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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Extreme Networks Inc | NASDAQ:EXTR | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-0.22 | -1.99% | 10.81 | 10.78 | 10.84 | 11.14 | 10.79 | 10.96 | 2,163,275 | 21:16:33 |
Financial Results In-line With Previously Revised Second Quarter Outlook
Extreme Networks, Inc. (“Extreme”) (Nasdaq: EXTR) today released financial results for its second quarter ended December 31, 2023.
"The integration of AI, security and analytics into a single platform is a key differentiator for Extreme and helped drive 37% subscription ARR growth in the quarter. We enhance network security, visibility and performance through our AIOps and machine learning capabilities and Zero Trust security posture. With our One Network, One Cloud strategy, we make networking simple and flexible and help customers drive meaningful impact across their organizations. Meanwhile competitors in our space remain challenged by portfolio integration and rationalization," said Ed Meyercord, President and Chief Executive Officer.
"The networking industry, like much of IT, is exiting the final stage of the COVID-induced era of supply chain constraints, which is still impacting our business. As a result, our distributors and partners have lowered inventory purchases, which we expect to accelerate in the third quarter. We expect to emerge in the fourth quarter at a more normalized level of revenue and earnings. Our bookings trends and funnel of new opportunities are a better reflection of customer demand. We’re seeing stabilization across EMEA and growth in APAC. And, we remain focused on innovation with this week’s introduction of new Wi-Fi 7 access points and 4000 Series Universal Switches, which help highly distributed enterprise organizations improve network connectivity, security and application performance. These trends, and our expanded go to market opportunities, give us confidence that we are positioned for a return to meaningful growth in FY25," concluded Meyercord.
Kevin Rhodes, Executive Vice President and Chief Financial Officer, stated, "Despite lower revenue in the second quarter, we improved our gross margins and optimized our operating expenses to maintain a healthy operating margin profile during the quarter. In the third quarter, we expect higher sell-through than sell-in, which will have a more significant impact on our operating results. As a result, we plan to take cost actions to drive a recovery in EPS and cash flow. Heading into the fourth quarter, we are expecting improved sequential revenue growth based on our funnel and the seasonality of our business, led by the Education vertical. This will position us to deliver improved profitability and cash flow in FY25."
Fiscal Second Quarter Results:
Liquidity:
Recent Key Highlights:
Fiscal Q2 2024 Financial Metrics:
(in millions, except percentages and per share information)
GAAP Results
Three Months Ended
December 31, 2023
December 31, 2022
Change
Product
$
186.6
$
223.4
$
(36.8
)
Subscription and support*
109.8
94.9
14.9
Total net revenue
$
296.4
$
318.3
$
(21.9
)
Gross margin
61.9
%
57.1
%
4.8
%
Operating margin
3.5
%
7.4
%
(3.9
)%
Net income
$
4.0
$
17.9
$
(13.9
)
Net income per diluted share
$
0.03
$
0.13
$
(0.10
)
Non-GAAP Results
Three Months Ended
December 31, 2023
December 31, 2022
Change
Product
$
186.6
$
223.4
$
(36.8
)
Subscription and support*
109.8
94.9
14.9
Total net revenue
$
296.4
$
318.3
$
(21.9
)
Gross margin
62.5
%
58.5
%
4.0
%
Operating margin
14.8
%
14.9
%
(0.1
)%
Net income
$
31.5
$
36.5
$
(5.0
)
Net income per diluted share
$
0.24
$
0.27
$
(0.03
)
* Prior to fiscal 2024, subscription and support revenue was referred to as service and subscription revenue, however, the composition of subscription and support revenue has not been modified.
