Extreme Networks Reports Second Quarter Fiscal Year 2025 Financial Results
Extreme Networks (EXTR) reported Q2 FY2025 financial results showing sequential revenue growth for the third consecutive quarter. Revenue reached $279.4 million, down 5.7% year-over-year but up 3.8% quarter-over-quarter. SaaS ARR grew 14.4% year-over-year to $181.1 million.
The company reported GAAP diluted EPS of $0.06 compared to $0.03 last year, and non-GAAP diluted EPS of $0.21 versus $0.24 last year. GAAP gross margin improved to 62.7% from 61.9% year-over-year. The Q2 ending cash balance was $170.3 million, with net debt of $14.7 million.
Extreme introduced Platform ONE, integrating networking, security, and AI capabilities. The company secured notable wins in professional sports venues, healthcare, and municipal infrastructure, demonstrating strong competitive positioning in enterprise networking.
Extreme Networks (EXTR) ha riportato i risultati finanziari del secondo trimestre dell'anno fiscale 2025, mostrando una crescita dei ricavi sequenziale per il terzo trimestre consecutivo. I ricavi hanno raggiunto 279,4 milioni di dollari, in calo del 5,7% rispetto all'anno precedente ma in aumento del 3,8% rispetto al trimestre precedente. SaaS ARR è cresciuto del 14,4% anno su anno, arrivando a 181,1 milioni di dollari.
L'azienda ha riportato un utile per azione diluito GAAP di 0,06 dollari rispetto a 0,03 dollari dell'anno scorso, e un utile per azione diluito non GAAP di 0,21 dollari rispetto a 0,24 dollari dell'anno scorso. Il margine lordo GAAP è migliorato al 62,7% rispetto al 61,9% dell'anno precedente. Alla fine del secondo trimestre, il saldo di cassa era di 170,3 milioni di dollari, con un debito netto di 14,7 milioni di dollari.
Extreme ha presentato Platform ONE, integrando capacità di networking, sicurezza e intelligenza artificiale. L'azienda ha ottenuto importanti successi in luoghi di sport professionistico, nel settore sanitario e nelle infrastrutture municipali, dimostrando una forte posizione competitiva nel networking aziendale.
Extreme Networks (EXTR) reportó los resultados financieros del segundo trimestre del año fiscal 2025, mostrando un crecimiento secuencial de ingresos por tercer trimestre consecutivo. Los ingresos alcanzaron 279,4 millones de dólares, disminuyendo un 5,7% en comparación interanual, pero aumentando un 3,8% en comparación con el trimestre anterior. SaaS ARR creció un 14,4% interanual, alcanzando los 181,1 millones de dólares.
La compañía reportó un resultado por acción diluido GAAP de 0,06 dólares en comparación con 0,03 dólares del año pasado, y un resultado por acción diluido no GAAP de 0,21 dólares frente a 0,24 dólares del año pasado. El margen bruto GAAP mejoró al 62,7% desde el 61,9% del año anterior. El saldo de efectivo al final del segundo trimestre fue de 170,3 millones de dólares, con una deuda neta de 14,7 millones de dólares.
Extreme presentó Platform ONE, integrando capacidades de redes, seguridad e inteligencia artificial. La empresa aseguró importantes victorias en instalaciones deportivas profesionales, salud e infraestructura municipal, demostrando una sólida posición competitiva en el networking empresarial.
익스트림 네트웍스 (EXTR)는 2025 회계연도 2분기 재무 결과를 발표하며 세 번째 분기 연속으로 매출이 증가했다고 보고했습니다. 매출은 2억 7940만 달러에 달했으며, 전년 대비 5.7% 감소했지만 전 분기 대비 3.8% 증가했습니다. SaaS ARR은 전년 대비 14.4% 성장하여 1억 8110만 달러에 도달했습니다.
회사는 GAAP 기준으로 희석 주당 순이익(EPS)은 0.06달러로 지난해의 0.03달러에 비해 증가했으며, 비 GAAP 기준으로 희석 EPS는 0.21달러로 지난해의 0.24달러에 비해 감소했습니다. GAAP 총 마진은 지난해 61.9%에서 62.7%로 개선되었습니다. 2분기 말 현금 잔고는 1억 7030만 달러였으며, 순 부채는 1470만 달러입니다.
익스트림은 네트워킹, 보안 및 AI 기능을 통합하는 Platform ONE을 소개했습니다. 회사는 프로 스포츠 경기장, 헬스케어 및 지방 인프라에서 상당한 성과를 거두어 기업 네트워킹에서 강력한 경쟁 위치를 입증했습니다.
Extreme Networks (EXTR) a annoncé les résultats financiers du deuxième trimestre de l'exercice 2025, montrant une croissance séquentielle des revenus pour le troisième trimestre consécutif. Les revenus ont atteint 279,4 millions de dollars, en baisse de 5,7% par rapport à l'année précédente, mais en hausse de 3,8% par rapport au trimestre précédent. SaaS ARR a augmenté de 14,4% d'une année sur l'autre pour atteindre 181,1 millions de dollars.
L'entreprise a déclaré un BPA dilué GAAP de 0,06 dollars, contre 0,03 dollars l'année dernière, et un BPA dilué non GAAP de 0,21 dollars contre 0,24 dollars l'année dernière. La marge brute GAAP s'est améliorée à 62,7% contre 61,9% d'une année sur l'autre. Le solde de trésorerie de fin de trimestre était de 170,3 millions de dollars, avec une dette nette de 14,7 millions de dollars.
Extreme a présenté Platform ONE, intégrant des capacités de mise en réseau, de sécurité et d'IA. L'entreprise a remporté des succès notables dans les lieux sportifs professionnels, les soins de santé et les infrastructures municipales, démontrant une position concurrentielle solide dans le domaine des réseaux d'entreprise.
