Extreme Networks, Inc. · NASDAQ:EXTR

Extreme Networks — Q1 2025 Earnings Presentation

30 slides from Extreme Networks's earnings presentation, Oct 30, 2024

  1. Slide 1: 1Q25 Financial Results

    1Q25 ExtremeCloud Financial Results Universal ZTNA October 30, 2024

  2. Slide 2: Disclaimer

    DISCLAIMER Non-GAAP Financial Measures Forward-Looking Statements This presentation includes certain financial measures that are not presented in accordance with This presentation contains forward-looking statements including, but generally accepted accounting principles in the United States (“GAAP)

  3. Slide 3: 1Q25 Financial Results

    1Q25 FINANCIAL RESULTS © EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 3

  4. Slide 4: 1Q25 Results Summary

    1Q25 RESULTS SUMMARY • Sequential Growth in Revenue led by growth in Americas region Bookings and • Sequential Growth in Product Revenue Revenue Trends • Recurring Revenue 2 of $103M, Up 8% Y/Y • SaaS ARR 1 of $174M, Up 23% Y/Y Cloud SaaS • Rising New Subscription Attach Rate 3 Subscriptions • SaaS

  5. Slide 5: 1Q25 Highlights

    1Q25 HIGHLIGHTS Total Revenue Non-GAAP Gross Profit 1 Non-GAAP EPS 1 $ Free Cash Flow 5 $269M $171M $0.17 $12M $174M 63.7% 12.4% $28M SaaS ARR 2 Non-GAAP Gross Margin 1 % Non-GAAP Operating Margin 1 % Net Debt 4 23% 27 32 SaaS ARR 2 38% Large $1M+ Customers Total Managed Recurring Revenue 3 (Over $1

  6. Slide 6: Financial Highlights

    FINANCIAL HIGHLIGHTS (IN M’S EXCEPT PERCENTAGES AND EPS) GAAP Non-GAAP 1 1Q24 4Q24 1Q25 1Q24 4Q24 1Q25 Product Revenue $253.5 $152.8 $162.3 $253.5 $152.8 $162.3 Subscription & Support Revenue $99.6 $103.9 $106.9 $99.6 $103.9 $106.9 Total Revenue $353.1 $256.7 $269.2 $353.1 $256.7 $269.2 Total GM% 60

  7. Slide 7: Quarterly Revenue Results

    QUARTERLY REVENUE RESULTS (IN M’S) Total Revenue $364 $353 $333 $318 28% $296 28% $269 27% $257 30% 37% $211 40% 40% 50% 73% 72% 72% 70% 63% 60% 60% 50% 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 1Q25 Product Revenue Subscription & Support Revenue © EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 7

  8. Slide 8: Quarterly Gross Profit and Margin

    QUARTERLY GROSS PROFIT AND MARGIN (IN M’S EXCEPT PERCENTAGES) Gross Profit – GAAP Gross Profit – Non-GAAP 1 $250 100.0% $250 100.0% $214 $213 $219 $216 $192 90.0% $196 90.0% $200 $182 $183 $200 $186 $185 $170 $171 80.0% 80.0% $150 $150 $120 $122 $116 $115 70.0% 70.0% 63.0% 63.7% $100 60.3% $100 60.2

  9. Slide 9: Quarterly Operating Expense and Margin

    QUARTERLY OPERATING EXPENSE AND MARGIN (IN M’S EXCEPT PERCENTAGES) Operating Expenses - GAAP Operating Expenses - Non-GAAP 1 $200 $180 $182 140.0% 140.0% $177 $177 $173 $174 $156 $180 $160 $153 $162 $164 $144 $147 $158 120.0% $139 $141 120.0% $160 $138 $140 $128 100.0% 100.0% $140 $120 80.0% 80.0% $

  10. Slide 10: Quarterly EPS

    QUARTERLY EPS EPS - GAAP EPS - Non-GAAP 1 $0.40 $0.40 $0.33 $0.35 $0.30 $0.30 $0.27 $0.29 $0.21 $0.24 $0.20 $0.17 $0.19 $0.20 $0.17 $0.13 $0.10 $0.10 $0.03 $- $- $(0.10) $(0.10) $(0.08) $(0.08) $(0.20) $(0.20) $(0.19) $(0.30) $(0.30) $(0.40) $(0.40) $(0.42) $(0.50) $(0.50) $(0.50) $(0.60) $(0.60) 2Q

