Extreme Networks, Inc. · NASDAQ:EXTR
Extreme Networks — Investor Day (February 2021)
84 slides from Extreme Networks's investor day presentation, Feb 23, 2021
Slide 1: Investor Day
INVESTOR DAY <y>—___— FEBRUARY 23, 2021 networks
Slide 2: Stan Kovler
STAN KOVLER VP, CORPORATE STRATEGY AND INVESTOR RELATIONS networks
Slide 3: Cautionary Statement on Financial Measures
Cautionary Statement on Financial Measures Non-GAAP Measures In preparing the accompanying information, the Company has excluded, where applicable, the impact of certain Non-GAAP costs as listed at the end of this presentation. The Company believes these Non-GAAP measures provide both management and
Slide 4: Agenda
Agenda Presentation Speaker Role VP, Corporate Strategy and Investor Opening Remarks Stan Kovler Relations Company Overview Ed Meyercord President and CEO Major League Baseball Norman Rice Chief Operating Officer Chief Product Officer and Chief Technology Vision Nabil Bukhari Technology Officer Brea
Slide 5: Ed Meyercord
ED MEYERCORD hate GN ee PRESIDENT AND CEO networks
Slide 6: Business Looks Different Today
Extreme Networks 25 YEARS $1B BUSINESS LOOKS DIFFERENT TODAY OF INNOVATION FLEXIBLE WORK In Annual Revenue ENVIRONMENTS COVID EXTREME 1.5 MILLION CLOUD-MANAGED The New Normal ACADEMY DEVICES THE DIGITAL DIVIDE GARTNER MQ LEADER IN WIRED FASTEST GROWING* DX AND WIRELESS Channel Engine, INFRASTRUCTURE
Slide 7: Investing for Growth in the Cloud Networking Era
Investing for Growth in the Cloud Networking Era SDN Solutions Fabric Networking Cloud Networking Simplify, Cloudify, $180M investment $79M investment $210M Investment Universal Hardware 2013 2017 2019 2021 EFFORTLESS SECURE FABRIC CLOUD CLOUD-DRIVEN NETWORKING NETWORKING NETWORKING NETWORKING SCALE
Slide 8: Building Blocks of Our Networking Vision
Building Blocks of Our Networking Vision Cloud Data Mobility Simplicity, flexibility, and The new currency in the Any device on any new capabilities cloud world network 8 ©EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. CN
Slide 9: Infinite Enterprise
Infinite Enterprise The Cloud has enabled the edge of the network to be infinitely distributed 9 ©EXTREME NETWORKS, INC. ALL RIGHTS RESERVED.
Slide 10: Aldine School District – Education
Aldine School District – Education 82 Campuses with 70,000 Students 67,000 Devices (Daily), 9,000 APs (1,000 Outdoor) Compressed 3-Year DX Plan to 10 Months Wireless, Switching, Analytics, Premiere Services K-12 Bridging the Education Digital Divide 10 ©EXTREME NETWORKS, INC. ALL RIGHTS RESERVED.
Slide 11: NAVER – Internet Search Engine
NAVER – Internet Search Engine Leading Search Engine in South Korea Handle 75% of Web Searches 200M User Base, $6.6B Revenue Needed Transformational Network for New HQ IT Software and Automated Services Campus 11 ©EXTREME NETWORKS, INC. ALL RIGHTS RESERVED.
Slide 12: PNC Bank – Finance
PNC Bank – Finance 2,300 Branches and Growing Needed Scalable Cloud Solution ISO 27001 Certified, Managed Service Private RDC Running on AWS Financial Cloud as a Institution Service 12 ©EXTREME NETWORKS, INC. ALL RIGHTS RESERVED.
Slide 13: Cordaan – Long-Term Care
Cordaan – Long-Term Care Largest Healthcare Provider in Netherlands Serves 20,000 Patients Across 100 Locations 6,000 Staff + 2,500 Volunteers ExtremeCloud IQ, Wireless, Fabric, Switching Healthcare Flexible Networking 13 ©EXTREME NETWORKS, INC. ALL RIGHTS RESERVED.
