SAN JOSE, Calif., Nov. 1, 2016 /PRNewswire/ -- Extreme Networks,
Inc. ("Extreme") (Nasdaq: EXTR) today released financial results
for its fiscal first quarter ended September 30, 2016.
First quarter GAAP revenue was $122.6
million and non-GAAP revenue was $122.8
million. GAAP net loss for the first fiscal quarter
was $6.5 million, or $0.06 per basic share, and non-GAAP net income
was $7.1 million, or $0.07 per diluted share.
"We are pleased to see the positive impacts of our margin
initiatives in our first quarter financial results. Our
non-GAAP operating income is up 18% year over year and our product
gross margins increased by 200 basis points both annually and
sequentially highlighting the progress we are making," stated
Ed Meyercord, President and CEO of
Extreme Networks. "Revenue in the quarter was impacted by a
more disciplined approach to our discounting policies and softness
in E-Rate."
"With the recently completed acquisition of the WLAN business
from Zebra Technologies Corporation, we have new growth
opportunities across existing and new markets. We are excited
to bring Zebra's talented employees, advanced technology portfolio
and blue chip customers into Extreme," Meyercord added.
Recent Key Events:
- Growth with Close of Zebra WLAN Business.
- Establishes Extreme as #3 in WLAN in targeted enterprise
verticals.
- Expanded offering and network refresh opportunities with
Zebra's large-scale, multi-location distributed enterprise
customers such as Walmart, Kroger, FedEx and Loews.
- New technology offerings to Extreme customers including Zebra's
Wing operating system; the industry leading wireless security
offering - Air Defense; guest management platform and location
based services; and new in-house managed services
capabilities.
- Extreme New Product Introductions. Introduced the
industry's first Wave 2 Integrated Camera Access Point, White Label
Cloud Management Solutions for partner enablement, Wall Plate
Wireless AP and expanded Industrial switch portfolio.
- Industry Recognition as "Visionary" and
"Champion". For the second consecutive year, Extreme is
positioned the furthest to the right by Gartner, Inc. in the
"Visionaries" quadrant in the Magic Quadrant for Wired and Wireless
LAN Access Infrastructure. In addition, Gartner rated Extreme the
third highest score of 16 vendors in the annual Critical
Capabilities for Wired and Wireless Access LAN in the All-Wireless
Office and IaaS/Managed Service use cases.* This quarter, Info-Tech
Research Group placed Extreme as a Champion in the Vendor Landscape
for Wired and Wireless LAN.
- Launch of Extreme Partner Network. Extreme introduced
new enhancements to its Extreme Partner Network ("EPN") program to
offer new incentives that increase profitability and simplify the
way Extreme's channel partners do business. It is the most
competitive partner program in the industry.
*Gartner, Critical Capabilities for Wired and Wireless LAN
Access Infrastructure, 12 September
2016
Gartner, Magic Quadrant for the Wired and Wireless LAN Access
Infrastructure, 30 August
2016
Gartner does not endorse any vendor, product or service depicted
in its research publications, and does not advise technology users
to select only those vendors with the highest ratings or other
designation. Gartner research publications consist of the opinions
of Gartner's research organization and should not be construed as
statements of fact. Gartner disclaims all warranties, expressed or
implied, with respect to this research, including any warranties of
merchantability or fitness for a particular purpose.
