Extreme Networks, Inc. · NASDAQ:EXTR

Extreme Networks — Q3 2024 Earnings Presentation

28 slides from Extreme Networks's earnings presentation, May 1, 2024

  1. Slide 1: FQ3'24 Financial Results

    FQ3’24 Financial Results May 1, 2024

  2. Slide 2: Disclaimer

    DISCLAIMER Non-GAAP Financial Measures: Forward-Looking Statements: This presentation includes certain financial measures that are not This presentation contains forward-looking statements presented in accordance with generally accepted accounting principles in including, but not limited to: the exp

  3. Slide 3: FQ3'24

    FQ3’24 ©2024 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 3

  4. Slide 4: FQ3'24 Results Summary

    FQ3’24 RESULTS SUMMARY • Reduced Channel Inventory Position Bookings and • Product Bookings Significantly Ahead of Product Revenue Revenue Trends • Subscription and Support Revenue of $105M, up 14% Y/Y Cloud SaaS • SaaS Deferred Revenue1 of $258M, up 29% Y/Y Subscriptions • SaaS ARR1 of $162M, up 38

  5. Slide 5: FQ3'24 Highlights

    FQ3’24 HIGHLIGHTS CLOUD ADOPTION OPERATING TRENDS PROFITABILITY AND CASH FLOW SaaS ARR2 $162M 28 Large $1M+ Customers (Over $1M in bookings for the Fiscal Quarter) Non-GAAP Gross Margin %1 57.6% $258M New Logos6 31% (12.2%) ($0.19) 38% % of Total Product Bookings Non-GAAP Non-GAAP SaaS Deferred Oper

  6. Slide 6: Major Vertical Bookings Contribution in Q3

    MAJOR VERTICAL BOOKINGS CONTRIBUTION IN Q3 Relative Bookings Strength in Healthcare, Education, Manufacturing, and Transportation / Logistics GOVT + EDUCATION HEALTHCARE HOSPITALITY + VENUES >40% <15% >5% MANUFACTURING RETAIL + TRANSPORTATION SERVICE PROVIDER <10% ~10% >5% ©2024 EXTREME NETWORKS, IN

  7. Slide 7: Financial Highlights

    FINANCIAL HIGHLIGHTS (IN M’S EXCEPT PERCENTAGES AND EPS) GAAP Non-GAAP1 3Q23 2Q24 3Q24 3Q23 2Q24 3Q24 Product Revenue $241.1 $186.6 $106.4 $241.1 $186.6 $106.4 Subscription & Support Revenue $91.4 $109.8 $104.6 $91.4 $109.8 $104.6 Total Revenue $332.5 $296.4 $211.0 $332.5 $296.4 $211.0 Total GM % 57

  8. Slide 8: Quarterly Results of Operations: Total Revenue

    QUARTERLY RESULTS OF OPERATIONS (IN M’S) Total Revenue $400M $364 $353 $333 $318 $298 28% $296 $300M 28% 28% 30% 31% 37% $211 $200M 50% 72% 72% 72% 70% $100M 69% 63% 50% $0M 2023 Q1 2023 Q2 2023 Q3 2023 Q4 2024 Q1 2024 Q2 2024 Q3 Product Revenue Subscription & Support Revenue ©2024 EXTREME NETWORKS,

  9. Slide 9: Quarterly Results of Operations: Gross Profit

    QUARTERLY RESULTS OF OPERATIONS (IN M’S EXCEPT PERCENTAGES) Gross Profit - GAAP Gross Profit - Non-GAAP $250M 70% $250M 70% $214 $219 $216 $213 $192 $200M $196 67% $200M 67% $182 $183 $186 $185 $171 $167 $150M 64% $150M 64% 62.5% $120 $122 61.9% 61.1% $100M 60.3% 61% $100M 61% 60.2% 58.9% 59.1% 58.5

