Extreme Networks, Inc. · NASDAQ:EXTR

Extreme Networks — Q4 2024 Earnings Presentation

30 slides from Extreme Networks's earnings presentation, Aug 7, 2024

  1. Slide 1: 4Q24 & FY24 Financial Results

    4Q24 & FY24 Financial Results August 7, 2024

  2. Slide 2: Disclaimer

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

  3. Slide 3: 4Q24 & FY24

    4Q24 & FY24 ©2024 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 3

  4. Slide 4: 4Q24 Results Summary

    4Q24 RESULTS SUMMARY • Channel Inventory Better Aligned To End Demand Trends Bookings and • Product Bookings Ahead of Product Revenue Revenue Trends • Recurring revenue of $101M, up 9% Y/Y Cloud SaaS • SaaS Deferred Revenue1 of $267M, up 23% Y/Y Subscriptions • SaaS ARR1 of $167M, up 29% Y/Y • Adjus

  5. Slide 5: FY24 Highlights

    FY24 HIGHLIGHTS CLOUD ADOPTION OPERATING TRENDS PROFITABILITY AND CASH FLOW SaaS ARR2 $167M 164 Large $1M+ Customers (Over $1M in bookings for the Fiscal Year) Adjusted Gross Margin 1 % 63.0% 11.9% $0.68 $267M New Logos6 ~20% Adjusted Operating Adjusted 29% % of Total Product Bookings Margin 1 % EPS

  6. Slide 6: Major Vertical Bookings Contribution in FY24

    MAJOR VERTICAL BOOKINGS CONTRIBUTION IN FY24 Relative Bookings Strength in Transportation / Logistics, Manufacturing, Government, K-12 Education, and Service Provider GOVT + EDUCATION HEALTHCARE HOSPITALITY + VENUES >40% >10% ~5% MANUFACTURING RETAIL + TRANSPORTATION SERVICE PROVIDER ~10% ~10% ~5% ©

  7. Slide 7: Financial Highlights

    FINANCIAL HIGHLIGHTS (IN M’S EXCEPT PERCENTAGES AND EPS) GAAP Non-GAAP 1 4Q23 3Q24 4Q24 FY23 FY24 4Q23 3Q24 4Q24 FY23 FY24 Product Revenue $261.7 $106.4 $152.8 $932.5 $699.3 $261.7 $106.4 $152.8 $932.5 $699.3 Subscription & Support Revenue $102.2 $104.6 $103.9 $380.0 $417.9 $102.2 $104.6 $103.9 $380

  8. Slide 8: Supplemental Information: GAAP to Adjusted Results

    Supplemental Information: GAAP to Adjusted Results We recorded an additional provision for excess and obsolete (“E&O”) inventory and loss on our supplier commitments of $46.5 million in the fourth quarter and $64.5M during fiscal 2024. The additional provision was taken for certain of the Company’s

  9. Slide 9: Quarterly Results of Operations

    QUARTERLY RESULTS OF OPERATIONS (IN M’S) Total Revenue $364 $353 $333 $318 $298 28% $296 28% 28% 30% $257 31% 37% $211 40% 50% 72% 72% 72% 70% 69% 63% 60% 50% 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 Product Revenue Subscription & Support Revenue ©2024 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 9

  10. Slide 10: Quarterly Results of Operations

    QUARTERLY RESULTS OF OPERATIONS (IN M’S EXCEPT PERCENTAGES) Gross Profit - Non-GAAP Gross Profit - GAAP $250M 79% $250M 79% $219 $216 76% $214 $213 76% $200M $196 73% $200M $192 73% $186 $185 70% $182 $183 70% $171 $167 67% 67% $150M 64% $150M 64% 62.5% $122 $116 61% $120 61% 61.1% 61.9% $115 60.2% 58

  11. Slide 11: Quarterly Results of Operations

    QUARTERLY RESULTS OF OPERATIONS (IN M’S EXCEPT PERCENTAGES) Operating Expenses - GAAP Operating Expenses - Non-GAAP $200M $200M 100% 100% $182 $177 $177 $173 $162 86.4% $164 $158 $156 $153 $149 $147 $150M 80%$150M $144 $141 80% $139 $135 69.8% $128 63.7% 58.4% $100M 60%$100M 60% 50.2% 49.7% 50.1% 50

  12. Slide 12: Quarterly Results of Operations

    QUARTERLY RESULTS OF OPERATIONS (IN M’S EXCEPT PERCENTAGES) Gross Profit - Adjusted Results 1 Operating Expenses & Margin - Adjusted Results 1 $250 66.0% $200 65.0% $226 $180 55.0% $200 64.8% $185 $160 $153 $147 45.0% $141 $163 $140 $128 64.1% $150 63.6% 35.0% $120 $129 63.5% $100 25.0% 20.7% $100 62

  13. Slide 13: Quarterly Results of Operations

    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 $(0.08) -$0.40 $(0.42) -$0.20 $(0.19) -$0.50 $(0.50) -$0.60 -$0.30 1Q23 2Q23 3Q23

  14. Slide 14: Quarterly Results of Operations

    QUARTERLY RESULTS OF OPERATIONS EPS - Adjusted Results 1 $0.50 $0.41 $0.40 $0.30 $0.24 $0.19 $0.20 $0.10 $0.00 -$0.10 $(0.14) -$0.20 1Q24 2Q24 3Q24 4Q24 ©2024 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 14 1Adjusted Results exclude the Non-GAAP adjustments, the additional provision for E&O inventory

  15. Slide 15: FY24 Revenue by Geography

    FY24 REVENUE BY GEOGRAPHY (IN $M’S EXCEPT PERCENTAGES) EMEA $422M 38% Americas 6% 56% $628M APAC $67M ©2024 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 15