Extreme Networks (EXTR) hat die finanziellen Ergebnisse für das zweite Quartal des Geschäftsjahres 2025 veröffentlicht, die ein sequenzielles Umsatzwachstum für das dritte Quartal in Folge zeigen. Der Umsatz erreichte 279,4 Millionen Dollar, was einem Rückgang von 5,7% im Vergleich zum Vorjahr entspricht, aber einem Anstieg von 3,8% im Vergleich zum vorangegangenen Quartal. SaaS ARR wuchs im Jahresvergleich um 14,4% und beträgt 181,1 Millionen Dollar.
Das Unternehmen berichtete von einem GAAP-diluted EPS von 0,06 Dollar im Vergleich zu 0,03 Dollar im vergangenen Jahr, sowie einem non-GAAP-diluted EPS von 0,21 Dollar gegenüber 0,24 Dollar im letzten Jahr. Die GAAP-Großmarge verbesserte sich von 61,9% auf 62,7% im Jahresvergleich. Der Cash-Bestand zum Ende des zweiten Quartals betrug 170,3 Millionen Dollar, mit einer Nettoverschuldung von 14,7 Millionen Dollar.
Extreme stellte Platform ONE vor, das Netzwerk-, Sicherheits- und KI-Funktionen integriert. Das Unternehmen sicherte sich bedeutende Erfolge in professionellen Sportstätten, im Gesundheitswesen und in der kommunalen Infrastruktur und demonstriert eine starke Wettbewerbsposition im Unternehmensnetzwerk.
- Sequential revenue growth for third consecutive quarter (+3.8% QoQ)
- SaaS ARR growth of 14.4% YoY to $181.1 million
- GAAP EPS improved to $0.06 from $0.03 YoY
- GAAP gross margin increased to 62.7% from 61.9% YoY
- Generated positive free cash flow of $16.1 million
- Revenue declined 5.7% YoY to $279.4 million
- Non-GAAP EPS decreased to $0.21 from $0.24 YoY
- Net debt position of $14.7 million compared to net cash of $26.4 million year ago
Insights
The Q2 FY25 results demonstrate Extreme Networks' operational resilience and strategic execution in a challenging market. The sequential revenue growth of
- GAAP operating margin expansion to
4.5% from3.5% YoY - Strong non-GAAP gross margin of
63.4% , up 90 basis points YoY - Positive free cash flow of
$16.1M , supporting balance sheet strength
The SaaS ARR growth of
The introduction of Platform ONE represents a strategic pivot towards integrated AI-driven solutions, potentially creating significant competitive advantages in network automation and management efficiency. Enterprise wins across healthcare, aviation and professional sports venues validate the platform's market appeal and suggest strengthening competitive positioning in high-value segments.
Consistent Execution Drives Third Quarter of Sequential Revenue Growth, Powering Earnings Above Guidance
"Our competitive win rates continue to improve, especially with larger enterprise customers. Our success is based on the simplicity and feature differentiation of our cloud networking platform and unique enterprise campus fabric solution. Changes in the competitive environment and early traction with our commercial models are creating new growth opportunities for Extreme," said Ed Meyercord, President and Chief Executive Officer.
"In the second quarter, we announced our vision for Extreme Platform ONE™, our innovative technology platform that integrates Extreme's networking and security solutions by collapsing all of our applications into a single interface. We are introducing new AI models at the core of the platform that will drive impactful advances to the networking experience. Platform ONE will deliver significant productivity gains for IT teams in network design, deployment, management and commercial operations, by reducing complex tasks from hours to minutes," concluded Meyercord.
Kevin Rhodes, Executive Vice President and Chief Financial Officer, stated, "The continued sequential revenue growth in the second quarter, coupled with higher operating margin and earnings growth, demonstrates the strong operating leverage in our financial model. We expect better than seasonal revenue for the third quarter, at the midpoint of our outlook, and further improvement in cash flow generation. For FY25, we expect growth in revenue, along with higher operating margins and cash flow generation, based on the ongoing recovery in our business and prudent management of our expenses."
Fiscal Second Quarter Results:
-
Revenue
$279.4 million 5.7% year-over-year, and up3.8% quarter-over-quarter -
SaaS ARR
$181.1 million 14.4% year-over-year, and up4.0% quarter-over-quarter -
GAAP diluted EPS
$0.06 $0.03 $0.08 -
Non-GAAP diluted EPS
$0.21 $0.24 $0.17 -
GAAP gross margin
62.7% compared to61.9% last year and63.0% last quarter -
Non-GAAP gross margin
63.4% compared to62.5% last year and63.7% last quarter -
GAAP operating profit margin
4.5% compared to GAAP operating profit margin3.5% last year and GAAP operating loss margin1.8% last quarter -
Non-GAAP operating profit margin
14.7% compared to14.8% last year and12.4% last quarter
Liquidity:
-
Q2 ending cash balance was
$170.3 million $10.8 million $51.1 million -
Q2 net debt was
$14.7 million $13.3 million $28.0 million $41.1 million $26.4 million -
During Q2, we generated net cash flow from operations of
$21.5 million $16.1 million
Recent Key Highlights:
- Extreme introduced Extreme Platform ONE, an innovative technology platform that integrates networking, security and AI to drive automation that helps customers reduce complex tasks from hours to minutes. The platform’s AI-powered automation includes conversational, interactive and autonomous AI agents—to assist, advise and accelerate the productivity of networking, security and business teams. CRN Magazine named Platform ONE one of the “Ten Hottest Networking Products of 2024.”