Extreme uses the non-GAAP free cash flow metric as a measure of operating performance. Free cash flow represents GAAP net cash provided by operating activities, less purchases of property, plant and equipment. 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, plant and equipment, 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, 2023
December 31, 2022
December 31, 2023
December 31, 2022
Cash flow provided by operations
$
34.3
$
70.6
$
109.9
$
120.3
Less: Property and equipment capital expenditures
(5.7
)
(3.1
)
(10.0
)
(6.3
)
Total free cash flow
$
28.6
$
67.5
$
99.9
$
114.0
SaaS ARR: Extreme uses SaaS annual recurring revenue (“SaaS ARR”) to identify the annual recurring revenue of XIQ 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 U.S. GAAP. SaaS ARR does not have a standardized meaning and therefore may not be comparable to similarly titled measures presented by other companies. SaaS ARR is not intended to be a replacement for forecasts of revenue.
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 minus gross debt, as shown in the table below (in millions):
Cash
Gross debt
Net cash (debt)
$
221.4
$
195.0
$
26.4
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 2024, ending March 31, 2024, the Company is targeting:
(in millions, except percentages and per share information)
Low-End
High-End
FQ3'24 Guidance – GAAP
Total net revenue
$
200.0
$
210.0
Gross margin
58.6
%
60.6
%
Operating margin
(33.7
)%
(29.2
)%
Earnings per share
$
(0.55
)
$
(0.50
)
Shares outstanding used in calculating GAAP EPS
129.0
129.0
FQ3’24 Guidance – Non-GAAP
Total net revenue
$
200.0
$
210.0
Gross margin
59.5
%
61.5
%
Operating margin
(13.4
)%
(9.8
)%
Earnings per share
$
(0.22
)
$
(0.17
)
Shares outstanding used in calculating non-GAAP EPS
129.0
129.0
The following table shows the GAAP to non-GAAP reconciliation for Q3 FY’24 guidance:
Gross Margin
Operating Margin
Earnings per Share
GAAP
58.6% - 60.6%
(33.7)% - (29.2)%
$(0.55) - $(0.50)
Estimated adjustments for:
Share-based compensation
0.6%
10.0% - 10.6%
0.16
Amortization of product intangibles
0.3%
0.3%
0.01
Amortization of non-product intangibles
—
0.3%
0.00
Restructuring
—
7.3% - 7.6%
0.12
Litigation charges
—
0.8%
0.01
System transition cost
—
0.7%
0.01
Tax adjustment
—
—
0.02
Non-GAAP
59.5% - 61.5%
(13.4)% - (9.8)%
$(0.22) - $(0.17)
The total of percentage rate changes may not equal the total change in all cases due to rounding.
For its Fiscal Q4'24, ending June 30, 2024, the Company is targeting:
No reconciliation of the forward-looking non-GAAP financial measure to the most directly comparable GAAP financial measure for Extreme’s Fiscal Q4’24 non-GAAP gross margin target and Fiscal Q4’24 non-GAAP operating margin target are included in this press release because, due to the high variability and difficulty in making accurate forecasts and projections of some of the excluded information, together with some of the excluded information not being ascertainable or accessible, Extreme is unable to quantify certain amounts that would be required to be included in the most directly comparable GAAP financial measure without unreasonable efforts.
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 2024 as well as the business outlook for the third quarter of fiscal 2024 ending March 31, 2024, 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 Q2'24 Earnings Registration Link) and you will be provided with dial in details. 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. Over 50,000 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 the United States and/or other countries. Other trademarks shown herein are the property of their respective owners.
Non-GAAP Financial Measures:
Extreme provides all financial information required in accordance with U.S. generally accepted accounting principles (“GAAP”). The Company is providing with this press release non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating margin, non-GAAP operating income, non-GAAP net income, non-GAAP net income per diluted share, net cash (debt) and non-GAAP free cash flow. In preparing non-GAAP information, the Company has excluded, where applicable, the impact of share-based compensation, acquisition and integration costs, amortization of intangibles, restructuring charges, system transition costs, litigation charges, and the tax effect of non-GAAP adjustments. The Company believes that excluding these items provides both management and investors with additional insight into its current operations, the trends affecting the Company, the Company's marketplace performance, and the Company's ability to generate cash from operations. Please note the Company’s non-GAAP measures may be different than those used by other companies. The additional non-GAAP financial information the Company presents should be considered in conjunction with, and not as a substitute for, the Company’s GAAP financial information.
