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Dec 31, 2023
Extreme Networks Q2 2024 Earnings Report
Reported financial results in-line with previously revised second quarter outlook.
Key Takeaways
Extreme Networks reported a decrease in revenue by 6.9% year-over-year, totaling $296.4 million. Despite the revenue decline, the company improved gross margins and optimized operating expenses to maintain a healthy operating margin. SaaS ARR grew by 37% year-over-year, reaching $158.0 million. The company expects to emerge in the fourth quarter at a more normalized level of revenue and earnings.
Revenue was $296.4 million, a decrease of 6.9% year-over-year.
SaaS ARR reached $158.0 million, showing a 37.4% increase year-over-year.
GAAP diluted EPS was $0.03, compared to $0.13 in the prior year quarter.
Non-GAAP diluted EPS was $0.24, compared to $0.27 in the prior year quarter.
Revenue by Segment
Forward Guidance
For the third quarter of fiscal 2024, Extreme Networks is targeting revenue between $200.0 and $210.0 million. They anticipate GAAP gross margin between 58.6% and 60.6%, and a GAAP operating margin between -33.7% and -29.2%. The company expects a GAAP earnings per share between $(0.55) and $(0.50). For the fourth quarter of fiscal 2024, Extreme Networks is targeting revenue between $265.0 and $275.0 million, with GAAP and non-GAAP gross margin to be flat to up slightly from Q3. The company projects a non-GAAP operating margin of 10% - 13% and a GAAP operating margin of (2)% - 1%.
Positive Outlook
- Expecting improved sequential revenue growth based on funnel and the seasonality of business, led by the Education vertical in Q4.
- Positioned to deliver improved profitability and cash flow in FY25.
- GAAP and non-GAAP gross margin to be flat to up slightly from Q3 in Q4.
- Expecting stabilization across EMEA and growth in APAC.
- Remains focused on innovation with the introduction of new Wi-Fi 7 access points and 4000 Series Universal Switches.
Challenges Ahead
- Networking industry is exiting the final stage of the COVID-induced era of supply chain constraints, impacting the business.
Historical Earnings Impact
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Avg. Return Before/After Earnings
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