- Extreme continued its dominance in professional sports, as the Pittsburgh Steelers will deploy state-of-the-art 6GHz Wi-Fi to enhance the fan experience and optimize retail PoS systems, ensuring faster transactions and shorter concession lines. NHL teams such as the Anaheim Ducks, Calgary Flames, Columbus Blue Jackets, St. Louis Blues, and Nashville Predators have deployed Extreme Fabric and ExtremeCloud™ IQ to improve in-arena Wi-Fi, deliver immersive fan experiences, support new digital services and secure IoT devices running throughout the arenas.
-
The München Klinik, the largest hospital network in
Munich and the number one emergency hospital in the region, has invested in Extreme Fabric, Universal switching and ExtremeCloud IQ to provide a more robust and secure network across its five sites. The investment in Extreme will help them advance patient care, better secure patient records and improve the performance of medical devices. -
Philadelphia International Airport selected Extreme for core routing services as well as secure automation via Extreme Fabric and Extreme’s Network Access Control (NAC) solution. PHL serves over 12 million passengers a year and is upgrading its terminals and technology. Deploying Extreme's technology provides the network team increased agility during construction phases of the projects in addition to daily operations. -
UK -based law firm Taylor Wessing needed to update its legacy infrastructure across its 28 offices. With Extreme Wireless and ExtremeCloud IQ, the firm will have faster Wi-Fi for employees, streamlined network management for its IT team and a simplified licensing structure that will be easier to manage and scale as the firm continues to grow. -
The City of
Temple, Texas , needed to modernize its network infrastructure and help its IT staff better support services across multiple municipal offices for its rapidly growing population.Temple selected Extreme to fully refresh its wired and wireless network and standardize its infrastructure on Extreme Fabric, significantly improving network security, visibility and control. - Extreme was recognized as one of the Great Tech Places to Work by NC TECH and was ranked #33 on Newsweek's 2025 Excellence 1000 Index, demonstrating our commitment to innovation, ethical practices, and sustainability while prioritizing our customers, employees, and global impact. ExtremeCloud Universal ZTNA was also named a winner in the 2025 BIG Innovation Awards and in the TMCNet 2024 Cybersecurity Excellence Awards.
Fiscal Q2 2025 Financial Metrics:
(in millions, except percentages and per share information)
|
|
GAAP Results |
|
|||||||||
|
|
Three Months Ended |
|
|||||||||
|
|
December 31,
|
|
|
December 31,
|
|
|
Change |
|
|||
Product |
|
$ |
172.3 |
|
|
$ |
186.6 |
|
|
$ |
(14.3 |
) |
Subscription and support |
|
|
107.1 |
|
|
|
109.8 |
|
|
|
(2.7 |
) |
Total net revenue |
|
$ |
279.4 |
|
|
$ |
296.4 |
|
|
$ |
(17.0 |
) |
Gross margin |
|
|
62.7 |
% |
|
|
61.9 |
% |
|
|
0.8 |
% |
Operating margin |
|
|
4.5 |
% |
|
|
3.5 |
% |
|
|
1.0 |
% |
Net income |
|
$ |
7.4 |
|
|
$ |
4.0 |
|
|
$ |
3.4 |
|
Net income per diluted share |
|
$ |
0.06 |
|
|
$ |
0.03 |
|
|
$ |
0.03 |
|
|
|
Non-GAAP Results |
|
|||||||||
|
|
Three Months Ended |
|
|||||||||
|
|
December 31,
|
|
|
December 31,
|
|
|
Change |
|
|||
Product |
|
$ |
172.3 |
|
|
$ |
186.6 |
|
|
$ |
(14.3 |
) |
Subscription and support |
|
|
107.1 |
|
|
|
109.8 |
|
|
|
(2.7 |
) |
Total net revenue |
|
$ |
279.4 |
|
|
$ |
296.4 |
|
|
$ |
(17.0 |
) |
Gross margin |
|
|
63.4 |
% |
|
|
62.5 |
% |
|
|
0.9 |
% |
Operating margin |
|
|
14.7 |
% |
|
|
14.8 |
% |
|
|
(0.1 |
)% |
Net income |
|
$ |
28.6 |
|
|
$ |
31.5 |
|
|
$ |
(2.9 |
) |
Net income per diluted share |
|
$ |
0.21 |
|
|
$ |
0.24 |
|
|
$ |
(0.03 |
) |
Extreme uses the non-GAAP free cash flow metric as a measure of operating performance. Free cash flow represents GAAP net cash provided by (used in) operating activities, less capital expenditures for purchases of property and equipment and capitalized software development costs. Extreme considers free cash flow to be useful information for management and investors regarding the amount of cash generated by the business after the purchases of property and equipment and capitalized software development costs, which can then be used to, among other things, invest in Extreme’s business, make strategic acquisitions, and strengthen the balance sheet. A limitation of the utility of this non-GAAP free cash flow metric as a measure of financial performance is that it does not represent the total increase or decrease in the Company's cash balance for the period. The following table shows non-GAAP free cash flow calculation (in millions):
Free Cash Flow |
Three Months Ended |
Six Months Ended |
|
||||||||||||
|
December 31,
|
|
|
December 31,
|
|
|
December 31,
|
|
|
December 31,
|
|
||||
Cash flow provided by operations |
$ |
21.5 |
|
|
$ |
34.3 |
|
|
$ |
40.1 |
|
|
$ |
109.9 |
|
Less: Property and equipment capital expenditures |
|
(5.4 |
) |
|
|
(5.7 |
) |
|
|
(12.3 |
) |
|
|
(10.0 |
) |
Total free cash flow |
$ |
16.1 |
|
|
$ |
28.6 |
|
|
$ |
27.8 |
|
|
$ |
99.9 |
|
SaaS ARR: Extreme uses SaaS annual recurring revenue (“SaaS ARR”) to identify the annual recurring revenue of ExtremeCloud IQ and other subscription revenue, based on the annualized value of quarterly subscription revenue and term-based licenses. We believe that SaaS ARR is an important metric because it is driven by our ability to acquire new customers and to maintain and expand our relationships with existing customers. SaaS ARR should be viewed independently of revenue or deferred revenue that are accounted for under
Gross Debt: Gross debt is defined as long-term debt and the current portion of long-term debt as shown on the balance sheet plus unamortized debt issuance costs, if any.