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; and a dependency on third parties for certain components and for the manufacturing of the Company’s products.
More information about potential factors that could affect the Company's business and financial results are described in “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, 2023, Quarterly Report on Form 10-Q for the quarter ended September 30, 2023 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 U.S. federal securities laws and the rules and regulations of the U.S. Securities and Exchange Commission, Extreme disclaims any obligation to update any forward-looking statements after the date of this release, whether as a result of new information, future events, developments, changes in assumptions or otherwise.
EXTREME NETWORKS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
(Unaudited)
December 31, 2023
June 30, 2023
ASSETS
Current assets:
Cash and cash equivalents
$
221,403
$
234,826
Accounts receivable, net
112,047
182,045
Inventories
152,521
89,024
Prepaid expenses and other current assets
72,272
70,263
Total current assets
558,243
576,158
Property and equipment, net
47,598
46,448
Operating lease right-of-use assets, net
47,124
34,739
Intangible assets, net
13,104
16,063
Goodwill
395,606
394,755
Other assets
80,983
73,544
Total assets
$
1,142,658
$
1,141,707
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt, net of unamortized debt issuance costs of $675 and $674, respectively
$
9,325
$
34,326
Accounts payable
87,790
99,724
Accrued compensation and benefits
50,862
71,367
Accrued warranty
11,397
12,322
Current portion, operating lease liabilities
10,686
10,847
Current portion, deferred revenue
300,399
282,475
Other accrued liabilities
78,507
64,440
Total current liabilities
548,966
575,501
Deferred revenue, less current portion
247,777
219,024
Long-term debt, less current portion, net of unamortized debt issuance costs of $2,069 and $2,409, respectively
182,931
187,591
Operating lease liabilities, less current portion
43,852
31,845
Deferred income taxes
7,748
7,747
Other long-term liabilities
3,200
3,247
Commitments and contingencies
Stockholders’ equity:
Convertible preferred stock, $0.001 par value, issuable in series, 2,000 shares authorized; none issued
—
—
Common stock, $0.001 par value, 750,000 shares authorized; 146,843 and 143,629 shares issued, respectively; 128,624 and 127,775 shares outstanding, respectively
147
144
Additional paid-in-capital
1,181,230
1,173,744
Accumulated other comprehensive loss
(12,058
)
(13,192
)
Accumulated deficit
(823,334
)
(855,998
)
Treasury stock at cost, 18,219 and 15,854 shares, respectively
(237,801
)
(187,946
)
Total stockholders’ equity
108,184
116,752
Total liabilities and stockholders’ equity
$
1,142,658
$
1,141,707
EXTREME NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
Six Months Ended
December 31, 2023
December 31, 2022
December 31, 2023
December 31, 2022
Net revenues:
Product
$
186,611
$
223,445
$
440,094
$
429,721
Subscription and support
109,766
94,903
209,420
186,316
Total net revenues
296,377
318,348
649,514
616,037
Cost of revenues:
Product
81,493
103,587
190,029
203,350
Subscription and support
31,514
33,106
63,179
64,324
Total cost of revenues
113,007
136,693
253,208
267,674
Gross profit:
Product
105,118
119,858
250,065
226,371
Subscription and support
78,252
61,797
146,241
121,992
Total gross profit
183,370
181,655
396,306
348,363
Operating expenses:
Research and development
52,833
52,618
110,849
103,607
Sales and marketing
85,154
80,538
177,074
158,920
General and administrative
25,384
24,085
49,257
42,632
Acquisition and integration costs
—
—
—
390
Restructuring and related charges
9,174
476
11,891
957
Amortization of intangible assets
509
504
1,020
1,027
Total operating expenses
173,054
158,221
350,091
307,533
Operating income
10,316
23,434
46,215
40,830
Interest income
1,430
889
2,656
1,281
Interest expense
(4,269
)
(3,884
)
(8,587
)
(7,710
)
Other income (expense), net
