Loading...
•
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.
Extreme Networks
Extreme Networks
Extreme Networks Revenue by Segment
Revenue by Segment
Product Revenue
CapyFin.com 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.
- Distributors and partners have lowered inventory purchases, which is expected to accelerate in the third quarter.
- Expect higher sell-through than sell-in, which will have a more significant impact on operating results in Q3.
- Plan to take cost actions to drive a recovery in EPS and cash flow.
- Targeting a GAAP operating margin between -33.7% and -29.2% for Q3.