Slide 14: Large and Growing Addressable Market
Large and Growing Addressable Market $26 Billion Enterprise Networking TAM $3 Billion Service Provider Networking SAM $15 Billion Enterprise Extreme SAM $50-100 Million Annual Target Source: 650 Group, Gartner, IDC, Omdia, Company Reports 14 ©EXTREME NETWORKS, INC. ALL RIGHTS RESERVED.
Slide 15: ExtremeCloud IQ SaaS Platform Addressable Market
ExtremeCloud IQ SaaS Platform Addressable Market $7B TAM by 2023 in Cloud-Based Networking Third Party IoT Devices Tens of billions Third Party Networking Devices Hundreds of millions Extreme Installed Base 5 Million devices and growing ExtremeCloud IQ 1.5M network devices 15 Source: 650 Group, Gart
Slide 16: Early Stages of Long-term 5G Growth Opportunity
Early Stages of Long-term 5G Growth Opportunity 5G Will Account for 80% of Mobile RAN Spending by 2025 Mobile Data Traffic* Mobile RAN Revenue Outlook** (EB/Month) ($ Millions) 180 $45,000 160 $36,000 140 120 $27,000 100 80 $18,000 60 40 $9,000 20 0 $0 2019 2020 2021 2022 2023 2024 2025 2019 2020 20
Slide 17: Pivoting Towards Growth and Innovation
Pivoting Towards Growth and Innovation Transformational Changes FY21 Demand Drivers in Longer-Term Growth Driving Improved Execution Existing Markets Opportunities Revamped Sales Motions Taking Share in High Growth Infinite Enterprise Segments of Networking Digital Marketing and Cross Sell and 5G Re
Slide 18: Thank You
THANK YOU ey, INVESTOR DAY 2021 networks
Slide 19: Norman Rice and Truman Boyes
NORMAN RICE TRUMAN BOYES CHIEF OPERATING OFFICER SVP INFRASTRUCTURE EXTREME NETWORKS MAJOR LEAGUE BASEBALL FE extreme (. ‘OFFICIAL WLFI SOLUTIONS PROVIDER OF MAJOR LEAGUE BASEBALL
Slide 20: Nabil Bukhari
NABIL BUKHARI > ww NES CHIEF PRODECT OFRICER CHEF... EGHN@1LOG VY. Gis: ie networks
Slide 21: A New World
A NEW WORLD 21 ©EXTREME NETWORKS, INC. ALL RIGHTS RESERVED.
Slide 22: Enterprise
ENTERPRISE ©EXTREME NETWORKS, INC. ALL RIGHTS RESERVED.
Slide 23: Infinite Enterprise
INFINITE ENTERPRISE INFINITELY DISTRIBUTED CONNECTIVITY INFINITELY SCALABLE CLOUD EFFORTLESS EXPERIENCE 23 ©EXTREME NETWORKS, INC. ALL RIGHTS RESERVED.
Slide 24: Building Blocks of Infinite Enterprise
Building Blocks of Infinite Enterprise Mobility Cloud Data Any User on any network Scalability, Simplicity, “The new currency” Flexibility 24 ©EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. CN
Slide 25: Mobility
MOBILITY INFINITELY INFINITELY ENTERPRISE UNIVERSAL DISTRIBUTED SCALABLE CONNECTIVITY FABRIC INFRASTRUCTURE CLOUD “enterprise grade trust with consumer centric experience – anywhere, everywhere” 25 ©EXTREME NETWORKS, INC. ALL RIGHTS RESERVED.
Slide 26: 5G: The Big Spend Cycle
5G: The Big Spend Cycle NEW NFV & INFRASTRUCTURE VIRTUALIZATION CLOUD NATIVE ROLLOUT OF THE MOBILE INFRASTRUCTURE NETWORK & MANAGEMENT “5G will enable a new generation of use cases” 26 ©EXTREME NETWORKS, INC. ALL RIGHTS RESERVED.