Net Cash (Debt) is defined as cash and cash equivalents minus gross debt, as shown in the table below (in millions):
Cash and cash equivalents |
|
|
Gross debt |
|
|
Net cash (debt) |
|
|||
$ |
170.3 |
|
|
$ |
185.0 |
|
|
$ |
(14.7 |
) |
Business Outlook:
Extreme’s business outlook is based on current expectations. The following statements are forward-looking, and actual results could differ materially based on various factors, including market conditions and the factors set forth under “Forward-Looking Statements” below.
For its third quarter of fiscal 2025, ending March 31, 2025, the Company is targeting:
(in millions, except percentages and per share information) |
Low-End |
|
|
High-End |
|
||
FQ3'25 Guidance – GAAP |
|
|
|
|
|
||
Total net revenue |
$ |
276.0 |
|
|
$ |
284.0 |
|
Gross margin |
|
61.2 |
% |
|
|
62.2 |
% |
Operating margin |
|
0.0 |
% |
|
|
2.1 |
% |
Earnings (Loss) per share |
$ |
(0.04 |
) |
|
$ |
0.00 |
|
Shares outstanding used in calculating GAAP EPS |
|
133.3 |
|
|
|
134.7 |
|
FQ3'25 Guidance – Non-GAAP |
|
|
|
|
|
||
Total net revenue |
$ |
276.0 |
|
|
$ |
284.0 |
|
Gross margin |
|
62.0 |
% |
|
|
63.0 |
% |
Operating margin |
|
12.0 |
% |
|
|
13.7 |
% |
Earnings per share |
$ |
0.16 |
|
|
$ |
0.20 |
|
Diluted Shares outstanding used in calculating non-GAAP EPS |
|
134.7 |
|
|
|
134.7 |
|
The following table shows the GAAP to non-GAAP reconciliation for Q3 FY'25 guidance:
|
|
FQ3'25 |
|
|||
|
Gross Margin |
|
Operating Margin |
|
Earnings (Loss) per Share |
|
GAAP |
|
|
|
|
( |
|
Estimated adjustments for: |
|
|
|
|
|
|
Share-based compensation |
|
|
|
|
0.16 |
|
Amortization of product intangibles |
|
|
|
|
0.01 |
|
Amortization of non-product intangibles |
— |
|
|
|
— |
|
Restructuring and related charges |
— |
|
|
|
0.02 |
|
Litigation charges |
— |
|
|
|
0.01 |
|
System transition cost |
— |
|
|
|
0.04 |
|
Tax adjustment |
— |
|
— |
|
(0.04) |
|
Non-GAAP |
|
|
|
|
|
|
The total of percentage rate changes may not equal the total change in all cases due to rounding.
For the full year fiscal 2025, ending June 30, 2025, the Company is targeting (in millions):
|
Low-End |
|
|
High-End |
|
||
FY'25 Guidance |
|
|
|
|
|
||
Total net revenue |
$ |
1,120.0 |
|
|
$ |
1,138.0 |
|
Conference Call:
Extreme will host a conference call at 8:00 a.m. Eastern (5:00 a.m. Pacific) today to review the second quarter results of fiscal 2025 as well as the business outlook for the third quarter of fiscal 2025 ending March 31, 2025, including significant factors and assumptions underlying the targets noted above. The conference call will be available to the public through a live audio web broadcast via the internet at http://investor.extremenetworks.com and a replay of the call will be available on the website for at least 7 days following the call. To access the call, please go to this link (Extreme Networks Q2'25 Earnings Registration) and you will be provided with dial in details. If you would like to participate in the Q&A, please register here: Q&A Registration Link. To avoid delays, we encourage participants to dial into the conference call fifteen minutes ahead of the scheduled start time.
About Extreme:
Extreme Networks, Inc. (EXTR) creates networking experiences that enable all of us to advance. We push the boundaries of technology leveraging the powers of machine learning, artificial intelligence, analytics, and automation. Tens of thousands customers globally trust our end-to-end, cloud-driven networking solutions and rely on our top-rated services and support to accelerate their digital transformation efforts and deliver progress like never before. For more information, visit Extreme's website at https://www.extremenetworks.com/ or LinkedIn, YouTube, Twitter, Facebook or Instagram
Extreme Networks, ExtremeCloud, and the Extreme Networks logo, are trademarks of Extreme Networks, Inc. or its subsidiaries in
Non-GAAP Financial Measures:
Extreme provides all financial information required in accordance with
The Company has provided a non-GAAP reconciliation of the results for the periods presented in this release, which are adjusted to exclude certain items as indicated. These measures should only be used to evaluate the Company's results of operations in conjunction with the corresponding GAAP measures for comparable financial information and understanding of the Company’s ongoing performance as a business. Extreme uses both GAAP and non-GAAP measures to evaluate and manage its operations.