Fiscal Q1 2017
Financial Metrics:
|
|
|
|
2017
|
|
|
2016
|
|
|
Change
|
|
GAAP Net
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product
|
|
$
|
90.1
|
|
|
$
|
91.4
|
|
|
$
|
(1.3)
|
|
|
|
(1)
|
%
|
Service
|
|
|
32.5
|
|
|
|
33.2
|
|
|
|
(0.7)
|
|
|
|
(2)
|
%
|
Total Net
Revenue
|
|
$
|
122.6
|
|
|
$
|
124.6
|
|
|
$
|
(2.0)
|
|
|
|
(2)
|
%
|
Gross
Margin
|
|
|
53.2
|
%
|
|
|
52.3
|
%
|
|
|
0.9
|
%
|
|
|
2
|
%
|
Operating
Margin
|
|
|
(3.9)
|
%
|
|
|
(8.7)
|
%
|
|
|
4.8
|
%
|
|
|
55
|
%
|
Net Loss
|
|
$
|
(6.5)
|
|
|
$
|
(11.5)
|
|
|
$
|
5.0
|
|
|
|
44
|
%
|
Loss per basic
share
|
|
$
|
(0.06)
|
|
|
$
|
(0.11)
|
|
|
$
|
0.05
|
|
|
|
45
|
%
|
Non-GAAP Net
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product
|
|
$
|
90.1
|
|
|
$
|
91.4
|
|
|
$
|
(1.3)
|
|
|
|
(1)
|
%
|
Service
|
|
|
32.7
|
|
|
|
33.6
|
|
|
|
(0.9)
|
|
|
|
(3)
|
%
|
Total Net
Revenue
|
|
$
|
122.8
|
|
|
$
|
125.0
|
|
|
$
|
(2.2)
|
|
|
|
(2)
|
%
|
Gross
Margin
|
|
|
56.3
|
%
|
|
|
55.2
|
%
|
|
|
1.1
|
%
|
|
|
2
|
%
|
Operating
Margin
|
|
|
7.2
|
%
|
|
|
6.0
|
%
|
|
|
1.2
|
%
|
|
|
20
|
%
|
Net Income
|
|
$
|
7.1
|
|
|
$
|
6.7
|
|
|
$
|
0.4
|
|
|
|
7
|
%
|
Earnings per diluted
share
|
|
$
|
0.07
|
|
|
$
|
0.07
|
|
|
$
|
-
|
|
|
|
—
|
|
|
|
•
|
Cash and investments
ended the quarter at $102.3 million, as compared to $94.1 million
from the prior quarter and an increase of $20.2 million from the
prior year amount.
|
•
|
Accounts receivable
balance ending Q1 was $68.2 million, with days sales outstanding
("DSO") of 51.
|
•
|
Inventory ending Q1
was $43.4 million, an increase of $2.4 million from the prior
quarter and down $18.3 million from the prior year
amount.
|
Business Outlook:
Extreme's Business Outlook is based on current
expectations. The following statements are forward-looking,
and actual results could differ materially based on market
conditions and the factors set forth under "Forward-Looking
Statements" below.
For its second quarter of fiscal 2017 ending December 31, 2016, the Company is targeting GAAP
and non-GAAP revenue in a range of $148.0
million to $158.0 million. GAAP gross margin is
targeted between 53.4% and 55.3% and non-GAAP gross margin is
targeted between 54.5% and 55.5%. Operating expenses are targeted
to be between $88.1 million and $90.5
million on a GAAP basis and $72.8
million to $76.3 million on a non-GAAP basis. GAAP earnings
are targeted to be between a net loss of $6.4 million to $10.1
million or a loss of $0.06 to
$0.09 per share. Non-GAAP
earnings are targeted in a range of net income of $5.7 million to $9.4 million, or $0.05 to $0.09 per diluted share. The GAAP and
non-GAAP net income (loss) targets are based on an estimated 109
million and 110 million average outstanding shares,
respectively.
Conference Call:
Extreme will host a conference call at 4:30 p.m. Eastern (1:30
p.m. Pacific) today to review the first fiscal quarter
results as well as the second fiscal quarter 2017 business outlook,
including significant factors and assumptions underlying the
targets noted above. The conference call will be available to the
public through a live audio web broadcast via the Internet at
http://investor.extremenetworks.com and a replay of the call will
be available on the website through November
2, 2017. The conference call may also be
heard by dialing 1-877-303-9826 (international callers dial
1-224-357-2194). Supplemental financial information to be discussed
during the conference call will be posted in the Investor Relations
section of the Company's website www.extremenetworks.com including
the non-GAAP reconciliation attached to this press release. The
encore recording can be accessed by dialing (855) 859-2056 /or
international 1 (404) 537-3406 Conference ID #
90330335.
