Extreme Networks Inc (EXTR, Financial) released its financial results for the first quarter ended September 30, 2023, on November 1, 2023. The company reported a 19% year-over-year revenue growth, reaching $353.1 million. The operating leverage doubled the GAAP EPS, and the adoption of cloud technology drove a 30% growth in SaaS ARR.
Financial Highlights
Extreme Networks Inc (EXTR, Financial) reported a GAAP diluted EPS of $0.21, compared to $0.09 in the prior year quarter. The non-GAAP diluted EPS was $0.35, compared to $0.20 in the prior year quarter. The GAAP gross margin was 60.3%, compared to 56.0% in the prior year quarter, and the non-GAAP gross margin was 61.1%, compared to 57.6% in the prior year quarter. The GAAP operating margin was 10.2%, compared to 5.8% in the prior year quarter, and the non-GAAP operating margin was 17.7%, compared to 12.1% in the prior year quarter.
Liquidity and Cash Flow
During Q1, EXTR generated net cash flow from operations of $75.6 million and free cash flow of $71.3 million. The company repurchased 0.9 million shares of its common stock on the open market at a total cost of $24.9 million with a weighted average price of $28.28 per share. The Q1 ending cash balance was $224.4 million, a decrease of $10.4 million from the end of Q4 2023 and an increase of $26.1 million from the end of Q1 in the prior year. The Q1 net cash was $26.9 million, an increase of $17.1 million from net cash of $9.8 million from the end of Q4 2023 and an increase of $100.1 million from net debt of $73.2 million at the end of Q1 in the prior year.
Outlook
Looking ahead at FY24, EXTR expects changing customer buying patterns based on macroeconomic conditions in certain geographies. Therefore, the company expects revenue growth to be more tempered for the balance of the year. Despite these market conditions and slower revenue growth expectations, the company expects continued growth of EPS of over 25% in FY24. The company has taken recent actions to ensure it aligns its cost structure to the current level of revenue growth it expects to achieve. As a result, the company believes it is well-positioned to deliver strong profitability and improved operating margins during the year.
Key Highlights
Extreme Networks will host an Investor Day on Tuesday, Nov. 7 at the headquarters of Major League Baseball (MLB) in New York City. Topics will include an overview of the company, including an update on its strategic growth opportunities, customer highlights, go-to-market developments and the company’s outlook and longer-term financial targets.
The company continues to see significant traction around its highly differentiated fabric solutions. More than 6,000 customers around the world rely on Extreme’s network fabric solutions for simplified, secure, resilient networking benefiting from zero-touch provisioning, automation, hyper-segmentation, and simplified network management.
Explore the complete 8-K earnings release (here) from Extreme Networks Inc for further details.