Forward-Looking Statements:
Statements in this press release, including statements regarding those concerning the Company’s business outlook and future operating metrics, financial and operating results, are forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements speak only as of the date of this release. There are several important factors that could cause actual results and other future events to differ materially from those suggested or indicated by such forward-looking statements. These include, among others, risks related to global macroeconomic and business trends; the Company’s failure to achieve targeted financial metrics; a highly competitive business environment for network switching equipment and cloud management of network devices; the Company’s effectiveness in controlling expenses; the possibility that the Company might experience delays in the development or introduction of new technology and products; customer response to the Company’s new technology and products; risks related to pending or future litigation; political and geopolitical factors, including but not limited to the potential of tariffs imposed by the
For more information about factors that could cause actual results and other future events to differ materially from those suggested or indicated by such forward-looking statements, see “Management's Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2024, Quarterly Report on 10-Q for the quarter ended September 30, 2024 and other documents of the Company on file with the Securities and Exchange Commission (available at www.sec.gov). As a result of these risks and others, actual results could vary significantly from those anticipated in this press release, and the Company’s financial condition and results of operations could be materially adversely affected. Except as required under the
EXTREME NETWORKS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except per share amounts) (Unaudited) |
||||||||
|
|
December 31,
|
|
|
June 30,
|
|
||
ASSETS |
|
|
|
|
|
|
||
Current assets: |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
170,322 |
|
|
$ |
156,699 |
|
Accounts receivable, net |
|
|
117,575 |
|
|
|
89,518 |
|
Inventories |
|
|
132,278 |
|
|
|
141,032 |
|
Prepaid expenses and other current assets |
|
|
75,114 |
|
|
|
79,677 |
|
Total current assets |
|
|
495,289 |
|
|
|
466,926 |
|
Property and equipment, net |
|
|
36,735 |
|
|
|
43,744 |
|
Operating lease right-of-use assets, net |
|
|
41,609 |
|
|
|
44,145 |
|
Goodwill |
|
|
391,981 |
|
|
|
393,709 |
|
Intangible assets, net |
|
|
8,221 |
|
|
|
10,613 |
|
Other assets |
|
|
107,109 |
|
|
|
83,457 |
|
Total assets |
|
$ |
1,080,944 |
|
|
$ |
1,042,594 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
||
Current liabilities: |
|
|
|
|
|
|
||
Accounts payable |
|
$ |
52,371 |
|
|
$ |
51,423 |
|
Accrued compensation and benefits |
|
|
59,521 |
|
|
|
42,064 |
|
Accrued warranty |
|
|
10,036 |
|
|
|
10,942 |
|
Current portion of deferred revenue |
|
|
312,050 |
|
|
|
306,114 |
|
Current portion of long-term debt, net of unamortized debt issuance costs of |
|
|
11,748 |
|
|
|
9,326 |
|
Current portion, operating lease liabilities |
|
|
10,997 |
|
|
|
10,547 |
|
Other accrued liabilities |
|
|
77,499 |
|
|
|
87,172 |
|
Total current liabilities |
|
|
534,222 |
|
|
|
517,588 |
|
Deferred revenue, less current portion |
|
|
277,419 |
|
|
|
268,909 |
|
Long-term debt, less current portion, net of unamortized debt issuance costs of |
|
|
170,866 |
|
|
|
178,265 |
|
Operating lease liabilities, less current portion |
|
|
37,994 |
|
|
|
41,466 |
|
Deferred income taxes |
|
|
6,771 |
|
|
|
7,978 |
|
Other long-term liabilities |
|
|
2,464 |
|
|
|
3,106 |
|
Commitments and contingencies |
|
|
|
|
|
|
||
Stockholders’ equity: |
|
|
|
|
|
|
||
Convertible preferred stock, |
|
|
— |
|
|
|
— |
|
Common stock, |
|
|
151 |
|
|
|
149 |
|
Additional paid-in-capital |
|
|
1,253,296 |
|
|
|
1,220,379 |
|
Accumulated other comprehensive loss |
|
|
(19,354 |
) |
|
|
(15,483 |
) |
Accumulated deficit |
|
|
(945,084 |
) |
|
|
(941,962 |
) |
Treasury stock at cost, 18,219 and 18,219 shares, respectively |
|
|
(237,801 |
) |
|
|
(237,801 |
) |
Total stockholders’ equity |
|
|
51,208 |
|
|
|
25,282 |
|
Total liabilities and stockholders’ equity |
|
$ |
1,080,944 |
|
|
$ |
1,042,594 |
|
EXTREME NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) (Unaudited) |
||||||||||||||||
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
December 31,
|
|
|
December 31,
|
|
|
December 31,
|
|
|
December 31,
|
|
||||
Net revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Product |
|
$ |
172,261 |
|
|
$ |
186,611 |
|
|
$ |
334,545 |
|
|
$ |
440,094 |
|
Subscription and support |
|
|
107,094 |
|
|
|
109,766 |
|
|
|
214,014 |
|
|
|
209,420 |
|
Total net revenues |
|
|
279,355 |
|
|
|
296,377 |
|
|
|
548,559 |
|
|
|
649,514 |
|
Cost of revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Product |
|
|
72,604 |
