Extreme Networks, Inc. · NASDAQ:EXTR
Extreme Networks — Q1 FY2022 Earnings Presentation
27 slides from Extreme Networks's earnings presentation, Nov 2, 2021
Slide 1: FQ1'22 Financial Results
EXTREME NETWORKS EXTREME NETWORKS FQ1’22 Financial Results November 2, 2021
Slide 2: Cautionary Statement on Financial Measures
Cautionary Statement on Financial Measures Non-GAAP Measures: Forward-Looking Statements: In preparing the accompanying information Extreme Networks This presentation contains forward-looking statements Inc. (the “Company”) has excluded, where applicable, the including, but not limited to: the expec
Slide 3: FQ1'22 Financial Results
FQ1’22 Financial Results ©2021 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 3
Slide 4: Q1 2022 Results Summary
Q1 2022 Results Summary Double-Digit Growth Fueled by Strong Demand and Execution Continued Strong Growth Cloud SaaS Subscriptions Robust Profitability and Free Cash Flow • Sustained Double-Digit Y/Y • Total Subscription Bookings Bookings Growth of 45% with Growth of 71% Y/Y • Record GAAP and Non-GA
Slide 5: FQ1'22 Highlights
FQ1’22 Highlights CLOUD ADOPTION Driving Growth PROFITABILITY & CASH FLOW SaaS ARR2 $78M Non-GAAP Gross Margin %1 60.3 % Backlog >$200M Recurring $122M Total Revenue Non-GAAP Operating Non- GAAP Revenue 29% SaaS Deferred Growth (Y/Y %) 13.5% Margin %1 EPS ($) 1 Revenue2 10.9% 13.8% $0.21 Product Rev
Slide 6: Vertical Trends
Vertical Trends Strong double-digit growth across nearly all major verticals Extreme Exposure Demand Outlook Tailwinds Headwinds Strong seasonality in Education Budget approvals will dictate future supported by E-rate, Higher Ed and spending increases Government ~40% State/Local Gov’t globally & Edu
Slide 7: Fiscal Q1'22 Product Highlights
Fiscal Q1’22 Product Highlights New Universal Platforms CoPilot Public Beta Start ExtremeCloudTM IQ-Site Engine Mid-tier Universal 5420 GA ExtremeCloud IQ API Phase 3 Mobile App 3.0 Enhancements • Wired Client visibility • Wireless Highlights Foundational Elements Universal Onboarding & D360 ©2021 E
Slide 8: GAAP Financial Highlights – Financial Operations
GAAP Financial Highlights – Financial Operations (In M’s except percentages and EPS) Quarter FQ1'21 FQ4'21 FQ1'22 GAAP Product Revenue $161.4 $195.8 $185.2 Services Revenue $74.4 $82.3 $82.5 Total Revenue $235.8 $278.1 $267.7 Total GM % 57.3% 57.9% 58.1% Operating Income (Loss) $ ($0.1) $17.6 $18.3
Slide 9: Non-GAAP Financial Highlights – Financial Operations
Non-GAAP Financial Highlights – Financial Operations (In M’s except percentages and EPS) Quarter FQ1'21 FQ4'21 FQ1'22 1 Non-GAAP Product Revenue $161.4 $195.8 $185.2 Services Revenue $74.4 $82.3 $82.5 Total Revenue $235.8 $278.1 $267.7 Total GM % 60.3% 60.5% 60.3% Operating Income $ $19.7 $37.4 $37.
Slide 10: Quarterly Results of Operations
Quarterly Results of Operations (In M’s except percentages and EPS) Total Revenue Gross Profit - GAAP vs Non-GAAP $300M $180M 66% $160M 64% $250M $140M 62% $200M $120M 60% $100M 58% $150M $80M 56% $100M $60M 54% $40M 52% $50M $20M 50% $0M $0M 48% 2021 Q 1 2021 Q 2 2021 Q 3 2021 Q 4 2022 Q 1 2021 Q 1
Slide 11: Quarterly Results of Operations
Quarterly Results of Operations (In M’s except percentages and EPS) Operating Expenses - GAAP vs Non-GAAP EPS - GAAP vs Non-GAAP $140M 75% $0.40 70% $0.30 $120M 65% $0.20 $100M 60% $0.10 $80M 55% $0.00 $60M 50% -$0.10 $40M 45% -$0.20 $20M 40% -$0.30 $0M 35% -$0.40 2021 Q 1 2021 Q 2 2021 Q 3 2021 Q 4
Slide 12: Revenue by Geography
Revenue by Geography (In M’s except percentages and EPS) $13M $6M $183M $88M $84M $52M $82M $26M $19M $267M $135M $113M ©2021 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 12
Slide 13: Revenue by Type and by Geography
Revenue by Type and by Geography (In M’s except percentages and EPS) Total Revenue by Type Americas Revenue - Product vs Service $300M $175M 90% $150M 80% $250M $125M 70% $200M $100M 60% $150M $75M 50% $100M $50M 40% $50M $25M 30% $0M 20% $0M 2021 Q1 2021 Q2 2021 Q3 2021 Q4 2022 Q1 2021 Q1 2021 Q2 2
Slide 14: Revenue by Type and by Geography Cont.