About Extreme Networks:
Extreme Networks, Inc. ("EXTR") delivers software-driven
networking solutions that help IT departments everywhere deliver
the ultimate business outcome: stronger connections with customers,
partners and employees. Wired to wireless, desktop to datacenter,
we go to extreme measures for our 20,000-plus customers in more
than 80 countries, delivering 100% insourced call-in technical
support to organizations large and small, including some of the
world's leading names in business, education, government,
healthcare, manufacturing and hospitality. Founded in 1996, Extreme
is headquartered in San Jose,
California. For more information, visit Extreme's website or
call 1-888-257-3000.
Extreme Networks and the Extreme Networks logo,
ExtremeManagement, ExtremeWireless, ExtremeControl and
ExtremeAnalytics are either trademarks or registered trademarks
of Extreme Networks, Inc. in the United
States and/or other countries.
Non-GAAP Financial Measures:
Extreme provides all financial information required in
accordance with generally accepted accounting principles ("GAAP").
The Company is providing with this press release non-GAAP revenue,
non-GAAP gross margins, non-GAAP operating expenses, and non-GAAP
income (loss) per share. In preparing non-GAAP information, the
Company has excluded, where applicable, the impact of share-based
compensation, acquisition and integration costs, purchase
accounting adjustments, amortization of acquired intangibles,
restructuring charges, executive transition costs, litigation
expenses and overhead adjustments. The Company believes that
excluding these items provides both management and investors with
additional insight into its current operations, the trends
affecting the Company, the Company's marketplace performance, and
the Company's ability to generate cash from operations. Please note
the Company's non-GAAP measures may be different than those used by
other companies. The additional non-GAAP financial information the
Company presents should be considered in conjunction with, and not
as a substitute for, the Company's GAAP financial
information. The Company has provided a non-GAAP
reconciliation of the results for the periods presented in this
release, which are adjusted to exclude certain items as
indicated. These measures should only be used to evaluate the
Company's results of operations in conjunction with the
corresponding GAAP measures for comparable financial information
and understanding of the Company's ongoing performance as a
business. Reconciliation of non-GAAP to corresponding GAAP measures
with respect to our business outlook is not possible at this time
due to the fact that amortization, stock compensation expense and
the impact of the mark-up of inventory to fair value for purchase
accounting can only be determined in connection with the
post-closing valuation of the assets we acquired in connection with
the closing of our transaction with Zebra Technologies Corporation
and other post-closing activities of the Company. Extreme
Networks uses both GAAP and non-GAAP measures to evaluate and
manage its operations.
Forward Looking Statements:
Statements in this release, including those concerning the
Company's business outlook, future financial and operating results,
and overall future prospects are forward-looking statements within
the meaning of the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995. These forward-looking
statements speak only as of the date of this release. Actual
results or events could differ materially from those anticipated in
those forward-looking statements as a result of certain factors,
including: our ability to realize the anticipated benefits of the
WLAN business from Zebra Technologies Corporation and to
successfully integrate the acquired technologies and operations
into our business and operations; failure to achieve targeted
revenues and forecasted demand from end customers; a highly
competitive business environment for network switching equipment;
our effectiveness in controlling expenses; the possibility that we
might experience delays in the development or introduction of new
technology and products; customer response to our new technology
and products; the timing of any recovery in the global economy;
risks related to pending or future litigation; and a dependency on
third parties for certain components and for the manufacturing of
our products.
More information about potential factors that could affect the
Company's business and financial results is included in the
Company's filings with the Securities and Exchange Commission,
including, without limitation, under the captions: "Management's
Discussion and Analysis of Financial Condition and Results of
Operations," and "Risk Factors". Except as required under the
U.S. federal securities laws and the rules and regulations of
the U.S. Securities and Exchange Commission, Extreme
Networks disclaims any obligation to update any
forward-looking statements after the date of this release, whether
as a result of new information, future events, developments,
changes in assumptions or otherwise.