|
|
|
81,493 |
|
|
|
142,006 |
|
|
|
190,029 |
|
Subscription and support |
|
|
31,628 |
|
|
|
31,514 |
|
|
|
61,923 |
|
|
|
63,179 |
|
Total cost of revenues |
|
|
104,232 |
|
|
|
113,007 |
|
|
|
203,929 |
|
|
|
253,208 |
|
Gross profit: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Product |
|
|
99,657 |
|
|
|
105,118 |
|
|
|
192,539 |
|
|
|
250,065 |
|
Subscription and support |
|
|
75,466 |
|
|
|
78,252 |
|
|
|
152,091 |
|
|
|
146,241 |
|
Total gross profit |
|
|
175,123 |
|
|
|
183,370 |
|
|
|
344,630 |
|
|
|
396,306 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Research and development |
|
|
54,883 |
|
|
|
52,833 |
|
|
|
109,334 |
|
|
|
110,849 |
|
Sales and marketing |
|
|
79,967 |
|
|
|
85,154 |
|
|
|
161,350 |
|
|
|
177,074 |
|
General and administrative |
|
|
26,064 |
|
|
|
25,384 |
|
|
|
62,665 |
|
|
|
49,257 |
|
Restructuring and related charges |
|
|
1,035 |
|
|
|
9,174 |
|
|
|
2,312 |
|
|
|
11,891 |
|
Amortization of intangible assets |
|
|
509 |
|
|
|
509 |
|
|
|
1,021 |
|
|
|
1,020 |
|
Total operating expenses |
|
|
162,458 |
|
|
|
173,054 |
|
|
|
336,682 |
|
|
|
350,091 |
|
Operating income |
|
|
12,665 |
|
|
|
10,316 |
|
|
|
7,948 |
|
|
|
46,215 |
|
Interest income |
|
|
839 |
|
|
|
1,430 |
|
|
|
1,685 |
|
|
|
2,656 |
|
Interest expense |
|
|
(4,179 |
) |
|
|
(4,269 |
) |
|
|
(8,601 |
) |
|
|
(8,587 |
) |
Other income (expense), net |
|
|
661 |
|
|
|
(420 |
) |
|
|
(60 |
) |
|
|
12 |
|
Income before income taxes |
|
|
9,986 |
|
|
|
7,057 |
|
|
|
972 |
|
|
|
40,296 |
|
Provision for income taxes |
|
|
2,604 |
|
|
|
3,069 |
|
|
|
4,094 |
|
|
|
7,632 |
|
Net income (loss) |
|
$ |
7,382 |
|
|
$ |
3,988 |
|
|
$ |
(3,122 |
) |
|
$ |
32,664 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic and diluted income (loss) per share: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income (loss) per share – basic |
|
$ |
0.06 |
|
|
$ |
0.03 |
|
|
$ |
(0.02 |
) |
|
$ |
0.25 |
|
Net income (loss) per share – diluted |
|
$ |
0.06 |
|
|
$ |
0.03 |
|
|
$ |
(0.02 |
) |
|
$ |
0.25 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Shares used in per share calculation – basic |
|
|
132,381 |
|
|
|
128,987 |
|
|
|
131,778 |
|
|
|
128,885 |
|
Shares used in per share calculation – diluted |
|
|
134,107 |
|
|
|
131,514 |
|
|
|
131,778 |
|
|
|
132,786 |
|
EXTREME NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) |
||||||||
|
|
Six Months Ended |
|
|||||
|
|
December 31,
|
|
|
December 31,
|
|
||
Cash flows from operating activities: |
|
|
|
|
|
|
||
Net income (loss) |
|
$ |
(3,122 |
) |
|
$ |
32,664 |
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
|
|
|
|
|
|
||
Depreciation |
|
|
7,804 |
|
|
|
9,485 |
|
Amortization of intangible assets |
|
|
2,251 |
|
|
|
3,064 |
|
Reduction in carrying amount of right-of-use asset |
|
|
4,894 |
|
|
|
5,891 |
|
Provision for credit losses |
|
|
27 |
|
|
|
82 |
|
Share-based compensation |
|
|
41,219 |
|
|
|
40,876 |
|
Deferred income taxes |
|
|
(987 |
) |
|
|
(21 |
) |
Provision (Benefit) for excess and obsolete inventory(1) |
|
|
(271 |
) |
|
|
16,043 |
|
Non-cash interest expense |
|
|
594 |
|
|
|
532 |
|
Other |
|
|
(801 |
) |
|
|
(2,481 |
) |
Changes in operating assets and liabilities: |
|
|
|
|
|
|
||
Accounts receivable, net |
|
|
(28,083 |
) |
|
|
69,915 |
|
Inventories(1) |
|
|
411 |
|
|
|
(80,595 |
) |
Prepaid expenses and other assets |
|
|
(9,969 |
) |
|
|
(7,850 |
) |
Accounts payable |
|
|
1,177 |
|
|
|
(12,263 |
) |
Accrued compensation and benefits |
|
|
16,995 |
|
|
|
(20,625 |
) |
Operating lease liabilities |
|
|
(5,375 |
) |
|
|
(6,444 |
) |
Deferred revenue |
|
|
17,421 |
|
|
|
48,272 |
|
Other current and long-term liabilities |
|
|
(4,067 |
) |
|
|
13,320 |
|
Net cash provided by operating activities |
|
|
40,118 |
|
|
|
109,865 |
|
Cash flows from investing activities: |
|
|
|
|
|
|
||
Capital expenditures |
|
|
(12,325 |
) |
|
|
(9,955 |
) |
Net cash used in investing activities |
|
|
(12,325 |
) |
|
|
(9,955 |
) |
Cash flows from financing activities: |
|
|
|
|
|
|
||
Net payments on revolving facility |
|
|
— |
|
|
|
(25,000 |
) |
Payments on debt obligations |
|
|
(5,000 |
) |
|
|
(5,000 |
) |
Payments on debt financing costs |
|
|
(695 |
) |
|
|
— |
|
Repurchase of common stock |
|
|
— |
|
|
|
(49,855 |
) |
Payments for tax withholdings, net of proceeds from issuance of common stock |
|
|
(8,300 |
) |
|
|
(33,387 |
) |
Net cash used in financing activities |
|
|
(13,995 |
) |
|
|
(113,242 |
) |
Foreign currency effect on cash and cash equivalents |
|
|
(175 |
) |
|
|
(91 |
) |
Net increase (decrease) in cash and cash equivalents |
|
|
13,623 |
|
|
|
(13,423 |
) |
|
|
|
|
|
|
|
||
Cash and cash equivalents at beginning of period |
|
|
156,699 |
|
|
|
234,826 |
|
Cash and cash equivalents at end of period |
|
$ |
170,322 |
|
|
$ |
221,403 |
|
|
|
|
|
|
|
|
||
(1) The prior period amounts have been reclassified to conform to the current period presentation
Extreme Networks, Inc.