Slide 27: Building Blocks of Infinite Enterprise
Building Blocks of Infinite Enterprise Mobility Cloud Data 27 ©EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. CN
Slide 28: Cloud
Cloud MULTI MULTI MULTI MULTI CLOUD DOMAIN DURATION DEPLOYMENT “Cloud is synonymous with simplicity and scalability, now we have entered the age of flexibility” 28 ©EXTREME NETWORKS, INC. ALL RIGHTS RESERVED.
Slide 29: ExtremeCloud Edge
ExtremeCloud Edge At launch: ExtremeCloud IQ ExtremeCloud IQ-SE ExtremeCloud IQ-WLC ExtremeCloud IQ AirDefense FULLY AS-A- CONTAINERIZED SERVICE ANY ISO CERTIFIED MARKETPLACE CLOUD EDGE TURNKEY APPLICATION OFFERING “we will bring the cloud to you - simplicity, scalability, flexibility ” 29 ©EXTREME
Slide 30: Building Blocks of Infinite Enterprise
Building Blocks of Infinite Enterprise Mobility Cloud Data 30 ©EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. CN
Slide 31: Data
DATA DATA & DATA DATA DATA CLOUD DURATION DURABILITY DIVERSITY “all data is not created equal, all data is not treated equal” 31 ©EXTREME NETWORKS, INC. ALL RIGHTS RESERVED.
Slide 32: Data
DATA OPEN API EXPLAINABLE ISO A.I. CERTIFICATIONS REDUCES REDUCES COST REDUCES COMPLEXIBILITY RISK “data unused, is data wasted” 32 ©EXTREME NETWORKS, INC. ALL RIGHTS RESERVED.
Slide 33: Simple, intuitive, and consistent
USERS BUYERS EFFORTLESS EXPERIENCE PARTNERS SELLER “simple, intuitive, and consistent” ©EXTREME NETWORKS, INC. ALL RIGHTS RESERVED.
Slide 34: Infinite Enterprise
INFINITE ENTERPRISE INFINITELY DISTRIBUTED CONNECTIVITY INFINITELY SCALABLE CLOUD EFFORTLESS EXPERIENCE 34 ©EXTREME NETWORKS, INC. ALL RIGHTS RESERVED.
Slide 35: Appendix
APPENDIX Bas NZ networks
Slide 36: How Does Extreme Deliver Effortless?
How Does Extreme Deliver Effortless? Through our platforms, cloud, and services… Financial Flexibility Trusted Support Universal Warranty Advanced Services Fueled by Data Simplified Licensing Pool-able, Portable, Device Agnostic Flexible Management Single control plane; Management Choice Universal P
Slide 37: Effortless Experiences Help Organizations Advance
Effortless Experiences Help Organizations Advance DRIVE TOPLINE IMPROVE EFFICIENCY “Retail businesses like ours must be “Working with Extreme means that able to seamlessly and effectively we now have the infrastructure in CHALLENGE: With adapt to dynamic market place to optimize performance exponent
Slide 38: Your Path to Making Every Connection Feel Effortless
Your Path to Making Every Connection Feel Effortless Bringing your users, devices, and applications together ISO 27001 WIPS IoT LOCATION GUEST ANY APP COMPLIANCE NAC AI/ML Air Defense Segmented Embedded SECURITY ANY CLOUD ANY WAY Public Cloud Private Cloud Cloud Edge NETWORK MANAGEMENT FABRIC ANYWHE
Slide 39: Not All Cloud Architectures Are Created Equal
Not All Cloud Architectures Are Created Equal. Choose Wisely. Global Footprint Microservices Architecture High Velocity Updates Unlimited Data Duration Public Cloud, Private Cloud, or Cloud Edge + AWS, GCP, Azure Capable Manage and Migrate Legacy On-Premise Solutions Manage 3rd Party Devices Wi-Fi &
Slide 40: Mobility
Ca MOBILITY
Slide 41: Effortless Wireless
EFFORTLESS WIRELESS © © LEADING WI-FI 6 CLOUD-DRIVEN MACHINE LEARNING E Extreme Networks Investor Day 2021
Slide 42: Wireless Benefits
WIRELESS BENEFITS High Speed & Visibility & Context-based Secure Access Efficiency Control Optimization for all Latest Wi-Fi technologies Meaningful performance APs identify associated Secure corporate, guest, including OFDMA, MU- and security insights users, devices, and BYOD, and IoT devic