(420
)
138
12
509
Income before income taxes
7,057
20,577
40,296
34,910
Provision for income taxes
3,069
2,646
7,632
4,394
Net income
$
3,988
$
17,931
$
32,664
$
30,516
Basic and diluted income per share:
Net income per share – basic
$
0.03
$
0.14
$
0.25
$
0.23
Net income per share – diluted
$
0.03
$
0.13
$
0.25
$
0.23
Shares used in per share calculation – basic
128,987
130,465
128,885
130,377
Shares used in per share calculation – diluted
131,514
134,453
132,786
133,833
EXTREME NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Six Months Ended
December 31, 2023
December 31, 2022
Cash flows from operating activities:
Net income
$
32,664
$
30,516
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation
9,485
9,983
Amortization of intangible assets
3,064
7,852
Reduction in carrying amount of right-of-use asset
5,891
6,240
Provision for doubtful accounts
82
102
Share-based compensation
40,876
31,185
Deferred income taxes
(21
)
65
Non-cash interest expense
532
764
Other
(2,481
)
(5,904
)
Changes in operating assets and liabilities:
Accounts receivable
69,915
31,944
Inventories
(64,552
)
(14,506
)
Prepaid expenses and other assets
(7,850
)
(6,557
)
Accounts payable
(12,263
)
2,164
Accrued compensation and benefits
(20,625
)
9,170
Operating lease liabilities
(6,444
)
(7,383
)
Deferred revenue
48,272
28,776
Other current and long-term liabilities
13,320
(4,074
)
Net cash provided by operating activities
109,865
120,337
Cash flows from investing activities:
Capital expenditures
(9,955
)
(6,271
)
Net cash used in investing activities
(9,955
)
(6,271
)
Cash flows from financing activities:
Payments on revolving facility
(25,000
)
—
Payments on debt obligations
(5,000
)
(46,625
)
Repurchase of common stock
(49,855
)
(49,803
)
Payments for tax withholdings, net of proceeds from issuance of common stock
(33,387
)
(7,183
)
Deferred payments on an acquisition
—
(2,000
)
Net cash used in financing activities
(113,242
)
(105,611
)
Foreign currency effect on cash and cash equivalents
(91
)
(456
)
Net increase (decrease) in cash and cash equivalents
(13,423
)
7,999
Cash and cash equivalents at beginning of period
234,826
194,522
Cash and cash equivalents at end of period
$
221,403
$
202,521
Extreme Networks, Inc. Non-GAAP Measures of Financial Performance
To supplement the Company's consolidated financial statements presented in accordance with U.S. generally accepted accounting principles (“GAAP”), Extreme uses non-GAAP measures of certain components of financial performance. These non-GAAP measures include non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating margin, non-GAAP operating income, non-GAAP net income, non-GAAP net income per diluted share, net cash (debt) and non-GAAP free cash flow.
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, acquisition and integration costs, amortization of intangibles, restructuring charges, system transition costs, litigation 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.
Acquisition and integration costs. Acquisition and integration costs consist of specified compensation charges, software charges, and legal and professional fees related to the acquisition of Ipanema. Extreme excludes these expenses since they result from an event that is outside the ordinary course of continuing operations.
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 charges. Restructuring 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.
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 U.S. federal and state net operating losses would have been fully consumed by the historical non-GAAP financial adjustments, eliminating the need for a full valuation allowance against our U.S. deferred tax assets which, consequently, enables our use of research and development tax credits. The non-GAAP tax provision consists of current and deferred income tax expense commensurate with the non-GAAP measure of profitability using our blended U.S. statutory tax rate of 24.6%.
