Extreme Networks Reports Fourth Quarter and Fiscal Year 2024 Financial Results

Extreme Networks, Inc., a global leader in cloud-driven networking solutions, has released its financial results for the fourth quarter and fiscal year ending June 30, 2024. The company reported significant developments in revenue, earnings, and strategic initiatives, reflecting its ongoing efforts to navigate market challenges and capitalize on growth opportunities.

Financial Highlights

For the fourth quarter of fiscal year 2024, Extreme Networks reported:

• Revenue of $256.7 million, a decrease of 29% year-over-year but an increase of 22% quarter-over-quarter.
• SaaS Annual Recurring Revenue (ARR) of $167.0 million, up 29% year-over-year.
• GAAP Loss Per Share of $0.42, compared to GAAP diluted EPS of $0.19 in the prior year quarter.
• Non-GAAP Loss Per Share of $0.08, compared to Non-GAAP diluted EPS of $0.33 in the prior year quarter.
• GAAP gross margin of 44.7%, down from 58.9% in the prior year quarter.
• Non-GAAP gross margin of 45.4%, down from 60.2% in the prior year quarter.

For the full fiscal year 2024, the company reported:

• Revenue of $1,117.2 million, a decrease of 15% year-over-year.
• GAAP Loss Per Share of $0.65, compared to diluted EPS of $0.58 in the prior year.
• Non-GAAP diluted EPS of $0.32, compared to $1.09 in the prior year.
• GAAP gross margin of 56.5%, compared to 57.5% in the prior year.
• Non-GAAP gross margin of 57.2%, compared to 58.9% in the prior year.

Business and Operational Highlights

Extreme Networks has made significant strides in its business operations, including:

• Forming a co-innovation alliance with Intel to enhance AI capabilities within Extreme’s AI Expert for network management.
• Completing the rollout of a new high-speed Wi-Fi network at Liverpool Football Club’s Anfield Stadium with Verizon Business.
• Deploying a new Fabric-enabled wired and wireless network at the Amman Stock Exchange in Jordan.
• Reimagining public infrastructure for the City of Prescott, Arizona, to support innovation and growth.
• Partnering with ebm-papst, a leading manufacturer of fans and motors, to advance IT operations using Extreme’s solutions.

Strategic Initiatives and Corporate Developments

Key strategic initiatives and corporate developments include:

• Recording an additional provision for excess and obsolete inventory of $46.5 million in Q4 and $64.5 million during fiscal 2024.
• Optimizing distributor inventory to better reflect end customer demand trends.
• Targeting non-GAAP double-digit operating margins and strengthening cash flow for fiscal 2025.

Management's Perspective

Ed Meyercord, President and CEO, expressed optimism about the company's growth opportunities, citing the convergence of cloud networking, generative AI, and security as key drivers. He highlighted the company's strong leadership position and innovation as factors that resonate with enterprise customers and channel partners.

Kevin Rhodes, CFO, emphasized the actions taken to reserve end-of-sale inventory and position new products for growth in fiscal 2025. He noted the company's improved distributor inventory position and the expectation of progressively improving gross margins throughout the fiscal year.

Future Outlook

For the first quarter of fiscal 2025, ending September 30, 2024, Extreme Networks is targeting:

• Total net revenue between $255.0 million and $265.0 million.
• GAAP gross margin between 61.2% and 63.2%.
• Non-GAAP gross margin between 62.0% and 64.0%.
• GAAP operating margin between (5.3%) and (2.3%).
• Non-GAAP operating margin between 7.8% and 10.4%.
• GAAP earnings (loss) per share between ($0.14) and ($0.09).
• Non-GAAP earnings per share between $0.10 and $0.14.

For the full fiscal year 2025, the company is targeting total net revenue between $1,110.0 million and $1,135.0 million.

SEC Filing: EXTREME NETWORKS INC [ EXTR ] - 8-K - Aug. 07, 2024