Slide 43: Wi-Fi 6 Portfolio
WI-FI 6 PORTFOLIO • Indoor, outdoor • 2x2, 4x4 • Integrated Antennas • External Antennas • BLE, Zigbee • Hardened APs • Cold Storage • Wet, dusty & harsh environments • Stadium APs • Pole mounted & under seat options
Slide 44: Effortless Switching
EFFORTLESS SWITCHING & SECURE CLOUD-DRIVEN E Extreme Networks : Investor Day 2021
Slide 45: Switching Benefits
SWITCHING BENEFITS Fabric-Enabled Dynamic Role-based Policies e itches support a common highly-scalable policy ns, Whether you are s wired and wi These policies metro, or WAN, our y defined but locally en The echnologies ensure a ‘i r policies travel with the user, device, and applic: dation for you
Slide 46: What Really Makes Extreme Feel Effortless
What Really Makes Extreme Feel Effortless We’re the first to bring one cloud and one fabric together ExtremeCloud™ Extreme Fabric Simplified Licensing Provider, deployment, and End-to-end Most flexible licensing model device agnostic Industry-leading footprint Finance, lease or subscriptio
Slide 47: Industry Proven Fabric
INDUSTRY PROVEN FABRIC A new simplified way to design, build and manage networks All the network services you need with just a single technology Multiple independent L2/3 virtualized networks deployed with ease and scale Field proven across the globe, in every vertical industry Reduces Enhances Impr
Slide 48: Effortless is When Fabric Meets Cloud
Effortless is When Fabric Meets Cloud A more agile and secure network for campus and branch environments Fabric Simple, Automated Network Effortless Operation and Intelligence End-to-End Automation • Single pane of glass • AI/ML driven insights • Intuitive workflows • Remote management Combining the
Slide 49: Cloud
CLOUD
Slide 50: Why Cloud-Driven Networking?
WHY CLOUD-DRIVEN NETWORKING? SIMPLICITY SPEED SERVICE From provisioning to support, cloud Continuous innovation and delivery With API-accessible data insights and networking data intelligence makes ensures that your network is actions, integrate your network with all of your network operations equip
Slide 51: End-to-End Solution
END-TO-END SOLUTION Full visibility of network and traffic, from the Edge to the Data Center 51
Slide 52: Cloud Choice
CLOUD CHOICE Public Cloud, Private Cloud, Local 52
Slide 53: Depth of Capability
DEPTH OF CAPABILITY Extreme Auto-Pilot Everything in Co-Pilot + Advanced Actionable Al Public / Private / Local Cloud Al Configutation Segmentation Optimization Al Anomaly Detection Al-Drive Quarantine Al WIPS Extreme Co-Pilot Everything in Pilot + Machine Learning Derived Insights and Intelligence
Slide 54: Universal Cloud
UNIVERSAL CLOUD AWS, Azure, GCP – or Your Own CLOUD AGNOSTIC Public, Private, or Local Cloud DEPLOYMENT AGNOSTIC Private Cloud Public Cloud Local Manage any type of device DEVICE AGNOSTIC Access Points Switches Routers 54
Slide 55: Data
Data DATA
Slide 56: Highest Quality Data
HIGHEST QUALITY DATA AVAILABILITY DURABILITY DURATION 100% uptime with rapid With over 1 million bits of 90 days of visibility delivers feature and bug fix data stored per day, we the longest data perspective availability using CI/CD might lose one every 659,000 in the industry years. You are about
Slide 57: Thank You
THANK YOU ey, INVESTOR DAY 2021 networks
Slide 58: Katy Motiey
KATY MOTIEY Pe 9 ET CHIEF ADMINISTRATIVE AND SUSTAINABILITY OFFICER networks
Slide 59: Doing the Right Thing for Our Stakeholders
DOING THE RIGHT THING FOR OUR STAKEHOLDERS Partners Distributors Customers Suppliers Employees Communities Shareholders 59 ©EXTREME NETWORKS, INC. ALL RIGHTS RESERVED.
