and looking for alternatives. Have you seen either of those dynamics in the field?

We have, Alex and we did put in place our own price increase effective October 1st but it's not surprising given the cost that Remi is describing, it's not surprising to see others raising price and especially from Cisco. When Cisco does that, it is a benefit to us because it gives us an umbrella, gives us more flexibility, if we want to contemplate our own price increase. But to your point, we are taking share in this environment. You can see it from our growth and from our bookings. And I would say I think it's more about our cloud and the value-add that we're bringing as opposed to just commodity price transactions. But we are seeing more people and we're seeing the channel community, importantly, looking for an alternative. The last comment I will make and you did raise the supply chain issue; we're getting really good marks from our distributors and how we're managing through this environment and putting commit dates that we're honoring. And as a result, we have seen some business come our way because of the confidence in our delivery and supply chain.

Nice. One last question, then I cede the floor. As we start to lap the significant increase in orders, as you get into the June and back half of calendar '22, industry-wide orders jumped 30%, 35%, 40% year-over-year. Every company in the space saw a similar kind of big stretch in orders and duration. Should we start to anticipate a decline in orders in the June quarter against that top or decline in orders in the back half of the year, book-to-bill going below 1. We could have the oddity of beat and raise on top line and bottom line as supply chain improves but the duration coming in causing orders to decline. How do we think about those mechanics?

It's interesting, Alex. In my comments, I noted that we're actually seeing momentum build and we have the same reaction as we were considering the first half of our fiscal year compared to the second half of fiscal '21. We're not experiencing that. On our side, we're seeing an increase in momentum and growth, especially as we look toward the June quarter, with strong visibility in our funnel of opportunities. I also mentioned we're enhancing our team. We've made some excellent hires across the organization, focusing on strengthening our teams and go-to-market strategy, and we're observing unprecedented levels of demand. We anticipate no slowdown in that area at Extreme.

Thank you. Our next question comes from Dave Kang with B. Riley. Your line is open.

Yes, good morning. I guess I may have missed it but did you give out the book-to-bill for product and services?

Remi, do you want to pick that up?

Yes, we're very happy to give it to you, the book-to-bill for product was 1.12 and for services was 1.16, total company book-to-bill was 1.14.

Got it. And then just wanted to clarify on the supply chain situation. So I think Remi, you said margin impact was about 4.5 points. What about on the revenue side, how much of revenue was impacted by component shortages?

Well, we increased our backlog by $19 million this quarter. So, we've been able to deliver everything revenue would have been in. It's very theoretical but it would have been an extra $19 million but that's the extent of the constraints that we saw this quarter.

Okay, that's pretty significant. On 5G, I guess, did I hear you correctly that you expect fiscal '22 5G revenue to exceed $20 million. Did I hear that correct, Ed?

Yes, Dave, what you heard is that our service provider business is set to grow by $20 million in incremental revenue, and we are on track for that. As for the deal comments, we have two very large customers, and one of them is in the early stages with numerous proof of concepts currently in the field. What we're observing is a transition into production. Some of these large carriers are beginning to move from the testing phase of cloud-native infrastructure to production, marking the initial stages of a ramp-up. We expect to see other service providers transition from testing to production as well, and we are just at the start of this ramp cycle. Nabil, would you like to add anything to what I just mentioned?

No, I think you're spot on, Dave, what we're seeing is that as this 5G movement, the cycle kind of just starts going on, and this is a global trend. We are seeing two kind of trends that counter each other. One is that with the whole supply chain and budget in networking, it's like everything. So we are seeing that larger customers that entered into proof-of-concepts like call it a couple of years ago, they are now slowly kind of ramping up their productions. But at the same time, we are actually seeing that the interest in the cloud-native infrastructure as opposed to the virtual infrastructure has actually expanded tremendously way beyond our expectations, so when you kind of like bring them together, that gives the confidence that Ed is talking about. Another part that we are also seeing is for us specifically that we are in a very specific use case for 5G, a specific solution or a portion of the 5G network. But now we are starting to see opportunities to kind of broaden that into other areas of 5G deployment as well. So it's overall a pretty good story for us.

Got it. Just a couple more on the 5G. So given that momentum in 5G, should we be thinking about maybe towards the high end of $50 million to $100 million for fiscal '23? Or is it still too early?

I think, Dave, we haven't updated our guidance yet. I would defer to Remi in terms of what's out on the Street. But one of the things we'll talk about is that we are going to have an Analyst Day in late Spring and we're expecting to do a deep dive here. And I think that's probably a time where we'll revise numbers. But Remi, do you want to add anything to that question?

No, for now, the $50 million to $100 million stands, Dave. Given the ramp-up that we have, the fact that we have networks running live with our solution and the opportunities that the 5G market represents, we feel confident about this $50 million to $100 million range that we provided last year.

Got it. And any new customers in the pipeline?