EXTREME NETWORKS,
INC.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(In
thousands)
|
(Unaudited)
|
|
|
|
September 30,
2016
|
|
|
June 30,
2016
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
102,265
|
|
|
$
|
94,122
|
|
Accounts receivable,
net of allowances of $2,582 at September 30, 2016 and $3,257 at
June 30, 2016
|
|
|
68,246
|
|
|
|
81,419
|
|
Inventories
|
|
|
43,395
|
|
|
|
40,989
|
|
Prepaid expenses and
other current assets
|
|
|
11,507
|
|
|
|
12,438
|
|
Total current
assets
|
|
|
225,413
|
|
|
|
228,968
|
|
Property and
equipment, net
|
|
|
30,058
|
|
|
|
29,580
|
|
Intangible assets,
net
|
|
|
11,707
|
|
|
|
19,762
|
|
Goodwill
|
|
|
70,877
|
|
|
|
70,877
|
|
Other
assets
|
|
|
25,054
|
|
|
|
25,236
|
|
Total
assets
|
|
$
|
363,109
|
|
|
$
|
374,423
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Current portion of
long-term debt
|
|
$
|
19,269
|
|
|
$
|
17,628
|
|
Accounts
payable
|
|
|
28,332
|
|
|
|
30,711
|
|
Accrued compensation
and benefits
|
|
|
19,827
|
|
|
|
27,145
|
|
Accrued
warranty
|
|
|
8,620
|
|
|
|
9,600
|
|
Deferred revenue,
net
|
|
|
70,697
|
|
|
|
72,934
|
|
Deferred distributors
revenue, net of cost of sales to distributors
|
|
|
30,229
|
|
|
|
26,817
|
|
Other accrued
liabilities
|
|
|
27,382
|
|
|
|
26,691
|
|
Total current
liabilities
|
|
|
204,356
|
|
|
|
211,526
|
|
Deferred revenue,
less current portion
|
|
|
21,540
|
|
|
|
21,926
|
|
Long-term debt, less
current portion
|
|
|
32,621
|
|
|
|
37,446
|
|
Deferred income
taxes
|
|
|
5,129
|
|
|
|
4,693
|
|
Other long-term
liabilities
|
|
|
8,728
|
|
|
|
8,635
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
|
Stockholders'
equity
|
|
|
90,735
|
|
|
|
90,197
|
|
Total liabilities and
stockholders' equity
|
|
$
|
363,109
|
|
|
$
|
374,423
|
|
EXTREME NETWORKS,
INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(In thousands,
except per share amounts)
|
(Unaudited)
|
|
|
|
For the three
months ended
|
|
|
|
September 30,
2016
|
|
|
September 30,
2015
|
|
Net
revenues:
|
|
|
|
|
|
|
|
|
Product
|
|
$
|
90,131
|
|
|
$
|
91,381
|
|
Service
|
|
|
32,511
|
|
|
|
33,200
|
|
Total net
revenues
|
|
|
122,642
|
|
|
|
124,581
|
|
Cost of
revenues:
|
|
|
|
|
|
|
|
|
Product
|
|
|
44,927
|
|
|
|
46,934
|
|
Service
|
|
|
12,469
|
|
|
|
12,529
|
|
Total cost of
revenues
|
|
|
57,396
|
|
|
|
59,463
|
|
Gross
profit:
|
|
|
|
|
|
|
|
|
Product
|
|
|
45,204
|
|
|
|
44,447
|
|
Service
|
|
|
20,042
|
|
|
|
20,671
|
|
Total gross
profit
|
|
|
65,246
|
|
|
|
65,118
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Research and
development
|
|
|
18,299
|
|
|
|
20,268
|
|
Sales and
marketing
|
|
|
36,956
|
|
|
|
36,062
|
|
General and
administrative
|
|
|
8,287
|
|
|
|
9,176
|
|
Acquisition and
integration costs
|
|
|
2,321
|
|
|
|
338
|
|
Restructuring charge,
net of reversals
|
|
|
-
|
|
|
|
5,603
|
|
Amortization of
intangibles
|
|
|
4,142
|
|
|
|
4,467
|
|
Total operating
expenses
|
|
|
70,005
|
|
|
|
75,914
|
|
Operating
loss
|
|
|
(4,759)
|
|
|
|
(10,796)
|
|
Interest
income
|
|
|
57
|
|
|
|
27
|
|
Interest
expense
|
|
|
(647)
|
|
|
|
(826)
|
|
Other income
(expense), net
|
|
|
(223)
|
|
|
|
967
|
|
Loss before income
taxes
|
|
|
(5,572)
|
|
|
|
(10,628)
|
|
Provision for income
taxes
|
|
|
907
|
|
|
|
898
|
|
Net loss
|
|
$
|
(6,479)
|
|
|
$
|
(11,526)
|
|
Basic and diluted net
loss per share:
|
|
|
|
|
|
|
|
|
Net loss per share -
basic
|
|
$
|
(0.06)
|
|
|
$
|
(0.11)
|
|
Net loss per share -
diluted
|
|
$
|
(0.06)
|
|
|
$
|
(0.11)
|
|
Shares used in per
share calculation - basic
|
|
|
105,955
|
|
|
|
100,985
|
|
Shares used in per
share calculation - diluted
|
|
|
105,955
|
|
|
|
100,895
|
