Extreme Networks, Inc. · NASDAQ:EXTR
Extreme Networks — Q3 FY2022 Earnings Presentation
26 slides from Extreme Networks's earnings presentation, Apr 27, 2022
Slide 1: FQ3'22 Financial Results
EXTREME NETWORKS EXTREME NETWORKS FQ3'22 Financial Results April 27, 2022
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: FQ3'22 Financial Results
FQ3’22 Financial Results ©2022 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 3
Slide 4: Q3 2022 Results Summary
Q3 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 Growth of 85% Y/Y • Fifth Consecutive Quarters with >2
Slide 5: FQ3'22 Highlights
FQ3’22 Highlights CLOUD ADOPTION Driving Growth PROFITABILITY & CASH FLOW SaaS ARR2 $97M Non-GAAP Gross Margin %1 58.0 % Product $425M+ Backlog Recurring $143M Total Revenue Non-GAAP Operating Non- GAAP Revenue 28% SaaS Deferred Growth (Y/Y %) 12.7% Margin %1 EPS ($) 1 Revenue2 10.9% 12.5% $0.21 Pro
Slide 6: Vertical Trends
Vertical Trends Strong double-digit growth across nearly all major verticals Extreme Exposure Demand Outlook Tailwinds Headwinds Strong Government spending, and E-rate spending cycle may be stabilizing growth in Education, supported by Government ~35% Higher Ed and K-12, driving demand & Education R
Slide 7: GAAP Financial Highlights – Financial Operations
GAAP Financial Highlights – Financial Operations (In M’s except percentages and EPS) Quarter FQ3'21 FQ2'22 FQ3'22 GAAP Product Revenue $176.3 $191.1 $198.4 Services Revenue $77.1 $89.8 $87.1 Total Revenue $253.4 $280.9 $285.5 Total GM % 58.7% 56.5% 56.5% Operating Income $ $11.2 $18.1 $17.3 Operatin
Slide 8: Non-GAAP Financial Highlights – Financial Operations
Non-GAAP Financial Highlights – Financial Operations (In M’s except percentages and EPS) Quarter FQ3'21 FQ2'22 FQ3'22 1 Non-GAAP Product Revenue $176.3 $191.1 $198.4 Services Revenue $77.1 $89.8 $87.1 Total Revenue $253.4 $280.9 $285.5 Total GM % 61.5% 58.2% 58.0% Operating Income $ $28.6 $36.7 $35.
Slide 9: Quarterly Results of Operations
Quarterly Results of Operations (In M’s except percentages) ©2022 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 9
Slide 10: Quarterly Results of Operations
Quarterly Results of Operations (In M’s except percentages and EPS) ©2022 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 10
Slide 11: Revenue by Geography
Revenue by Geography (In M’s except percentages) $10M $6M $110M $198M $78M $29M $88M $53M $16M $139M $286M $131M ©2022 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 11
Slide 12: Financial Highlights – Balance Sheet
Financial Highlights – Balance Sheet (In M’s except days) Balance Sheet Highlights FQ3'21 FQ2'22 FQ3'22 Cash $203.1 $173.5 $166.6 Accounts Receivable $130.6 $133.3 $163.0 Inventories $43.9 $37.2 $37.7 Accounts Payables $57.2 $58.8 $68.5 Gross Debt* $351.5 $322.9 $315.8 Net Debt** $148.4 $149.4 $149.
Slide 13: 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 14: 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 15: Historical SaaS Disclosures
Historical SaaS Disclosures SaaS ARR & SaaS Deferred Ending Revenue (In $M’s) 1 SaaS Annual Recurring Revenue (ARR): Extreme uses SaaS annual recurring revenue (“SaaS ARR”) to identify the annual recurring value of customer contracts at the end of a reporting period. SaaS ARR represents the projecte
Slide 16: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Revenue & Gross Margin (In M’s except percentages) Quarter FQ3'21 FQ2'22 FQ3'22 Product Revenue $ 176.3 $ 191.1 $ 198.4 Service Revenue 77.1 89.8 87.1 Total Revenue - GAAP $ 253.4 $ 280.9 $ 285.5 Gross Margin - GAAP 148.8 158.8 161.4 Gross Margin % - GAAP 58.7% 56.5%
Slide 17: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Operating Income (In M’s except percentages) Quarter FQ3'21 FQ2'22 FQ3'22 Operating Income - GAAP $ 11.2 $ 18.1 $ 17.3 Operating Margin- GAAP 4.4% 6.4% 6.1% Amortization of Product Intangibles 6.4 4.1 3.6 Total Share-Based Compensation 9.2 11.3 10.9 Restructuring Cha
Slide 18: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Net Income (In $M’s except EPS) Quarter FQ3'21 FQ2'22 FQ3'22 Net Income - GAAP $ 3.5 $ 13.3 $ 12.8 Shares - GAAP 130.0 133.6 133.4 EPS - GAAP (Diluted ) $ 0.03 $ 0.10 $ 0.10 Amortization of Product Intangibles 6.4 4.1 3.6 Total Share-Based Compensation 9.2 11.3 10.9
Slide 19: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations EBITDA (In $M’s) Quarter FQ3'21 FQ2'22 FQ3'22 Net Income - GAAP $ 3.5 $ 13.3 $ 12.8 Interest $ 5.5 $ 3.0 $ 2.7 Provision for Income Taxes $ 2.4 $ 1.8 $ 1.9 Depreciation/Amortization $ 13.2 $ 10.1 $ 9.3 EBITDA - GAAP 24.6 28.2 26.7 Net Non-GAAP Adjustments 17.2 15.1 1
Slide 20: FQ4'22 Financial Guidance
FQ4’22 Financial Guidance ©2022 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 20
Slide 21: FQ4'22 Guidance – GAAP
FQ4’22 Guidance – GAAP (In M’s except percentages and EPS) FQ4’22 FQ3’22 Guidance Revenue ($M) $285.5 $265.0 - $275.0 Gross Margin % 56.5% 55.5% - 57.4% Net Income $12.8 $2.4 – $9.3 EPS $0.10 $0.02 – $0.07 ©2022 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 21
Slide 22: FQ4'22 Guidance – Non-GAAP
FQ4’22 Guidance – Non-GAAP (In M’s except percentages and EPS) FQ4’22 FQ3’22 Guidance Revenue ($M) $285.5 $265.0 - $275.0 Gross Margin % 58.0% 57.0% - 59.0% Net Income $27.4 $16.7-$23.9 EPS $0.21 $0.12 – $0.18 ©2022 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 22
Slide 23: FQ4'22 Guidance - GAAP to Non-GAAP Reconciliation
FQ4’22 Guidance - GAAP to Non-GAAP Reconciliation Operating Margin Gross Margin Rate Earnings per Share Rate GAAP 55.5% - 57.4% 3.1%-5.5% $0.02-$0.07 Estimated Adjustments for: Amortization of Product Intangibles 1.1% 1.1% $0.02 Share-Based Compensation 0.2% 3.9% $0.08 Restructuring Charges, net - 0
Slide 24: FY23 and Long-Term Financial Guidance
FY23 and Long-Term Financial Guidance ©2022 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 24
Slide 25: FY23 and Long-Term Growth Outlook
FY23 and Long-Term Growth Outlook Revenue Growth and Outlook Mid-Teens** 10-15%** 10%* 2.8% FY21 FY22 FY23 FY25 *Current Company Outlook and guidance at the midpoint ** Current Company Outlook ©2022 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 25
Slide 26: ©2022 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED.
©2022 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 26