  10. Slide 10: Quarterly Results of Operations: Operating Expenses

    QUARTERLY RESULTS OF OPERATIONS (IN M’S EXCEPT PERCENTAGES) Operating Expenses - GAAP Operating Expenses - Non-GAAP $200M 100% $200M 100% $182 $177 $177 $173 $162 86.4% $158 $156 $153 $149 $147 $150M 80% $150M $144 $141 80% $139 $135 69.8% 58.4% $100M 60% $100M 60% 50.2% 49.7% 48.8% 50.1% 48.5% 47.7

  11. Slide 11: Quarterly Results of Operations: EPS

    QUARTERLY RESULTS OF OPERATIONS EPS - GAAP EPS - Non-GAAP $0.40 $0.40 $0.35 $0.33 $0.30 $0.29 $0.21 $0.30 $0.27 $0.19 $0.20 $0.17 $0.24 $0.13 $0.20 $0.09 $0.20 $0.10 $0.03 $0.00 $0.10 -$0.10 $0.00 -$0.20 -$0.30 -$0.10 -$0.40 -$0.20 $(0.19) -$0.50 $(0.50) -$0.60 -$0.30 2023 Q1 2023 Q2 2023 Q3 2023 Q4

  12. Slide 12: Q3'24 Revenue by Geography

    Q3’24 REVENUE BY GEOGRAPHY (IN $M’S EXCEPT PERCENTAGES) EMEA $59M 28% Americas 8% 64% $134M APAC $18M ©2024 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 12

  13. Slide 13: Financial Highlights – Balance Sheet

    FINANCIAL HIGHLIGHTS – BALANCE SHEET (IN M’S EXCEPT DAYS) Balance Sheet Highlights 3Q23 2Q24 3Q24 Cash and Cash Equivalents $203.0 $221.4 $151.0 Accounts Receivable $158.6 $112.0 $94.4 Inventories $70.3 $152.5 $185.4 Accounts Payable $96.0 $87.8 $81.5 Gross Debt* $237.0 $195.0 $192.5 Net Cash (Debt)

  14. Slide 14: 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

  15. Slide 15: Historical SaaS Disclosures – SaaS ARR

    HISTORICAL SAAS DISCLOSURES – SaaS ARR (IN $M’S) SaaS ARR1 $158 $162 $141 $129 $115 $117 $109 $103 $96 $89 $79 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 1Extreme uses SaaS annual recurring revenue (“SaaS ARR”) to identify the annual recurring revenue of ExtremeCloud IQ (XIQ) and other s

  16. Slide 16: Historical SaaS Disclosures – SaaS Deferred Revenue

    HISTORICAL SAAS DISCLOSURES – SaaS DEFERRED REVENUE (IN $M’S) SaaS Deferred Revenue1 $258 $246 $236 $217 $199 $187 $171 $157 $143 $136 $122 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 1SaaS Ending Deferred Revenue refers to the ending quarterly balance of advance payments received for Saa

  17. Slide 17: Historical Disclosures – Recurring Revenue

    HISTORICAL DISCLOSURES – RECURRING REVENUE (IN $M’S) Recurring Revenue1 $101 $100 $95 $93 $87 $88 $87 $86 $84 $81 $78 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 1Recurring Revenue is the sum of all Subscription and Support revenue that is recognized over multiple periods, quarters or ye

  18. Slide 18: Appendices

    APPENDICES GAAP to Non-GAAP Reconciliations & Operating Metrics Note: The totals for some periods may not foot due to rounding. Please see press release for full reconciliation. ©2024 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED.

  19. Slide 19: GAAP to Non-GAAP Reconciliations – Gross Margin

    GAAP TO NON-GAAP RECONCILIATIONS – GROSS MARGIN (IN M’S EXCEPT PERCENTAGES) 3Q23 2Q24 3Q24 Product Revenue $ 241.1 $ 186.6 $ 106.4 Subscription & Support Revenue 91.4 109.8 104.6 Total Revenue - GAAP $ 332.5 $ 296.4 $ 211.0 Gross Margin - GAAP 191.9 183.4 119.9 Gross Margin % - GAAP 57.7% 61.9% 56.8