|
EXTREME NETWORKS,
INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(In
thousands)
|
(Unaudited)
|
|
|
|
For the three
months ended
|
|
|
|
September 30,
2016
|
|
|
September 30,
2015
|
|
Net cash provided
by operating activities
|
|
$
|
9,574
|
|
|
$
|
6,526
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
|
|
(1,635)
|
|
|
|
(633)
|
|
Net cash used in
investing activities
|
|
|
(1,635)
|
|
|
|
(633)
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
|
Repayment of
debt
|
|
|
(3,250)
|
|
|
|
(1,625)
|
|
Proceeds from issuance
of common stock
|
|
|
3,416
|
|
|
|
1,855
|
|
Net cash provided by
financing activities
|
|
|
166
|
|
|
|
230
|
|
|
|
|
|
|
|
|
|
|
Foreign currency
effect on cash
|
|
|
38
|
|
|
|
(323)
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash
and cash equivalents
|
|
|
8,143
|
|
|
|
5,800
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents at beginning of period
|
|
|
94,122
|
|
|
|
76,225
|
|
Cash and cash
equivalents at end of period
|
|
$
|
102,265
|
|
|
$
|
82,025
|
|
Extreme Networks, Inc.
Non-GAAP Measures of Financial Performance
To supplement the Company's consolidated financial statements
presented in accordance with generally accepted accounting
principles, ("GAAP"), Extreme Networks uses non-GAAP measures of
certain components of financial performance. These non-GAAP
measures include non-GAAP net income, non-GAAP earnings per diluted
share, non-GAAP gross margin, non-GAAP operating expenses and free
cash flow.
Reconciliation to the nearest GAAP measure of all historical
non-GAAP measures included in this press release can be found in
the tables included with this press release. In this press
release, Extreme Networks also presents its target for non-GAAP
expenses, which is expenses less share-based compensation expense,
acquisition and integration costs, purchase accounting adjustments,
amortization of intangibles, restructuring expenses and overhead
adjustments.
Non-GAAP measures presented in this press release are not in
accordance with or alternative measures prepared in accordance with
GAAP and may be different from non-GAAP measures used by other
companies. In addition, these non-GAAP measures are not based
on any comprehensive set of accounting rules or principles.
Non-GAAP measures have limitations in that they do not reflect all
of the amounts associated with Extreme Networks' results of
operations as determined in accordance with GAAP. These
non-GAAP measures should only be used to evaluate Extreme Networks'
results of operations in conjunction with the corresponding GAAP
measures.
Extreme believes these non-GAAP measures when shown in
conjunction with the corresponding GAAP measures enhance investors'
and management's overall understanding of the Company's current
financial performance and the Company's prospects for the future,
including cash flows available to pursue opportunities to enhance
shareholder value. In addition, because Extreme Networks has
historically reported certain non-GAAP results to investors, the
Company believes the inclusion of non-GAAP measures provides
consistency in the Company's financial reporting.
For its internal planning process, and as discussed further
below, Extreme's management uses financial statements that do not
include share-based compensation expense, acquisition and
integration costs, purchase accounting adjustments, amortization
of intangibles, restructuring expenses, executive
transition costs, litigation expenses and overhead
adjustments. Extreme's management also uses non-GAAP
measures, in addition to the corresponding GAAP measures, in
reviewing the Company's financial results.
