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Extreme Networks Reports Q1 Revenue on the High Side of Guidance
Nov 01, 2010 (04:11 PM EDT)
Strength in Europe and Asia-Pacific Drive Revenue
SANTA CLARA, Calif., Nov. 1, 2010 /PRNewswire-FirstCall/ -- Extreme Networks, Inc. (Nasdaq: EXTR) today announced financial results for its 2011 fiscal first quarter ended September 26, 2010. For the quarter, net revenue increased 26 percent to $83.8 million, as compared to revenue of $66.3 million in the first quarter of last year. Previously issued guidance to investors was for net revenue of $81-$84 million."
"Both EMEA and APAC posted solid performance, as we benefited from improvement in orders for Service Providers in EMEA through our Strategic Alliance partners, and we closed large orders in Korea that we had mentioned on our fourth quarter earnings call," said Oscar Rodriguez, President & CEO of Extreme Networks. "While our over-all performance was solid, performance in North America did not meet our expectation, as we believe our decision to make changes in our sales organization affected our ability to execute within the quarter. We believe the changes we are making will result in a stronger North American sales organization."
Rodriguez commented further, "As the global economies strengthen, we will continue to position in areas for additional growth. Based on the strength of our technology and our focus on affordable leading-edge products, I believe we can increase our sales contribution through both traditional channel partners and Alliance channels, to drive company revenue growth and to take market share."
First quarter non-GAAP operating income was $4.6 million, or 5.5 percent of net revenue, representing significant improvement as compared to an operating loss of $4.6 million in the first quarter of last year. Non-GAAP operating income in the 2010 fiscal fourth quarter was $5.6 million or 6.6 percent of net revenue.
In the first quarter the Company reported non-GAAP net income of $4.8 million or $0.05 per diluted share. That compares to a non-GAAP net loss of $4.9 million or $0.05 loss per diluted share in the first quarter of last year, and to non-GAAP net income of $6.3 million or $0.07 per diluted share in the 2010 fiscal fourth quarter, which historically is the Company's strongest seasonal period. Non-GAAP financial results exclude the impact of stock-based compensation, restructuring charges and litigation settlement costs. A reconciliation of GAAP to non-GAAP financial measures is included in the accompanying financial tables.
Operating income on a GAAP basis was $2.5 million for the quarter, representing significant improvement as compared to an operating loss of $5.3 million for the first quarter of last year. Reported operating income was $2.8 million in the 2010 fiscal fourth quarter.
Net income on a GAAP basis for quarter was $2.7 million or $0.03 per diluted share and compares to a net loss on a GAAP basis for the 2010 fiscal first quarter of $5.5 million or $0.06 loss per diluted share. In the 2010 fiscal fourth quarter, net income on a GAAP basis was $3.4 million or $0.04 per diluted share.
For the quarter, total net revenue in North America was $29.5 million, revenue in EMEA was $36.5 million, and revenue in APAC was $17.9 million. That compares to revenue of $36.3 million in North America, $36.8 million in EMEA, and $12.4 million in APAC in the 2010 fiscal fourth quarter.
Total cash and investments increased $0.3 million from the fourth quarter to $132.7 million and the Company has no debt. The increase in cash was tempered by payment of sales commissions resulting from accelerators earned in the fourth quarter and payment of a litigation settlement related to patent litigation.
2011 Fiscal Second Quarter non-GAAP Financial Guidance
For its 2011 fiscal second quarter ending December 26, 2010, the Company currently expects net revenue to be in a range of $85-$88 million and non-GAAP net income of $0.05 to $0.07 per diluted share.
Conference Call and Slide Presentation
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 1-800-642-1687 (international callers dial 1-706-645-9291). The conference call passcode is 15208309. In addition, a live webcast and replay of the call will be available at http://investor.extremenetworks.com. 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.
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), non-GAAP operating income/(loss) and non-GAAP earnings/(loss) per diluted share. In preparing our non-GAAP information, we have excluded, where applicable, the impact of restructuring charges, share-based compensation and litigation settlement costs. We believe that excluding these charges 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 charges 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 Consolidated Statement of Operations for the periods presented in this release, which are adjusted to exclude restructuring charges, share-based compensation expense and litigation settlement cost 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 provides converged Ethernet network infrastructures that support data, voice and video for enterprises and service providers. The company's network solutions feature high performance, high availability and scalable switching solutions that enable organizations to address real-world communications challenges and opportunities. Operating in more than 50 countries, Extreme Networks provides wired and wireless secure LANs, data center infrastructure and Service Provider Ethernet transport solutions that are complemented by global, 24x7 service and support. For more information, visit: http://www.extremenetworks.com
Extreme Networks is either a trademark or registered trademark of Extreme Networks, Inc. in the United States and/or other countries.
This announcement contains forward-looking statements that involve risks and uncertainties, including statements regarding the Company's expectations regarding financial performance and revenue growth and market share. 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.