  16. Slide 16: Financial Highlights – Balance Sheet

    FINANCIAL HIGHLIGHTS – BALANCE SHEET (IN M’S EXCEPT DAYS) Balance Sheet Highlights 4Q23 3Q24 4Q24 Cash and Cash Equivalents $234.8 $151.0 $156.7 Accounts Receivable $182.0 $94.4 $89.5 Inventories $89.0 $185.4 $141.0 Accounts Payable $99.7 $81.5 $51.4 Gross Debt* $225.0 $192.5 $190.0 Net Cash (Debt)*

  17. Slide 17: 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

  18. Slide 18: Historical SaaS Disclosures – SaaS ARR

    HISTORICAL SAAS DISCLOSURES – SaaS ARR (IN $M’S) SaaS ARR 1 $167 $158 $162 $141 $129 $115 $117 $109 $103 $96 $89 $79 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 1Extreme uses SaaS annual recurring revenue (“SaaS ARR”) to identify the annual recurring revenue of ExtremeCloud IQ (XIQ)

  19. Slide 19: Historical SaaS Disclosures – SaaS Deferred Revenue

    HISTORICAL SAAS DISCLOSURES – SaaS DEFERRED REVENUE (IN $M’S) SaaS Deferred Revenue1 $267 $258 $246 $236 $217 $199 $187 $171 $157 $143 $136 $122 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 1SaaS Ending Deferred Revenue refers to the ending quarterly balance of advance payments receiv

  20. Slide 20: Historical Disclosures – Recurring Revenue

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

  21. Slide 21: 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.

  22. Slide 22: GAAP to Non-GAAP Reconciliations – Gross Margin

    GAAP TO NON-GAAP RECONCILIATIONS – GROSS MARGIN (IN M’S EXCEPT PERCENTAGES) 4Q23 3Q24 4Q24 FY23 FY24 Product Revenue $ 261.7 $ 106.4 $ 152.8 $ 932.5 $ 699.3 Subscription & Support Revenue 102.2 104.6 103.9 380.0 417.9 Total Revenue - GAAP $ 363.9 $ 211.0 $ 256.7 $ 1,312.5 $ 1,117.2 Gross Margin - GA

  23. Slide 23: GAAP to Non-GAAP Reconciliations – Operating Income (Loss)

    GAAP TO NON-GAAP RECONCILIATIONS – OPERATING INCOME (LOSS) (IN M’S EXCEPT PERCENTAGES) 4Q23 3Q24 4Q24 FY23 FY24 Operating Income (Loss) - GAAP $ 37.9 $ (62.5) $ (48.9) $ 108.3 $ (65.2) Operating Margin - GAAP 10.4% (29.6%) (19.1%) 8.3% (5.8%) Amortization of Intangibles, COGS 3.1 0.6 0.6 12.9 3.2 Sh

  24. Slide 24: GAAP to Non-GAAP Reconciliations – Net Income (Loss)

    GAAP TO NON-GAAP RECONCILIATIONS – NET INCOME (LOSS) (IN M’S EXCEPT EPS) 4Q23 3Q24 4Q24 FY23 FY24 Net Income (Loss) - GAAP $ 25.4 $ (64.4) $ (54.2) $ 78.1 $ (86.0) Shares - GAAP 132.9 129.3 130.1 133.6 132.7 EPS - GAAP (Diluted ) $ 0.19 $ (0.50) $ (0.42) $ 0.58 $ (0.65) Amortization of Intangibles,

  25. Slide 25: Adjusted EBITDA Reconciliation

    ADJUSTED EBITDA RECONCILIATION (IN M’S) 4Q23 3Q24 4Q24 FY23 FY24 Net Income (Loss) - GAAP $ 25.4 $ (64.4) $ (54.2) $ 78.1 $ (86.0) Interest 4.6 2.9 3.6 14.2 12.5 Provision for (Benefit from) Income Taxes 7.7 (0.6) 1.5 16.0 8.4 Depreciation/Amortization 8.5 5.5 11.3 34.9 29.5 EBITDA $ 46.2 $ (56.6) $

  26. Slide 26: 1Q25 & FY25

    1Q25 & FY25 ©2024 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 26

  27. Slide 27: 1Q25 Guidance

    1Q25 GUIDANCE (IN M’S EXCEPT PERCENTAGES AND EPS) Adjusted GAAP Non-GAAP Results1 1Q25 1Q25 4Q24 Revenue ($M) $256.7 $255.0 - $265.0 $255.0 - $265.0 Gross Margin % 63.5% 61.2% - 63.2% 62.0% - 64.0% Operating Margin % 13.5% (5.3%) - (2.3%) 7.8% - 10.4% EPS $0.19 ($0.14) - ($0.09) $0.10 - $0.14 ©2024

  28. Slide 28: 1Q25 Guidance – GAAP to Non-GAAP Reconciliation

    1Q25 GUIDANCE – GAAP TO NON-GAAP RECONCILIATION Gross Margin Rate Operating Margin Rate Earnings per Share GAAP 61.2% - 63.2% (5.3%) – (2.3%) ($0.14) – ($0.09) Estimated Adjustments for: Share-Based Compensation 0.5% 7.7% - 8.0% 0.16 Amortization of Product Intangibles 0.3% 0.3% 0.01 Amortization of

  29. Slide 29: FY25 Guidance

    FY25 GUIDANCE (IN M’S) FY24 FY25 Revenue ($M) $1,117.2 $1,110.0 - $1,135.0 ©2024 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 29

  30. Slide 30: ©2024 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED.

    ©2024 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 30

Extreme Networks — Q4 2024 Earnings Presentation on 6ix