Slide 60: Diversity and Inclusion, Philanthropy, Sustainability
• Diversity and Inclusion • Philanthropy • Environmental and Sustainability • Data Privacy • Business Ethics • CSR 2025 Goals 60 ©EXTREME NETWORKS, INC. ALL RIGHTS RESERVED.
Slide 61: Gender Diversity, Racial/Ethnic Diversity, Environment
Women’s Leadership Council Sustainability Gender Diversity Racial/Ethnic Diversity Environment Increased from 18% ERGs, employee Moving freight from air to 24% over the last referrals, speaker series to sea, installed Bloom three years fuel cells 61 ©EXTREME NETWORKS, INC. ALL RIGHTS RESERVED.
Slide 62: Cloud Certifications
CLOUD CERTIFICATIONS We are the only Cloud Networking company with: • ISO 27001 • ISO 27017* • ISO 27701* *We have been recommended by our Certification Body DQS Inc. for ISO 27701 and ISO 27017 certifications. 62 ©EXTREME NETWORKS, INC. ALL RIGHTS RESERVED.
Slide 63: Advance Your Future.
ADVANCE YOUR FUTURE. 63 ©EXTREME NETWORKS, INC. ALL RIGHTS RESERVED.
Slide 64: Thank You
THANK YOU ey, INVESTOR DAY 2021 networks
Slide 65: Joe Vitalone and Wes Durow
/ JOE VITALONE WES DUROW CHIEF REVENUE. OFFICER CHIEF MARKETING OFFICER f= Extreme networks
Slide 66: Thank You
THANK YOU ey, INVESTOR DAY 2021 networks
Slide 67: Partner Testimonial
PARTNER TESTIMONIAL i JOE VITALONE ED WALTON wa wa CHIEF REVENUE OFFICER CHIEF EXECUTIVE OFFICER EXTREME NETWORKS SEEPIGG f= Extreme networks
Slide 68: Remi Thomas
REMI THOMAS eS NES CHIEF FINANCIAL OFFICER networks
Slide 69: Progress to Date
Progress to Date FY18 FY19 FY20 2019 LT FY21 Actuals Actuals Actuals Target Consensus $976M Revenue $983M $996M $948M >5% +3% Y/Y Recurring Revenue % 31% 22% 25% 31% 35%-40% of Total Revenue Q2’21 actuals Non GAAP Gross Profit 57.9% 58.2% 59.1% 60-62% 61.3% % of Revenue Non GAAP Operating 9.6% 6.1%
Slide 70: Strong Execution and Momentum Since COVID Hit
Strong Execution and Momentum Since COVID Hit Q3’20 Q2’21 Change B/(W) Revenue $209.5M $242.1M +15.5% Non GAAP Gross Margin % 56.7% 61.0% +4.3 pp Non GAAP OPEX % 62% 51% +11 pp Non GAAP OP% -5.1% 10.2% +15.3 pp Non GAAP EPS ($0.09) $0.13 +$0.22 Free Cash Flow $2M $33M +$31M Net Debt $229M $172M Redu
Slide 71: Long Term Revenue Drivers
Long Term (3 to 5-Year Horizon) Revenue Drivers Enterprise Networking Market Growth Rate — 3%-5% Incremental Service $20M in FY22, ramping to ~$50M-$100M annually Provider Opportunities Subscription Booking CAGR 25%-30% Subscription Renewal Rate 85%-90% Maintenance Attach 7%-10% of Product Revenue M
Slide 72: Strong Growth Outlook for ExtremeCloud IQ
Strong Growth Outlook for ExtremeCloud IQ Bookings Revenue $86M $56M Q2'21 Annualized Run Rate L-T Target Q2'21 Annualized Run Rate L-T Target ©EXTREME NETWORKS, INC. ALL RIGHTS RESERVED.