  20. Slide 20: GAAP to Non-GAAP Reconciliations – Operating Income (Loss)

    GAAP TO NON-GAAP RECONCILIATIONS – OPERATING INCOME (LOSS) (IN M’S EXCEPT PERCENTAGES) 3Q23 2Q24 3Q24 Operating Income (Loss) - GAAP $ 29.6 $ 10.3 $ (62.5) Operating Margin - GAAP 8.9% 3.5% (29.6%) Amortization of Intangibles, COGS 3.0 0.5 0.6 Share-Based Compensation, Total 15.4 21.0 17.8 Restructu

  21. Slide 21: GAAP to Non-GAAP Reconciliations – Net Income (Loss)

    GAAP TO NON-GAAP RECONCILIATIONS – NET INCOME (LOSS) (IN M’S EXCEPT EPS) 3Q23 2Q24 3Q24 Net Income (Loss) - GAAP $ 22.1 $ 4.0 $ (64.4) Shares - GAAP 133.0 131.5 129.3 EPS - GAAP (Diluted ) $ 0.17 $ 0.03 $ (0.50) Amortization of Intangibles, COGS 3.0 0.5 0.6 Share-Based Compensation, Total 15.4 21.0

  22. Slide 22: Adjusted EBITDA Reconciliation

    ADJUSTED EBITDA RECONCILIATION (IN M’S) 3Q23 2Q24 3Q24 Net Income (Loss) - GAAP $ 22.1 $ 4.0 $ (64.4) Interest 3.2 2.8 2.9 Provision for (Benefit from) Income Taxes 3.9 3.1 (0.6) Depreciation/Amortization 8.6 5.7 5.5 EBITDA $ 37.8 $ 15.6 $ (56.6) Net Non-GAAP Adjustments 16.7 27.5 39.6 Tax Effect in

  23. Slide 23: FQ4'24

    FQ4’24 ©2024 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 23

  24. Slide 24: FQ4'24 Guidance

    FQ4’24 GUIDANCE (IN M’S EXCEPT PERCENTAGES AND EPS) GAAP GAAP NON-GAAP FQ3'24 FQ4'24 FQ4'24 Revenue ($M) $211.0 $250.0 - $260.0 $250.0 - $260.0 Gross Margin % 56.8% 60.9% - 62.9% 61.6% - 63.6% Operating Margin % (29.6%) (3.8%) - (0.9%) 9.0% - 11.5% EPS ($0.50) ($0.11) - ($0.05) $0.11 - $0.15 ©2024 E

  25. Slide 25: FY24 Guidance

    FY24 GUIDANCE (IN M’S EXCEPT PERCENTAGES AND EPS) GAAP GAAP NON-GAAP FY’23 FY'24 FY'24 Revenue ($M) $1,312.5 $1,110.5 - $1,120.5 $1,110.5 - $1,120.5 Gross Margin % 57.5% 60.2% - 60.6% 60.9% - 61.4% Operating Margin % 8.3% (2.4%) - (1.7%) 9.3% - 9.9% EPS $0.58 ($0.35) - ($0.30) $0.51 - $0.55 ©2024 EX

  26. Slide 26: FQ4'24 Guidance – GAAP to Non-GAAP Reconciliation

    FQ4’24 GUIDANCE – GAAP TO NON-GAAP RECONCILIATION Gross Margin Rate Operating Margin Rate Earnings per Share GAAP 60.9% - 62.9% (3.8%) – (0.9%) ($0.11) – ($0.05) Estimated Adjustments for: Share-Based Compensation 0.4% 7.5% - 7.8% $0.15 Amortization of Product Intangibles 0.3% 0.3% $0.00 Amortizatio

  27. Slide 27: FY24 Guidance – GAAP to Non-GAAP Reconciliation

    FY24 GUIDANCE – GAAP TO NON-GAAP RECONCILIATION Gross Margin Rate Operating Margin Rate Earnings per Share GAAP 60.2% - 60.6% (2.4%) – (1.7%) ($0.35) – ($0.30) Estimated Adjustments for: Share-Based Compensation 0.5% 7.0% $0.60 Amortization of Product Intangibles 0.3% 0.3% $0.02 Amortization of Non-

  28. Slide 28: ©2024 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED.

    ©2024 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 28

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