Extreme Networks, Inc. · NASDAQ:EXTR

Extreme Networks — Q2 FY2022 Earnings Presentation

25 slides from Extreme Networks's earnings presentation, Jan 27, 2022

  1. Slide 1: FQ2'22 Financial Results

    EXTREME NETWORKS EXTREME NETWORKS FQ2'22 Financial Results January 27, 2022

  2. 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

  3. Slide 3: FQ2'22 Financial Results

    FQ2’22 Financial Results ©2021 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 3

  4. Slide 4: Q2 2022 Results Summary

    Q2 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 47% Y/Y • Record quarterly GAAP and Non-GAAP

  5. Slide 5: FQ2'22 Highlights

    FQ2’22 Highlights CLOUD ADOPTION Driving Growth PROFITABILITY & CASH FLOW SaaS ARR2 $88M Non-GAAP Gross Margin %1 58.2 % Backlog ~$300M Recurring $136M Total Revenue Non-GAAP Operating Non- GAAP Revenue 30% SaaS Deferred Growth (Y/Y %) 16.0% Margin %1 EPS ($) 1 Revenue2 10.9% 13.1% $0.21 Product Rev

  6. Slide 6: Industry Vertical Trends

    Vertical Trends Strong double-digit growth across nearly all major verticals Extreme Exposure Demand Outlook Tailwinds Headwinds Solid Education spending supported by State and Local government trends E-rate and Higher Ed stabile Government ~35% & Education Robust demand and outlook on wireless Some

  7. Slide 7: GAAP Financial Highlights – Financial Operations

    GAAP Financial Highlights – Financial Operations (In M’s except percentages and EPS) Quarter FQ2'21 FQ1'22 FQ2'22 GAAP Product Revenue $165.8 $185.2 $191.1 Services Revenue $76.3 $82.5 $89.8 Total Revenue $242.1 $267.7 $280.9 Total GM % 57.9% 58.1% 56.5% Operating Income $ $5.7 $18.3 $18.1 Operating

  8. Slide 8: Non-GAAP Financial Highlights – Financial Operations

    Non-GAAP Financial Highlights – Financial Operations (In M’s except percentages and EPS) Quarter FQ2'21 FQ1'22 FQ2'22 1 Non-GAAP Product Revenue $165.8 $185.2 $191.1 Services Revenue $76.3 $82.5 $89.8 Total Revenue $242.1 $267.7 $280.9 Total GM % 61.0% 60.3% 58.2% Operating Income $ $24.6 $37.0 $36.

  9. Slide 9: Quarterly Results of Operations

    Quarterly Results of Operations (In M’s except percentages) ©2021 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 9

  10. Slide 10: Quarterly Results of Operations

    Quarterly Results of Operations (In M’s except percentages and EPS) ©2021 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 10

  11. Slide 11: Revenue by Geography

    Revenue by Geography (In M’s except percentages) $18M $6M $80M $191M $93M $31M $90M $53M $24M $111M $281M $146M ©2021 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 FQ2'21 FQ1'22 FQ2'22 Cash $184.0 $191.3 $173.5 Accounts Receivable $128.2 $129.6 $133.3 Inventories $49.8 $32.4 $37.2 Accounts Payables $53.7 $63.4 $58.8 Gross Debt* $356.3 $330.0 $322.9 Net Debt** $172.3 $138.7 $149.

  13. Slide 13: Financial Highlight – Share Repurchase

    Financial Highlight – Share Repurchase FQ2’22 Share Repurchase Impact on Net Debt Shares Repurchased 1.8M Q2 Net Debt $149.4M Total Cost $25M Change in Net Debt $10.7M Average Price $13.65 Cash Used for Repurchase $25M Remaining Authorization $30M Adjusted Change in Net Debt ($14.3M) ©2021 EXTREME N

  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 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

  15. Slide 15: 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.

  16. Slide 16: Historical SaaS Disclosures

    Historical SaaS Disclosures SaaS ARR & SaaS Deferred Ending Revenue (In $M’s) Ending SaaS ARR1 $88 $80 $70 $63 $57 $54 2021 Q1 2021 Q2 2021 Q3 2021 Q4 2022 Q1 2022 Q2 1 SaaS Annual Recurring Revenue (ARR) Extreme uses SaaS annual recurring revenue (“SaaS ARR”) to identify the annual recurring value