As described above, Extreme excludes the following items from
one or more of its non-GAAP measures when applicable.
Share-based compensation. This expense consists of
expenses for stock options, restricted stock and employee stock
purchases through its ESPP. Extreme Networks excludes
share-based compensation expenses from its non-GAAP measures
primarily because they are non-cash expenses that the Company does
not believe are reflective of ongoing cash requirement related to
operating results. Extreme Networks expects to incur share-based
compensation expenses in future periods.
Acquisition and integration costs. Acquisition and
integration costs consist of legal and professional fees related to
the acquisition of Zebra Technologies Corporation's wireless LAN
business. Extreme Networks excludes these expenses
since they result from an event that is outside the ordinary course
of continuing operations.
Purchase accounting adjustments. Purchase
accounting adjustments relating to deferred revenue consists of
adjustments to the carrying value of deferred revenue. We
have recorded adjustments to the assumed deferred revenue to
reflect only a fulfillment margin and thereby excluding the profit
margin and revenue which would have been incurred had Extreme
Networks entered into the service contract post-acquisition.
Amortization of acquired intangibles. Amortization
of acquired intangibles includes the monthly amortization expense
of acquired intangible assets such as developed technology,
customer relationships, trademarks and order backlog. The
amortization of the developed technology intangible is recorded in
product cost of goods sold, while the amortization for the other
intangibles are recorded in operating expenses. Extreme
Networks excludes these non-cash expenses since they result from an
intangible asset and for which the period expense does not impact
the operations of the business and are non-cash in nature.
Restructuring expenses. Restructuring expenses primarily
consist of accrued lease costs pertaining to the estimated future
obligations for non-cancelable lease payments and accelerated
depreciation of leasehold improvements related to excess
facilities. Extreme Networks excludes restructuring expenses since
they result from events that often occur outside of the ordinary
course of continuing operations.
Executive transition expenses. Executive transition
expenses consists of severance and termination benefits and legal
transition cash transactions. The expenses are incurred
through execution of pre-established employment contracts with
senior executives. The Company does not believe these
expenses are reflective of ongoing cash requirements related to its
operating results.
Litigation expenses. Litigation expenses consist of legal
and professional fees and expenses related to our on-going ligation
matter as a result of a securities laws class action lawsuit.
Overhead adjustments. Overhead adjustment relate to
service inventory overhead capitalization, this was a one-time
event and was non-cash in nature.
In addition to the non-GAAP measures discussed above, Extreme
uses free cash flow as a measure of operating performance.
Free cash flow represents operating cash flows less net purchase of
property and equipment on a GAAP basis. Extreme considers
free cash flows to be a liquidity measure that provides useful
information to management and investors about the amount of cash
generated by the business after the purchases of property and
equipment, which can then be used to, among other things, invest in
Extreme business, make strategic acquisitions, and strengthen the
balance sheet. A limitation of the utility of free cash flows
as a measure of financial performance is that it does not represent
the total increase or decrease in the Company's cash balance for
the period.