Non-GAAP Measures of Financial Performance
To supplement the Company's consolidated financial statements presented in accordance with
Reconciliation to the nearest GAAP measure of all historical non-GAAP measures included in this press release can be found in the tables included with this press release.
Non-GAAP measures presented in this press release are not in accordance with or alternative measures prepared in accordance with GAAP and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. Non-GAAP measures have limitations in that they do not reflect all of the amounts associated with Extreme’s results of operations as determined in accordance with GAAP. These non-GAAP measures should only be used to evaluate Extreme’s results of operations in conjunction with the corresponding GAAP measures.
Extreme believes these non-GAAP measures, when shown in conjunction with the corresponding GAAP measures, enhance investors' and management's overall understanding of the Company's current financial performance and the Company's prospects for the future, including cash flows available to pursue opportunities to enhance stockholder value. In addition, because Extreme has historically reported certain non-GAAP results to investors, the Company believes the inclusion of non-GAAP measures provides consistency in the Company's financial reporting.
For its internal planning process, and as discussed further below, Extreme's management uses financial statements that do not include share-based compensation expense, amortization of intangibles, restructuring and related charges, system transition costs, litigation charges, debt refinancing charges and the tax effect of non-GAAP adjustments. Extreme’s management also uses non-GAAP measures, in addition to the corresponding GAAP measures, in reviewing the Company's financial results.
As described above, Extreme excludes the following items from one or more of its non-GAAP measures when applicable.
Share-based compensation. Consists of associated expenses for stock options, restricted stock awards and the Company’s Employee Stock Purchase Plan. Extreme excludes share-based compensation expenses from its non-GAAP measures primarily because they are non-cash expenses that the Company does not believe are reflective of ongoing cash requirement related to its operating results. Extreme expects to incur share-based compensation expenses in future periods.
Amortization of intangibles. Amortization of intangibles includes the monthly amortization expense of intangible assets such as developed technology, customer relationships, trademarks and order backlog. The amortization of the developed technology and order backlog are recorded in cost of goods sold, while the amortization for the other intangibles is recorded in operating expenses. Extreme excludes these expenses since they result from an intangible asset and for which the period expense does not impact the operations of the business and are non-cash in nature.
Restructuring and related charges. Restructuring and related charges consist of severance costs for employees, asset disposal costs and other charges related to excess facilities that do not provide economic benefit to our future operations. Extreme excludes restructuring expenses since they result from events that occur outside of the ordinary course of continuing operations.
System transition costs. System transition costs consist of costs related to direct and incremental costs incurred in connection with our multi-phase transition of our customer relationship management solution and our configure, price, quote solution. Extreme excludes these costs because we believe that these costs do not reflect future operating expenses and will be inconsistent in amount and frequency, making it difficult to contribute to a meaningful evaluation of our operating performance.
Litigation charges. Litigation charges consist of estimated settlement and related legal expenses for a non-recurring pending litigation offset by any proceeds received or expected to be received from insurance.
Debt refinancing charges. Debt refinancing charges consist of costs that were not capitalizable and are included in other income (expense), that occurred in conjunction with the amendment related to our outstanding credit facility.
Tax effect of non-GAAP adjustments. We calculate our non-GAAP provision for income taxes in accordance with the SEC guidance on non-GAAP Financial Measures Compliance and Disclosure Interpretation. We have assumed our
The non-GAAP provision for income taxes has typically been and is currently higher than the GAAP provision given the Company has a valuation allowance against its US and a portion of its Irish deferred tax assets due to historical losses. Once these valuation allowances are released, the non-GAAP and the GAAP provision for income taxes will be more closely aligned.
Over the next year, our cash taxes will be driven by US federal and state taxes and the tax expense of our foreign subsidiaries, which amounts have not historically been significant, with the exception of the Company’s Canadian, German and Indian subsidiaries which perform research and development and sales and marketing activities for the Company, as well as the Company’s Irish trading subsidiaries.
