Extreme Networks Reports Fiscal Q2 Results

SANTA CLARA, Calif., Feb. 2, 2012 /PRNewswire/ -- Extreme Networks, Inc. (Nasdaq: EXTR) today announced financial results for its 2012 fiscal second quarter ended January 1, 2012. For the quarter, total net revenue was $82.8 million.  Non-GAAP Net Income was $5.8 million, or $0.06 per diluted share, and Net Income on a GAAP basis was $4.1 million or $0.04 per diluted share.  

"These results show the initial positive effect of our company transformation with product revenue up 8% and non-GAAP operating income up 25% from Q1," said Oscar Rodriguez, President and CEO of Extreme Networks. "We are now focused on driving the success of our new products for the cloud, data center and mobile markets, which will begin shipping this quarter."

Rodriguez continued, "Across our vertical markets, we are seeing strong interest in new cloud-scale products including the Black Diamond X8, and our new mobile backhaul products, the E4G cell-site routers."

For the quarter ended January 1, 2012, total net revenue was $82.8 million, compared to $85.1 million in the second quarter of fiscal 2011. Total net revenue in Americas was $36.8 million, revenue in EMEA was $32.4 million, and revenue in APAC was $13.6 million. That compares to revenue in Americas of $30.8 million, revenue in EMEA of $37.2 million, and revenue in APAC of $17.1 million for the same period last year. For the quarter, total revenue increased 5%, and product revenue was up 8% sequentially from the first quarter of fiscal 2012.

Second quarter non-GAAP operating income was $5.8 million or 7% of net revenue, representing a 10% improvement, compared to non-GAAP operating income of $5.3 million or 6% of net revenue in the second quarter last year.  Non-GAAP operating income in the first quarter of fiscal 2012 was $4.6 million or 6% of net revenue, representing a 25% improvement sequentially.

In the second quarter, the Company reported a non-GAAP Net Income of $5.8 million or $0.06 per diluted share. That compares to a non-GAAP Net Income of $5.1 million or $0.06 per diluted share in the second quarter of last year, and to non-GAAP Net Income of $4.4 million or $0.05 per diluted share in the first quarter of fiscal 2012. Non-GAAP financial results exclude the impact of stock-based compensation, restructuring charges, and litigation settlements. A reconciliation of GAAP to non-GAAP financial measures is included in the accompanying financial tables.

Operating income on a GAAP basis was $4.1 million for the quarter, compared to operating income of $9.1 million for the second quarter of last year, which included a favorable impact of $4.2 million in litigation settlements.  Operating income was $1.8 million in the first quarter of fiscal 2012.

Net Income on a GAAP basis for the quarter was $4.1 million or $0.04 per diluted share, compared to GAAP Net Income of $8.9 million or $0.10 per diluted share in the second quarter last year, which included the impact of $4.2 million in litigation settlements. In the first quarter of fiscal 2012, GAAP Net Income was $1.6 million or $0.02 per diluted share, including $1.0 million of restructuring charges.  

Total cash and investments totaled $146.4 million as of January 1, 2012. The Company has no long-term debt.

2012 Fiscal Third Quarter non-GAAP Financial Guidance
For its 2012 fiscal third quarter, ending on April 1, 2012, the Company currently expects net revenue to be in a range of $80 million to $85 million and non-GAAP Net Income of $0.06 to $0.08 per diluted share. The company also reiterates full-year guidance of $320 million to $340 million in revenue and earnings per share of 28 cents to 35 cents per diluted share.

Conference Call  
Extreme Networks will host a conference call to discuss these results today at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time). The conference call may be heard by dialing 1-877-303-9826 (international callers dial 1-224-357-2194). A 7-day replay will be available following the call by dialing 1-706-645-9291. The conference call passcode is 19564319. In addition, a live webcast and replay of the call will be available at http://investor.extremenetworks.com. 

Non-GAAP Financial Measures
Extreme Networks provides all financial information required in accordance with generally accepted accounting principles (GAAP). To supplement our consolidated financial statements presented in accordance with GAAP, we are also providing with this press release non-GAAP net income/(loss) and non-GAAP operating income/(loss). In preparing our non-GAAP information, we have excluded, where applicable, the impact of restructuring charges, share-based compensation and litigation settlements. We believe that excluding these items provides both management and investors with additional insight into our current operations, the trends affecting the Company and the Company's marketplace performance. In particular, management finds it useful to exclude these items in order to more readily correlate the Company's operating activities with the Company's ability to generate cash from operations. Accordingly, management uses these non-GAAP measures, along with the comparable GAAP information, in evaluating our historical performance and in planning our future business activities. Please note that our non-GAAP measures may be different than those used by other companies. The additional non-GAAP financial information we present should be considered in conjunction with, and not as a substitute for, our financial information presented in accordance with GAAP. We have provided a non-GAAP reconciliation of the Condensed Consolidated Statement of Operations for the periods presented in this release, which are adjusted to exclude restructuring charges, share-based compensation expense and litigation settlements for these periods. 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. Extreme Networks uses both GAAP and non-GAAP measures to evaluate and manage its operations.

Extreme Networks, Inc.
Extreme Networks delivers networks for the mobile world. The Company's open network solutions enable a quality user experience, providing a platform for improved business agility. From the converged mobile edge of enterprises to virtualized clouds, and from data centers to global carrier networks that backhaul mobile traffic, Extreme Networks' extensible services architecture helps set a foundation for mobility, user awareness and faster performance to empower people and machines to connect and move seamlessly. Extreme Networks is headquartered in Santa Clara, California, with offices in more than 50 countries worldwide. For more information, visit: www.extremenetworks.com

Extreme Networks and BlackDiamond are trademarks or registered trademarks of Extreme Networks, Inc. in the United States and/or other countries.

This announcement contains forward-looking statements, including our guidance regarding future results, that involve risks and uncertainties, including statements regarding the Company's expectations regarding financial performance, the impact of the restructuring and company transformation, and product introduction. Actual results could differ materially from those projected in the forward-looking statements as a result of certain risk factors, including, but not limited to: a challenging macro-economic environment both in the United States and overseas; fluctuations in demand for the Company's products and services; a highly competitive business environment for network switching equipment; the Company's effectiveness in controlling expenses, the possibility that the Company might experience delays in the development of new technology and products; customer response to its 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 the Company's products. The Company undertakes no obligation to update the forward-looking information in this release. More information about potential factors that could affect the Company's business and financial results is included in its 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," which are on file with the Securities and Exchange Commission."

SOURCE Extreme Networks, Inc.