  11. Slide 11: 1Q25 Revenue by Geography

    1Q25 REVENUE BY GEOGRAPHY (IN $M’S EXCEPT PERCENTAGES) AMERICAS EMEA APAC $165M $85M $19M 61% of Revenue 32% of Revenue 7% of Revenue © EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 11

  12. Slide 12: Financial Highlights – Balance Sheet

    FINANCIAL HIGHLIGHTS – BALANCE SHEET (IN M’S EXCEPT DAYS) Balance Sheet Highlights 1Q24 4Q24 1Q25 Cash and Cash Equivalents $224.4 $156.7 $159.5 Accounts Receivable $131.5 $89.5 $97.2 Inventories $100.8 $141.0 $143.6 Accounts Payable $80.0 $51.4 $65.8 Gross Debt 1 $197.5 $190.0 $187.5 Net Cash (Debt

  13. 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 operating performance. Free cash flow represents GAAP net cash provided by (used in) operating activities, less purchases of property, plant and equipment. Extreme considers free cash flow as useful info

  14. Slide 14: Historical SaaS Disclosures – SaaS ARR

    HISTORICAL SAAS DISCLOSURES – SaaS ARR (IN $M’S) SaaS ARR 1 $174 $167 $158 $162 $141 $129 $115 $117 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 1Q25 1 Extreme uses SaaS annual recurring revenue (“SaaS ARR”) to identify the annual recurring revenue of ExtremeCloud IQ (XIQ) and other subscription revenue, base

  15. Slide 15: Historical SaaS Disclosures – SaaS Deferred Revenue

    HISTORICAL SAAS DISCLOSURES – SaaS DEFERRED REVENUE (IN $M’S) SaaS Deferred Revenue 1 $282 $267 $258 $246 $236 $217 $199 $187 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 1Q25 1 SaaS Ending Deferred Revenue refers to the ending quarterly balance of advance payments received for SaaS goods or services that are

  16. Slide 16: Historical Disclosures – Recurring Revenue

    HISTORICAL DISCLOSURES – RECURRING REVENUE (IN $M’S) Recurring Revenue 1 $105 60% $103 $101 $101 $100 55% $100 47% 50% $95 $95 $93 45% 39% $90 38% 40% $88 $87 34% 35% $85 28% 27% 30% 26% 26% $80 25% $75 20% 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 1Q25 Recurring Revenue as % of Total Revenue 1 Recurring R

  17. Slide 17: 2Q25 & FY25 Financial Guidance

    2Q25 & FY25 FINANCIAL GUIDANCE © EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 17

  18. Slide 18: 2Q25 Guidance

    2Q25 GUIDANCE (IN M’S EXCEPT PERCENTAGES AND EPS) Non-GAAP 1 GAAP Non-GAAP 1 1Q25 2Q25 2Q25 Revenue ($M) $269.2 $273.0 – $283.0 $273.0 – $283.0 Gross Margin % 63.7% 62.2% – 63.2% 63.0% – 64.0% Operating Margin % 12.4% (1.1%) – 1.4% 11.3% – 13.4% EPS $0.17 ($0.07) – ($0.01) $0.16 – $0.20 2See slides

  19. Slide 19: FY25 Guidance

    FY25 GUIDANCE (IN M’S) FY24 FY25 Revenue ($M) $1,117 $1,117 – $1,137 © EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 19

  20. Slide 20: Appendices

    APPENDICES GAAP to Non-GAAP Reconciliations and Operating Metrics Note: The totals for some periods may not foot due to rounding. Please see press release for full reconciliation. © EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 20

  21. Slide 21: Supplemental Information: GAAP to Adjusted Results

    SUPPLEMENTAL INFORMATION: GAAP TO ADJUSTED RESULTS (IN M’S EXCEPT PERCENTAGES AND EPS) We recorded an additional provision for excess and obsolete (“E&O”) inventory and loss on our supplier commitments of $64.5 million during fiscal 2024. The quarterly split was as follows: 1Q24: $10.5m, 3Q24: $7.5m

  22. Slide 22: Adjusted Quarterly Results of Operations – Gross Profit

    ADJUSTED QUARTERLY RESULTS OF OPERATIONS (IN M’S EXCEPT PERCENTAGES) Gross Profit – Adjusted Results 1 $250 70.0% $226 68.0% $200 $185 $171 $163 66.0% $150 64.1% $129 63.5% 63.7% 64.0% 62.5% $100 61.2% 62.0% $50 60.0% - 58.0% 2 2 1Q24 2Q24 3Q24 4Q24 1Q25 Product Gross Profit Subscription & Support G