  17. Slide 17: GAAP to Non-GAAP Reconciliations

    GAAP to Non-GAAP Reconciliations Revenue & Gross Margin (In M’s except percentages) Quarter FQ2'21 FQ1'22 FQ2'22 Product Revenue $ 165.8 $ 185.2 $ 191.1 Service Revenue 76.3 82.5 89.8 Total Revenue - GAAP $ 242.1 $ 267.7 $ 280.9 Gross Margin - GAAP 140.2 155.6 158.8 Gross Margin % - GAAP 57.9% 58.1%

  18. Slide 18: GAAP to Non-GAAP Reconciliations

    GAAP to Non-GAAP Reconciliations Operating Income (In M’s except percentages) Quarter FQ2'21 FQ1'22 FQ2'22 Operating Income - GAAP $ 5.7 $ 18.3 $ 18.1 Operating Margin- GAAP 2.4% 6.9% 6.4% Amortization of Product Intangibles 6.6 5.2 4.1 Total Share-Based Compensation 10.1 10.4 11.3 Restructuring Cha

  19. Slide 19: GAAP to Non-GAAP Reconciliations

    GAAP to Non-GAAP Reconciliations Net Income (Loss) (In $M’s except EPS) Quarter FQ2'21 FQ1'22 FQ2'22 Net Income (Loss) - GAAP $ (3.1) $ 12.7 $ 13.3 Shares - GAAP 123.3 133.2 133.6 EPS - GAAP (Diluted ) $ (0.02) $ 0.10 $ 0.10 Amortization of Product Intangibles 6.6 5.2 4.1 Total Share-Based Compensat

  20. Slide 20: GAAP to Non-GAAP Reconciliations

    GAAP to Non-GAAP Reconciliations EBITDA (In $M’s) Quarter FQ2'21 FQ1'22 FQ2'22 Net Income (Loss) - GAAP $ (3.1) $ 12.7 $ 13.3 Interest $ 6.0 $ 3.8 $ 3.0 Provision for Income Taxes $ 1.9 $ 2.1 $ 1.8 Depreciation/Amortization 13.9 $ 11.6 $ 10.1 EBITDA - GAAP 18.7 30.2 28.2 Net Non-GAAP Adjustments 19.

  21. Slide 21: FQ3'22 Financial Guidance

    FQ3’22 Financial Guidance ©2021 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 21

  22. Slide 22: FQ3'22 Guidance – GAAP

    FQ3’22 Guidance – GAAP (In M’s except percentages and EPS) FQ3’22 FQ2’22 Guidance Revenue ($M) $280.9 $276.0 - $286.0 Gross Margin % 56.5% 55.8% - 57.8% Net Income $13.3 $5.1 – $12.6 EPS $0.10 $0.04 – $0.09 ©2021 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 22

  23. Slide 23: FQ3'22 Guidance – Non-GAAP

    FQ3’22 Guidance – Non-GAAP (In M’s except percentages and EPS) FQ3’22 FQ2’22 Guidance Revenue ($M) $280.9 $276.0 - $286.0 Gross Margin % 58.2% 57.3% - 59.3% Net Income $28.4 $21.3-$28.7 EPS $0.21 $0.16 – $0.21 ©2021 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 23

  24. Slide 24: FQ3'22 Guidance - GAAP to Non-GAAP Reconciliation

    FQ3’22 Guidance - GAAP to Non-GAAP Reconciliation Operating Margin Gross Margin Rate Earnings per Share Rate GAAP 55.8% - 57.8% 3.9%-6.4% $0.04-$0.09 Estimated Adjustments for: Amortization of Product Intangibles 1.0% 1.0% $0.02 Share-Based Compensation 0.2% 3.8% $0.08 Restructuring Charges, net - 0

  25. Slide 25: ©2021 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED.

    ©2021 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 25

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