Extreme Networks, Inc. · NASDAQ:EXTR
Extreme Networks — Q4 FY2010 Earnings Presentation
22 slides from Extreme Networks's earnings presentation, Aug 2, 2010
Slide 1: Q4 FY2010 Financial Results Slides
© 2010 Extreme Networks Inc. All rights reserved Q4 FY2010 Financial Results Slides Bob L. Corey - SVP/CFO and Acting CEO Mike Seaton – VP WW Sales and Customer Support August 2, 2010 Exhibit 99.2
Slide 2: Risk on Forward-Looking Statements
© 2010 Extreme Networks Inc. All rights reserved Risk on Forward-Looking Statements This presentation contains forward-looking statements that involve risks and uncertainties, including statements regarding the Company’s financial performance, acceptance of the Company’s newer products in the market
Slide 3: Cautionary Statement on Pro Forma Results
© 2010 Extreme Networks Inc. All rights reserved Cautionary Statement on Pro Forma Results With the exception of revenue and the number of shares outstanding, all of the charts that follow refer to non-GAAP operating results unless stated otherwise. Non-GAAP operating results exclude the effective r
Slide 4: Our Vision
© 2010 Extreme Networks Inc. All rights reserved Our Vision A fully connected world enabled by Ethernet everywhere.
Slide 5: Our Mission
© 2010 Extreme Networks Inc. All rights reserved Our Mission Deliver high performance, innovative products and superior services to ensure the success of our customers & partners.
Slide 6: Pro Forma Financial Highlights
© 2010 Extreme Networks Inc. All rights reserved Q4’09 Q1’10 Q2’10 Q3’10 Q4’10 Product 64.8 50.8 64.5 63.2 70.6 Service 16.5 15.6 14.9 15.0 14.8 Total Revenue ($M) 81.3 66.3 79.4 78.2 85.5 Gross Margin (%) 56.8% 55.7% 58.0% 58.3% 57.4% Research & Development ($M) 13.3 13.2 11.8 10.9 11.7 Sales & Mar
Slide 7: Q4FY10 Revenue Results
© 2010 Extreme Networks Inc. All rights reserved Q4FY10 Revenue Results Total revenue up 9% sequentially and up 5% year over year Product revenue up 12% sequentially and up 9% year over year Americas product revenue up 17% sequentially due to strong sales in education market and pickup in wireless E
Slide 8: Supply Chain Management
© 2010 Extreme Networks Inc. All rights reserved Supply Chain Management Inventory investment decreased from $23.6 to $21.8 million quarter over quarter Turnover at 6X Continued improvements to integrate sales forecasting and materials requirements planning Continuous Supply Chain engagement
Slide 9: Q4FY10 Sales by Geography
© 2010 Extreme Networks Inc. All rights reserved Q4FY10 Sales by Geography Total Americas revenue up 11% sequentially and 4% year over year; product revenue increased 17% sequentially and 11% year over year EMEA total revenue increased 18% sequentially and 16.5% year over year; product revenue up 22
Slide 10: Q4FY10 Revenue Trends
© 2010 Extreme Networks Inc. All rights reserved Q4FY10 Revenue Trends 40.0 50.0 60.0 70.0 80.0 90.0 Q309 Q409 Q110 Q210 Q310 Q410 Fiscal Quarter Total Revenue Product Service
Slide 11: Q4 FY10 Revenue Trends
© 2010 Extreme Networks Inc. All rights reserved Q4 FY10 Revenue Trends 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0 Q409 Q110 Q210 Q310 Q410 Fiscal Quarter Asia EMEA Americas
Slide 12: Revenue Breakdown by Geography
© 2010 Extreme Networks Inc. All rights reserved 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410 Service Revenue Asia EMEA Americas 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410 Total Revenue Asia EMEA Americas 0% 10% 20% 30%
Slide 13: Enterprise/Service Provider Bookings and Stackable/Modular Revenue Trend
© 2010 Extreme Networks Inc. All rights reserved 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Q3'07 Q4'07 Q1'08 Q2'08 Q3'08 Q4'08 Q1'09 Q2'09 Q3'09 Q4'09 Q1'10 Q2'10 Q3'10 Q4'10 Enterprise % Service Provider % Enterprise/Service Provider Bookings and Stackable/Modular Revenue Trend 0% 10% 20% 30% 40%
Slide 14: Q4FY10 Margins
© 2010 Extreme Networks Inc. All rights reserved Q4FY10 Margins
Slide 15: Gross Margin Trends
© 2010 Extreme Networks Inc. All rights reserved Gross Margin Trends Q409 Q110 Q210 Q310 Q410 Product GM % 55.3% 53.4% 58.0% 58.0% 57.4% Service GM % 62.5% 63.0% 57.9% 59.8% 57.6% Total GM% 56.8% 55.7% 58.0% 58.3% 57.4% 40.0% 50.0% 60.0% 70.0% ProForma Gross Margin Trends
Slide 16: Q4FY10 Operating Expenses
© 2010 Extreme Networks Inc. All rights reserved Q4FY10 Operating Expenses Sales & Marketing up $1.2M from prior quarter due to higher commissions R&D up $700k from prior quarter driven by timing of project development cost G&A up $700k from prior quarter due to higher fees related to litigation
Slide 17: Operating Expense Trend
© 2010 Extreme Networks Inc. All rights reserved Operating Expense Trend Q409 Q110 Q210 Q310 Q410 R&D Exp 13.3 13.2 11.8 10.9 11.7 S&M 22.8 21.3 23.9 24.2 25.3 G&A 7.0 6.9 6.1 5.7 6.4 % of Revenue 53.0% 62.4% 52.6% 52.2% 50.8% 40.0% 45.0% 50.0% 55.0% 60.0%
Slide 18: Q4 FY10 Balance Sheet Metrics
© 2010 Extreme Networks Inc. All rights reserved Q4’09 Q1’10 Q2’10 Q3’10 Q4’10 Cash & Investments ($M) 127.4 130.7 135.4 127.9 132.4 Cash Flow from Operations ($M) 8.7 4.1 6.1 (7.2)* 6.3 Accts Receivable ($M) 37.6 36.2 40.6 36.6 42.1 DSO Inventory ($M) 12.4 16.2 16.6 23.6 21.8 EBITDA – Pro-Forma 4.8
Slide 19: Q1 FY11 Guidance
© 2010 Extreme Networks Inc. All rights reserved Q1 FY11 Guidance Total Q1 revenue of $81-$84 million Total Gross Margin of 57% - 59% Pro-Forma Operating Income of $3.5M-$6.0M EPS of $.04 to $.06
Slide 20: Financial Model
© 2010 Extreme Networks Inc. All rights reserved Financial Model Gross Margin of 57%-59% Research & Development of 13%-14% Sales & Marketing of 25%-26% General & Administrative of 7%-8% Operating Income of ~11%
Slide 21: GAAP to NON-GAAP Reconciliation
© 2010 Extreme Networks Inc. All rights reserved GAAP to NON-GAAP Reconciliation June 27, June 28, June 27, June 28, 2010 2009 2010 2009 Net income - GAAP Basis 3,412 $ $ $ 2,815 $ Non-GAAP adjustments Stock-based compensation expense 1,664 $ 1,224 $ 6,235 $ 3,854 $ Restructuring charge 4,238 2,245
Slide 22: Thank you
© 2010 Extreme Networks Inc. All rights reserved Thank you