EXTREME NETWORKS,
INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
GAAP TO NON-GAAP
RECONCILIATION
|
(In thousands,
except per share amounts)
|
(Unaudited)
|
|
Non-GAAP
Revenue
|
For the three
months ended
|
|
|
|
September 30,
2016
|
|
|
September 30,
2015
|
|
|
|
|
|
|
|
|
|
|
|
Revenue - GAAP
Basis
|
$
|
122,642
|
|
|
$
|
124,581
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
Purchase accounting
adjustment
|
|
133
|
|
|
|
377
|
|
|
Revenue - Non-GAAP
Basis
|
$
|
122,775
|
|
|
$
|
124,958
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Gross
Margin
|
For the three
months ended
|
|
|
|
September 30,
2016
|
|
|
September 30,
2015
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit - GAAP
Basis
|
$
|
65,246
|
|
|
$
|
65,118
|
|
|
Gross margin - GAAP
Basis percentage
|
|
53.2
|
%
|
|
|
52.3
|
%
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
Stock based
compensation expense
|
|
300
|
|
|
|
663
|
|
|
Purchase accounting
adjustments
|
|
133
|
|
|
|
377
|
|
|
Amortization of
intangibles
|
|
3,417
|
|
|
|
4,292
|
|
|
Service inventory
overhead capitalization
|
|
-
|
|
|
|
(1,493)
|
|
|
Gross profit -
Non-GAAP Basis
|
$
|
69,096
|
|
|
$
|
68,957
|
|
|
Gross margin -
Non-GAAP Basis percentage
|
|
56.3
|
%
|
|
|
55.2
|
%
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Operating
Income
|
For the three
months ended
|
|
|
|
September 30,
2016
|
|
|
September 30,
2015
|
|
|
|
|
|
|
|
|
|
|
|
GAAP operating
loss
|
$
|
(4,759)
|
|
|
$
|
(10,796)
|
|
|
GAAP operating loss
percentage
|
|
(3.9)
|
%
|
|
|
(8.7)
|
%
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
Stock based
compensation expense
|
|
3,475
|
|
|
|
4,671
|
|
|
Acquisition and
integration costs
|
|
2,321
|
|
|
|
338
|
|
|
Restructuring charge,
net of reversal
|
|
-
|
|
|
|
5,603
|
|
|
Amortization of
intangibles
|
|
7,559
|
|
|
|
8,759
|
|
|
Purchase accounting
adjustments
|
|
133
|
|
|
|
377
|
|
|
Executive transition
costs
|
|
34
|
|
|
|
-
|
|
|
Litigation
|
|
27
|
|
|
|
-
|
|
|
Service inventory
overhead capitalization
|
|
-
|
|
|
|
(1,493)
|
|
|
Total adjustments to
GAAP operating loss
|
$
|
13,549
|
|
|
$
|
18,255
|
|
|
Non-GAAP operating
income
|
$
|
8,790
|
|
|
$
|
7,459
|
|
|
Non-GAAP operating
income percentage
|
|
7.2
|
%
|
|
|
6.0
|
%
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Net
Income
|
For the three
months ended
|
|
|
|
September 30,
2016
|
|
|
September 30,
2015
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net
loss
|
$
|
(6,479)
|
|
|
$
|
(11,526)
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
Stock based
compensation expense
|
|
3,475
|
|
|
|
4,671
|
|
|
Acquisition and
integration costs
|
|
2,321
|
|
|
|
338
|
|
|
Restructuring charge,
net of reversal
|
|
-
|
|
|
|
5,603
|
|
|
Amortization of
intangibles
|
|
7,559
|
|
|
|
8,759
|
|
|
Purchase accounting
adjustments
|
|
133
|
|
|
|
377
|
|
|
Executive transition
costs
|
|
34
|
|
|
|
-
|
|
|
Litigation
|
|
27
|
|
|
|
-
|
|
|
Service inventory
overhead capitalization
|
|
-
|
|
|
|
(1,493)
|
|
|
Total adjustments to
GAAP net loss
|
$
|
13,549
|
|
|
$
|
18,255
|
|
|
Non-GAAP net
income
|
$
|
7,070
|
|
|
$
|
6,729
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
share
|
|
|
|
|
|
|
|
|
Non-GAAP diluted net
income per share
|
$
|
0.07
|
|
|
$
|
0.07
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in
diluted net income per share calculation
|
|
|
|
|
|
|
|
|
Non-GAAP shares
used
|
|
108,637
|
|
|
|
102,907
|
|
|
|
|
|
Free Cash
Flow
|
For the three
months ended
|
|
|
|
September 30,
2016
|
|
|
September 30,
2015
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow provided by
operations
|
$
|
9,574
|
|
|
$
|
6,526
|
|
|
Less: PP&E CapEx
spending
|
|
(1,635)
|
|
|
$
|
(633)
|
|
|
Total free cash
flow
|
$
|
7,939
|
|
|
$
|
5,893
|
|
|
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SOURCE Extreme Networks, Inc.