EXTREME NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS GAAP TO NON-GAAP RECONCILIATION (In thousands, except percentages and per share amounts) (Unaudited) |
|||||||||||||||
Revenues |
Three Months Ended |
Six Months Ended |
|
||||||||||||
|
December 31,
|
|
|
December 31,
|
|
|
December 31,
|
|
|
December 31,
|
|
||||
Revenues – GAAP |
$ |
279,355 |
|
|
$ |
296,377 |
|
|
$ |
548,559 |
|
|
$ |
649,514 |
|
Non-GAAP Gross Margin |
Three Months Ended |
Six Months Ended |
|
||||||||||||
|
December 31,
|
|
|
December 31,
|
|
|
December 31,
|
|
|
December 31,
|
|
||||
Gross profit – GAAP |
$ |
175,123 |
|
|
$ |
183,370 |
|
|
$ |
344,630 |
|
|
$ |
396,306 |
|
Gross margin – GAAP percentage |
|
62.7 |
% |
|
|
61.9 |
% |
|
|
62.8 |
% |
|
|
61.0 |
% |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
||||
Share-based compensation expense, Product |
|
680 |
|
|
|
464 |
|
|
|
1,298 |
|
|
|
947 |
|
Share-based compensation expense, Subscription and support |
|
798 |
|
|
|
749 |
|
|
|
1,487 |
|
|
|
1,615 |
|
Amortization of intangibles, Product |
|
589 |
|
|
|
593 |
|
|
|
1,195 |
|
|
|
1,737 |
|
Amortization of intangibles, Subscription and support |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
272 |
|
Total adjustments to GAAP gross profit |
$ |
2,067 |
|
|
$ |
1,806 |
|
|
$ |
3,980 |
|
|
$ |
4,571 |
|
Gross profit – non-GAAP |
$ |
177,190 |
|
|
$ |
185,176 |
|
|
$ |
348,610 |
|
|
$ |
400,877 |
|
Gross margin – non-GAAP percentage |
|
63.4 |
% |
|
|
62.5 |
% |
|
|
63.6 |
% |
|
|
61.7 |
% |
Non-GAAP Operating Margin |
Three Months Ended |
Six Months Ended |
|
||||||||||||
|
December 31,
|
|
|
December 31,
|
|
|
December 31,
|
|
|
December 31,
|
|
||||
GAAP operating income |
$ |
12,665 |
|
|
$ |
10,316 |
|
|
$ |
7,948 |
|
|
$ |
46,215 |
|
GAAP operating margin |
|
4.5 |
% |
|
|
3.5 |
% |
|
|
1.4 |
% |
|
|
7.1 |
% |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
||||
Share-based compensation expense, cost of revenues |
|
1,478 |
|
|
|
1,213 |
|
|
|
2,785 |
|
|
|
2,562 |
|
Share-based compensation expense, R&D |
|
4,467 |
|
|
|
4,435 |
|
|
|
8,680 |
|
|
|
8,812 |
|
Share-based compensation expense, S&M |
|
7,596 |
|
|
|
7,535 |
|
|
|
14,478 |
|
|
|
14,523 |
|
Share-based compensation expense, G&A |
|
7,911 |
|
|
|
7,774 |
|
|
|
15,276 |
|
|
|
14,979 |
|
Restructuring and related charges |
|
1,035 |
|
|
|
9,174 |
|
|
|
2,312 |
|
|
|
11,891 |
|
Litigation charges |
|
877 |
|
|
|
1,353 |
|
|
|
11,593 |
|
|
|
2,813 |
|
System transition costs |
|
4,026 |
|
|
|
1,030 |
|
|
|
9,371 |
|
|
|
1,599 |
|
Amortization of intangibles |
|
1,098 |
|
|
|
1,102 |
|
|
|
2,216 |
|
|
|
3,029 |
|
Total adjustments to GAAP operating income |
$ |
28,488 |
|
|
$ |
33,616 |
|
|
|
66,711 |
|
|
|
60,208 |
|
Non-GAAP operating income |
$ |
41,153 |
|
|
$ |
43,932 |
|
|
$ |
74,659 |
|
|
$ |
106,423 |
|
Non-GAAP operating margin |
|
14.7 |
% |
|
|
14.8 |
% |
|
|
13.6 |
% |
|
|
16.4 |
% |
Non-GAAP Net Income (Loss) |
Three Months Ended |
Six Months Ended |
|
||||||||||||
|
December 31,
|
|
|
December 31,
|
|
|
December 31,
|
|
|
December 31,
|
|
||||
GAAP net income (loss) |
$ |
7,382 |
|
|
$ |
3,988 |
|
|
$ |
(3,122 |
) |
|
$ |
32,664 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
||||
Share-based compensation expense |
|
21,452 |
|
|
|
20,957 |
|
|
|
41,219 |
|
|
|
40,876 |
|
Restructuring and related charges |
|
1,035 |
|
|
|
9,174 |
|
|
|
2,312 |
|
|
|
11,891 |
|
Litigation charges |
|
877 |
|
|
|
1,353 |
|
|
|
11,593 |
|
|
|
2,813 |
|
System transition costs |
|
4,026 |
|
|
|
1,030 |
|
|
|
9,371 |
|
|
|
1,599 |
|
Amortization of intangibles |
|
1,098 |
|
|
|
1,102 |
|
|
|
2,216 |
|
|
|
3,029 |
|
Debt refinancing charges, Other income (expense) |
|
— |
|
|
|
— |
|
|
|
79 |
|
|
|
— |
|
Tax effect of non-GAAP adjustments |
|
(7,297 |
) |
|
|
(6,129 |
) |
|
|
(12,695 |
) |
|
|
(14,857 |
) |
Total adjustments to GAAP net income (loss) |
$ |
21,191 |
|
|
$ |
27,487 |
|
|
$ |
54,095 |
|
|
$ |
45,351 |
|
Non-GAAP net income |
$ |
28,573 |
|
|
$ |
31,475 |
|
|
$ |
50,973 |
|
|
$ |
78,015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Earnings (Loss) per share |
|
|
|
|
|
|
|
|
|
|
|
||||
GAAP net income (loss) per share – diluted |
$ |
0.06 |
|
|
$ |
0.03 |
|
|
$ |
(0.02 |
) |
|
$ |
0.25 |
|
Non-GAAP net income (loss) per share – diluted |
$ |
0.21 |
|
|
$ |
0.24 |
|
|
$ |
0.38 |
|
|
$ |
0.59 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Shares used in net income (loss) per share – diluted: |
|
|
|
|
|
|
|
|
|
|
|
||||
GAAP Shares used in per share calculation – basic |
|
132,381 |
|
|
|
128,987 |
|
|
|
131,778 |
|
|
|
128,885 |
|
Potentially dilutive equity awards |
|
1,726 |
|
|
|
2,527 |
|
|
|
1,462 |
|
|
|
3,901 |
|
GAAP and Non-GAAP shares used in per share calculation – diluted |
|
134,107 |
|
|
|
131,514 |
|
|
|
133,240 |
|
|
|
132,786 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20250129573352/en/
Investor Relations
Stan Kovler
919/595-4196
Investor_relations@extremenetworks.com
Media Contact
Amy Aylward
603/952-5138
pr@extremenetworks.com
Source: Extreme Networks, Inc.
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