Revenue by Type and by Geography Cont. (In M’s except percentages and EPS) EMEA Revenue - Product vs Service APAC Revenue - Product vs Service $120M 60% $30M 30% $100M 50% $25M 25% $80M 40% $20M 20% $60M 30% $15M 15% $40M 20% $10M 10% $20M 10% $5M 5% $0M 0% 2021 Q1 2021 Q2 2021 Q3 2021 Q4 2022 Q1 $0
Slide 15: Financial Highlights – Balance Sheet
Financial Highlights – Balance Sheet (In M’s except percentages and EPS) Balance Sheet Highlights FQ1'21 FQ4'21 FQ1'22 Cash $193.1 $246.9 $191.3 Accounts Receivable $123.6 $156.5 $129.6 Inventories $55.8 $32.9 $32.4 Accounts Payables $59.4 $60.1 $63.4 Gross Debt* $396.0 $346.8 $330.0 Net Debt** $202
Slide 16: Non-GAAP Free Cash Flow
Non-GAAP Free Cash Flow (In $M’s) Extreme uses the non-GAAP free cash flow metric as a measure of things, invest in Extreme’s business, make strategic acquisitions, operating performance. Free cash flow represents GAAP net cash and strengthen the balance sheet. A limitation of the utility of the pro
Slide 17: Appendices
EXTREME NETWORKS Appendices - GAAP to Non-GAAP Reconciliations Note: The totals for some periods may not foot due to rounding. Please see press release for full reconciliation.
Slide 18: Historical SaaS Disclosures
Historical SaaS Disclosures SaaS ARR & SaaS Deferred Ending Revenue (In $M’s except percentages) Ending SaaS ARR1 SaaS Ending Deferred Revenue2 $78 $122 $68 $112 $61 $99 $55 $91 $51 $85 2021 Q1 2021 Q2 2021 Q3 2021 Q4 2022 Q1 2021 Q1 2021 Q2 2021 Q3 2021 Q4 2022 Q1 1 SaaS Annual Recurring Revenue (A
Slide 19: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Revenue & Gross Margin (In M’s except percentages) Quarter FQ1'21 FQ4'21 FQ1'22 Product Revenue $ 161.4 $ 195.8 $ 185.2 Service Revenue 74.4 82.3 82.5 Total Revenue - GAAP $ 235.8 $ 278.1 $ 267.7 Gross Margin - GAAP 135.0 161.1 155.6 Gross Margin % - GAAP 57.3% 57.9%
Slide 20: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Operating Income (Loss) (In M’s except percentages) Quarter FQ1'21 FQ4'21 FQ1'22 Operating Income (Loss) - GAAP $ (0.1) $ 17.6 $ 18.3 Operating Margin- GAAP (0.0%) 6.3% 6.9% Amortization of Product Intangibles 6.6 6.4 5.2 Total Share-Based Compensation 8.3 11.5 10.4
Slide 21: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Net Income (Loss) (In $M’s except EPS) Quarter FQ1'21 FQ4'21 FQ1'22 Net Income (Loss) - GAAP $ (8.8) $ 10.3 $ 12.7 Shares - GAAP 121.7 132.4 133.2 EPS - GAAP (Dilluted ) $ (0.07) $ 0.08 $ 0.10 Amortization of Product Intangibles 6.6 6.4 5.2 Total Share-Based Compensa
Slide 22: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations EBITDA (In $M’s) Quarter FQ1'21 FQ4'21 FQ1'22 Net Income (Loss) - GAAP $ (8.8) $ 10.3 $ 12.7 Interest 6.5 $ 4.5 $ 3.8 Provision for Income Taxes 1.3 $ 2.7 $ 2.1 Depreciation/Amortization 15.2 $ 13.0 $ 11.6 EBITDA - GAAP 14.3 30.5 30.2 Net Non-GAAP Adjustments 19.8 14
Slide 23: FQ2'22 Financial Guidance
FQ2’22 Financial Guidance ©2021 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 23
Slide 24: FQ2'22 Guidance – GAAP
FQ2’22 Guidance – GAAP (In M’s except percentages and EPS) FQ2’22 FQ1’22 Guidance Revenue ($M) $267.7 $265.0 - $280.0 Gross Margin % 58.1% 55.4% - 57.5% Net Income $12.7 $0.00 – $11.9 EPS $0.10 $0.00 – $0.09 ©2021 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 24
Slide 25: FQ2'22 Guidance – Non-GAAP
FQ2’22 Guidance – Non-GAAP (In M’s except percentages and EPS) FQ2’22 FQ1’22 Guidance Revenue ($M) $267.7 $265.0 - $280.0 Gross Margin % 60.3% 57.0% - 59.0% Net Income $28.0 $18.4-$28.9 EPS $0.21 $0.14 – $0.21 ©2021 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 25
Slide 26: FQ2'22 Guidance - GAAP to Non-GAAP Reconciliation
FQ2’22 Guidance - GAAP to Non-GAAP Reconciliation Operating Margin Gross Margin Rate Earnings per Share Rate GAAP 55.4% - 57.5% 2.3%-6.4% $0.00-$0.09 Estimated Adjustments for: Amortization of Product Intangibles 1.0% 1.0% $0.02 Share-Based Compensation 0.3% 4.1% $0.08 Restructuring Charges, net - 0
Slide 27: ©2021 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED.
©2021 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 27