Slide 73: Company Revenue Growth and Mix Outlook
Company Revenue Growth and Mix Outlook FY20 Long-Term Target 5% 12% Revenue Type Target CAGR 26% Product 4%-6% Services 3%-5% 23% Subscription 25%-35% 69% Total 5%-9% 65% Product Services Subscription Product Services Subscription ©EXTREME NETWORKS, INC. ALL RIGHTS RESERVED.
Slide 74: Product Gross Margin Expansion
Product Non GAAP Gross Margin Expansion Margin Drivers GM% Impact Volume +2% Standard Cost – Including Universal Hardware +2% 61% Supply Chain – Distribution Costs, Freight, Tariffs +2% Service Provider Growth in Mix -1% Pricing and Discounting neutral 56% FY20 Non GAAP Product Target Non GAAP Produ
Slide 75: Services and Subscription Gross Margin Expansion
Services and Subscription Non GAAP Gross Margin Expansion Margin Drivers GM% Impact Increased Subscription Revenue in mx +5% Support volume growth +1% 70% Professional Services mix -2% 66% FY20 Non GAAP Services Target Non GAAP GM% Services GM% ©EXTREME NETWORKS, INC. ALL RIGHTS RESERVED.
Slide 76: Non GAAP Operating Expenses
Non GAAP Operating Expenses 55% 51% 5% 46%-49% 5% 5% 29% 27% 24%-25% G&A S&M R&D 21% 19% 17%-19% FY20 FY21* Long-Term Target 76 *Based on consensus ©EXTREME NETWORKS, INC. ALL RIGHTS RESERVED.
Slide 77: Target Operating Model
Target Operating Model P&L Drivers (Non GAAP) Cash Drivers FY21 Consensus FY21 YTD Gross Margin OPEX % of Rev OP Margin FCF % of Rev* CCC (Days) CAPEX % of Rev 61% 51% 10% 11.4% 44 1.7% Long-Term Targets Long-Term Targets 63%-65% 46%-49% 15%-18% 11%-13% 35-45 1.5%-2% 77 ©EXTREME NETWORKS, INC. ALL R
Slide 78: Capital Allocation
Capital Allocation Deleveraging Remains Our Top Priority Support Organic Investment to Drive Innovation • Current interest rate: Libor + 4.50 = 4.62% • Simplify, Cloudify • Original covenants (leverage<3.25x): Libor +3.25% • Universal Hardware • Further leverage reduction (<2.75x): Libor +2.75% • 5G
Slide 79: Key Takeaways
Key Takeaways 5-9% 25-35% 35% L-T Revenue Growth CAGR L-T Cloud Subscription Target Software and Services Revenue CAGR Recurring Revenue 63-65% 15-18% 11-13% L-T Gross Margin Non GAAP Operating Target Free Cash Expansion Margin Target Flow % of Revenue 79 ©EXTREME NETWORKS, INC. ALL RIGHTS RESERVED.
Slide 80: Appendix: GAAP Reconciliations
APPENDIX ath ON E NZ GAAP RECONCILIATIONS networks
Slide 81: Progress to Date - GAAP
Progress to Date - GAAP FY18 FY19 FY20 Actuals Actuals Actuals Revenue $983M $996M $948M Recurring Revenue % 22% 25% 31% of Total Revenue GAAP Gross Profit % of 54.4% 55.4% 54.6% Revenue GAAP Operating -3.9% -1.5% -10.4% Income % of Revenue Cash Conversion Cycle 66 days 62 days 63 days *Note: A reco
Slide 82: Strong Execution and Momentum Since COVID Hit - GAAP
Strong Execution and Momentum Since COVID Hit - GAAP Q3’20 Q2’21 Change B/(W) Revenue $209.5M $242.1M +15.5% GAAP Gross Margin % 53.1% 57.9% +4.8 pp GAAP OPEX % 71% 56% +15 pp GAAP OP% -18.3% 2.4% +20.7 pp GAAP EPS ($0.37) ($0.02) +$0.35 Free Cash Flow $2M $33M +$31M Net Debt $229M $172M Reduced by
Slide 83: Thank You
THANK YOU ey, INVESTOR DAY 2021 networks
Slide 84: Q&A Session
Q&A SESSION eS N& INVESTOR DAY 2021 networks