Yes, that question is interesting because in the case of our cloud-native infrastructure solutions, we have a force multiplier since our partner sells to service providers. The answer is yes, many new customers are adopting the cloud-native solution that Nabil mentioned. From that perspective, we can leverage our partners' global sales team that is engaging with major service providers, and they are successfully acquiring new business. The demand for cloud-native solutions has been greater than they expected. Additionally, the technologies we are developing for our large customers are also relevant to the wider service provider market. The quality of our solutions, including their carrier-grade resiliency, is driving growth among our other service provider clients. Nabil, I invite you to join this conversation.

Thank you, Ed. I have a couple of comments to make. Firstly, regarding 5G, as I mentioned earlier, the interest in cloud-native infrastructure is increasing, which means that new service providers are entering this space. However, it's important to keep in mind that service providers tend to move at a slower pace. These new customers will go through their initial stages and early deployments. Nevertheless, we are definitely observing a growing interest, especially from our partners. Secondly, the technologies we are developing specifically for 5G are also relevant to smaller cloud service providers, not just the major players. For instance, one of our European service provider customers has adopted part of the 5G solution and is deploying it extensively in their environment. This shows that our technology is being utilized across both the 5G sector and the broader data center market. This is also the case for our Packet Broker solutions, which are primarily designed to meet the substantial demands of the 5G rollout, but they also hold significant value for other service providers and larger enterprises. As time goes on, we see this technology expanding its reach beyond just 5G.

Got it. Thank you.

Thank you. Our next question comes from Eric Martinuzzi with Lake Street. Your line is open.

Yes. I wanted to focus on the SaaS part of the business. I understand the ARR number is very healthy at $88 million, up 55% but I wanted to go into the script bookings, the subscription bookings at 47%, that's a terrific number but it is down. I think Q1's number was 71% on the bookings and I think previously you guys have been running in the 100% range. Are you seeing a change in appetite for the subscription form factor? Or maybe if I could ask it a different way, what is your expectation for subscription bookings in Q3, Q4?

Yes, I think several of us will speak on this. When we launched ExtremeCloud IQ, we had the opportunity to transition many customers to the platform. Some of the higher growth rates you observed earlier were due to this customer migration. Therefore, when looking at XIQ license growth, the year-over-year comparisons may not appear as favorable because we experienced a significant surge in XIQ subscriptions. We anticipate continued growth in new subscriptions throughout the rest of the year. However, many of our XIQ subscriptions are currently in backlog, which means that if the product is limited in availability, the licenses will also be limited. As we approach the end of the year, we expect to start unlocking some of these new subscription bookings. Regarding renewals, we foresee larger renewal growth occurring around the fiscal year 2024. Remi, would you like to add anything? Additionally, with SD-WAN and new WAN-Edge services, we anticipate considerable growth driving cloud subscriptions. Remi, if you have specific numbers for Eric or perspectives on that, please share. Nabil, could you also provide insights on the future evolution of XIT subscriptions? We expect that to be in a longer-term growth range of about 30%. Moreover, as we consider new WAN-Edge services, we envision a much higher growth rate starting from a lower base.

No, Ed, I would say the initial phase of our growth in the subscription business was really driven by us acquiring new subscribers onto our platform, migrating some of the existing customers that had an on-prem solution to a cloud-based solution. And now that this business is growing, what we're seeing this quarter is a significant contribution from renewals of customers that adopted our solution two to three years ago, sometimes when they were Aerohive customers, so now we're seeing a more balanced contribution to the 47% growth that I mentioned in my comments from new customers adopting the subscription model, as well as renewal of existing customers. And basically, that will grow going forward as we introduce SD-WAN and hence us feeling very comfortable in some of the growth rates that we highlighted a year ago at the time, if you recall, we talked about 25% to 30% growth in bookings and 25% to 35% growth in revenue for the next three to five years. Today, we feel comfortable that both bookings and revenue will grow slightly more than 30% over the period.

Yes, I can provide additional insights. Our subscription business consists of various cohorts. One cohort is the migration group, another is the hard wireless business, and we also have the cloud wireless business driving much of our XIQ. Each of these cohorts has its own growth trajectory. When we combine them, that's the growth figure we are highlighting. From a product and technology perspective, we see two primary opportunities for growth in our subscription business. First, as more devices integrate into our cloud, the number of subscribers will rise. Second, we are focused on increasing the average revenue per unit, or ARPU, which will grow as we introduce new services and licenses on our ExtremeCloud platform. Our AI and ML platform, copilot, is expected to transition to general availability in fiscal '23, which should help boost our ARPU. Additionally, we are expecting to launch our SD-WAN service from the Ipanema acquisition this quarter, which will create another revenue stream alongside what XIQ is providing. Our strategy is straightforward: we want these cohorts to build upon one another. While they may be introduced and peak at different times, overall, we are confident in the growth projections Remi mentioned for the coming years.

Got it. Thanks for taking my question and congratulations on the quarter.

Thank you, Eric. I think we will conclude here. I want to express my gratitude to everyone who joined us today. We will be finalizing a date for an analyst and investor meeting in late Spring, so please keep an eye out for that. I also want to congratulate all of our Extreme employees and partners for achieving record results in the last quarter and for all the hard work they have put into executing and delivering at Extreme. I hope everyone stays healthy and I look forward to connecting soon. Take care and have a great day.

This concludes today's conference call. Thank you for participating. You may now disconnect.