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 Indian subsidiary which performs research and development activities, 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, 2023
December 31, 2022
December 31, 2023
December 31, 2022
Revenues – GAAP
$
296,377
$
318,348
$
649,514
$
616,037
Non-GAAP Gross Margin
Three Months Ended
Six Months Ended
December 31, 2023
December 31, 2022
December 31, 2023
December 31, 2022
Gross profit – GAAP
$
183,370
$
181,655
$
396,306
$
348,363
Gross margin – GAAP percentage
61.9
%
57.1
%
61.0
%
56.5
%
Adjustments:
Share-based compensation expense, Product
464
499
947
873
Share-based compensation expense, Subscription and support
749
966
1,615
1,638
Amortization of intangibles, Product
593
2,388
1,737
5,161
Amortization of intangibles, Subscription and support
—
815
272
1,629
Total adjustments to GAAP gross profit
$
1,806
$
4,668
$
4,571
$
9,301
Gross profit – non-GAAP
$
185,176
$
186,323
$
400,877
$
357,664
Gross margin – non-GAAP percentage
62.5
%
58.5
%
61.7
%
58.1
%
Non-GAAP Operating Income
Three Months Ended
Six Months Ended
December 31, 2023
December 31, 2022
December 31, 2023
December 31, 2022
GAAP operating income
$
10,316
$
23,434
$
46,215
$
40,830
GAAP operating income percentage
3.5
%
7.4
%
7.1
%
6.6
%
Adjustments:
Share-based compensation expense, cost of revenues
1,213
1,465
2,562
2,511
Share-based compensation expense, R&D
4,435
3,962
8,812
7,052
Share-based compensation expense, S&M
7,535
5,910
14,523
10,549
Share-based compensation expense, G&A
7,774
6,059
14,979
11,073
Acquisition and integration costs
—
—
—
390
Restructuring charges
9,174
476
11,891
957
Litigation charges
1,353
2,324
2,813
2,324
System transition costs
1,030
—
1,599
—
Amortization of intangibles
1,102
3,707
3,029
7,817
Total adjustments to GAAP operating income
33,616
23,903
60,208
42,673
Non-GAAP operating income
$
43,932
$
47,337
$
106,423
$
83,503
Non-GAAP operating income percentage
14.8
%
14.9
%
16.4
%
13.6
%
Non-GAAP Net Income
Three Months Ended
Six Months Ended
December 31, 2023
December 31, 2022
December 31, 2023
December 31, 2022
GAAP net income
$
3,988
$
17,931
$
32,664
$
30,516
Adjustments:
Share-based compensation expense
20,957
17,396
40,876
31,185
Acquisition and integration costs
—
—
—
390
Restructuring charge, net of reversal
9,174
476
11,891
957
Litigation charges
1,353
2,324
2,813
2,324
System transition costs
1,030
—
1,599
—
Amortization of intangibles
1,102
3,707
3,029
7,817
Tax effect of non-GAAP adjustments
(6,129
)
(5,354
)
(14,857
)
(9,622
)
Total adjustments to GAAP net income
$
27,487
$
18,549
$
45,351
$
33,051
Non-GAAP net income
$
31,475
$
36,480
$
78,015
$
63,567
Earnings per share
GAAP net income per share – diluted
$
0.03
$
0.13
$
0.25
$
0.23
Non-GAAP net income per share – diluted
$
0.24
$
0.27
$
0.59
$
0.47
Shares used in net income per share – diluted:
GAAP Shares used in per share calculation – basic
128,987
130,465
128,885
130,377
Potentially dilutive equity awards
2,527
3,988
3,901
3,456
GAAP and Non-GAAP shares used in per share calculation – diluted
131,514
134,453
132,786
133,833
View source version on businesswire.com: https://www.businesswire.com/news/home/20240131371784/en/
Investor Relations Stan Kovler 919/595-4196 Investor_relations@extremenetworks.com
Media Contact Amy Aylward 603/952-5138 pr@extremenetworks.com
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