Extreme Networks Reports Second Quarter Fiscal Year 2015 Financial Results 

Extreme Networks, Inc. today released financial results for the second quarter of fiscal year 2015, ended December 31, 2014. GAAP revenue was $147.2 million and non-GAAP revenue was $148.0 million. GAAP net loss for the second fiscal quarter was $13.1 million, or $0.13 per share, and non-GAAP net income was $4.7 million, or $0.05 per diluted share. This is the fourth quarter that Extreme Networks is reporting full quarter results that include the Enterasys acquisition.

“We made solid progress towards improving our results in the second fiscal quarter. Non-GAAP revenues were up 8% from the prior quarter at $148 million. Non-GAAP operating income was up over five-fold from the prior quarter reaching $6.7 million and EPS was $0.05 compared to a penny loss in Q1. At the same time we strengthened our balance sheet, reducing debt by $32 million while maintaining cash at $109 million, slightly above the prior quarter,” said Chuck Berger, president and CEO of Extreme Networks. “We added several large new customers during the quarter including the Green Bay Packers, Baltimore Ravens, University of Maryland and Penn State University.

“We also continued to strengthen our sales leadership adding Stephen Patak and Bob Gault as heads of U.S. and Canada sales and worldwide channels respectively,” Berger continued. “Together they bring more than 30 years of experience in the networking industry. In addition, David Hume joined as CIO and Frank Yoshino was appointed vice president, treasury and IR. Raj Khanna joined our Board of Directors in December. Raj brings extensive financial and internal audit experience over a 30 year career at Xerox, Sun and Qualcomm.”

Key Accomplishments in Fiscal Q2 FY 2015:

• Product innovation continued with the introduction of the Summit 460-G2 fixed switch, the most powerful edge switch in our portfolio. We also broadened our IdentiFi Wi-Fi product offering with the AP3805, a full featured enterprise-class 802.11ac access point at an entry-level price point.
• Lenovo selected Extreme Networks to provide networking technology for its high performance computing (HPC) solution.
• Continued success with the NFL by adding the Baltimore Ravens and the Green Bay Packers as new customers for our in stadium Wi-Fi solutions. Extreme Networks was also named the first official Wi-Fi Solutions Provider of the NFL.
• We announced a co-marketing and sales agreement with IMG College, part of WME-IMG, who owns the marketing and media rights to over 90 division one universities. The University of Maryland selected our IdentiFi Wi-Fi solution for its football and basketball venues, joining Baylor University, an IMG partner university, who went live with Extreme in the prior quarter.
• Microsoft, Palo Alto Networks, VMWare, A10 Networks, NetOptics/IXIA and Sanbolic joined the Extreme Technology Solutions Partner (TSP) program joining more than 50 existing members, adding support to our open and standards-based networking and SDN technology.
• Key account wins:
  • Green Bay Packers
  • Baltimore Ravens
  • Penn State University
  • Harford County Public Schools
  • Sejong City Office of Education
  • Caledonia Community Schools
  • Charite Campus Mitte
  • Riken Japan

Business Outlook

For its third quarter of fiscal 2015 ending March 31, 2015, the Company is targeting GAAP revenue in a range of $129 million to $139 million with non-GAAP revenue in a range of $130 million to $140 million. GAAP gross margin is targeted between 51.0% and 52.0% and non-GAAP gross margin targeted between 55.0% and 56.0%. Operating expenses are targeted to be between $83 million and $84.6 million on a GAAP basis and $72.5 million to $74.5 million on a non-GAAP basis. GAAP net loss is targeted to be between $14 million to $19.5 million, or $0.14 to $0.20 per share. Non-GAAP earnings are targeted in a range of a net loss of $3.1 million to net income of $1.8 million, or a loss of $0.03 to net income of $0.02 per diluted share. The GAAP and non-GAAP net (loss) income targets are based on an estimated 99 million and 101 million, average outstanding shares respectively. Targeted non-GAAP earnings exclude expenses related to stock-based compensation expense, the amortization of acquired intangibles, acquisition and integration related expenses, restructuring expenses and the purchase accounting adjustment related to deferred service revenue.