  23. Slide 23: Adjusted Quarterly Results of Operations – Operating Expenses

    ADJUSTED QUARTERLY RESULTS OF OPERATIONS (IN M’S EXCEPT PERCENTAGES) Operating Expenses - Adjusted Results 1 $180 140.0% $160 $153 $147 $141 $138 120.0% $140 $128 100.0% $120 80.0% $100 60.0% $80 40.0% 20.7% $60 14.8% 13.5% 12.4% 20.0% $40 (8.6%) 0.0% $20 (20.0%) - (40.0%) 2 2 1Q24 2Q24 3Q24 4Q24 1Q

  24. Slide 24: Adjusted Quarterly Results of Operations – EPS

    ADJUSTED QUARTERLY RESULTS OF OPERATIONS EPS - Adjusted Results 1 $0.60 $0.41 $0.40 $0.24 $0.19 $0.17 $0.20 $- $(0.20) $(0.14) $(0.40) $(0.60) 2 2 1Q24 2Q24 3Q24 4Q24 1Q25 1 Adjusted Results exclude the Non-GAAP adjustments and the additional provision for E&O inventory. Adjustments were made in 1Q2

  25. Slide 25: GAAP to Non-GAAP Reconciliations – Gross Margin

    GAAP TO NON-GAAP RECONCILIATIONS – GROSS MARGIN (IN M’S EXCEPT PERCENTAGES) 1Q24 4Q24 1Q25 Product Revenue $253.5 $152.8 $162.3 Subscription & Support Revenue 99.6 103.9 106.9 Total Revenue – GAAP $353.1 $256.7 $269.2 Gross Margin – GAAP $212.9 $114.6 $169.5 Gross Margin % – GAAP 60.3% 44.7% 63.0% A

  26. Slide 26: GAAP to Non-GAAP Reconciliations – Operating Income (Loss)

    GAAP TO NON-GAAP RECONCILIATIONS – OPERATING INCOME (LOSS) (IN M’S EXCEPT PERCENTAGES) 1Q24 4Q24 1Q25 Operating Income (Loss) – GAAP $35.9 ($48.9) ($4.7) Operating Margin – GAAP 10.2% (19.1%) (1.8%) Amortization of Intangibles, COGS 1.4 0.6 0.6 Share-Based Compensation, Total 19.9 18.1 19.8 Restruct

  27. Slide 27: GAAP to Non-GAAP Reconciliations – Net Income (Loss)

    GAAP TO NON-GAAP RECONCILIATIONS – NET INCOME (LOSS) (IN M’S EXCEPT EPS) 1Q24 4Q24 1Q25 Net Income (Loss) – GAAP $28.7 ($54.2) ($10.5) Shares – GAAP 133.5 130.1 131.2 EPS – GAAP (Diluted) $0.21 ($0.42) ($0.08) Amortization of Intangibles, COGS 1.4 0.6 0.6 Share-Based Compensation, Total 19.9 18.1 19

  28. Slide 28: Adjusted EBITDA Reconciliation

    ADJUSTED EBITDA RECONCILIATION (IN M’S) 1Q24 4Q24 1Q25 Net Income (Loss) – GAAP $28.7 ($54.2) ($10.5) Interest 3.1 3.6 3.6 Provision for (Benefit) Income Taxes 4.5 1.5 1.5 Depreciation/Amortization 6.8 11.3 5.1 EBITDA $43.1 ($37.8) ($0.3) Net Non-GAAP Adjustments 17.9 44.3 32.9 Tax Effect Included i

  29. Slide 29: GAAP to Non-GAAP Reconciliations – 2Q25 Guidance

    GAAP TO NON-GAAP RECONCILIATIONS – 2Q25 GUIDANCE Gross Margin Operating Margin Earnings Rate Rate per Share GAAP 62.2% – 63.2% (1.1%) – 1.4% ($0.07) – ($0.01) Estimated Adjustments for: Share-Based Compensation 0.6% 7.9% – 8.3% 0.17 Amortization of Product Intangibles 0.2% 0.2% 0.01 Amortization of

  30. Slide 30: © EXTREME NETWORKS, INC. ALL RIGHTS RESERVED.

    © EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 30

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