Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Sep. 30, 2018 | Oct. 30, 2018 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | EXTREME NETWORKS INC | |
Entity Central Index Key | 1,078,271 | |
Current Fiscal Year End Date | --06-30 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2018 | |
Document Fiscal Year Focus | 2,019 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | EXTR | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 118,337,479 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Sep. 30, 2018 | Jun. 30, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 140,167 | $ 121,139 |
Accounts receivable, net of allowance for doubtful accounts of $1,661 at September 30, 2018 and $1,478 at June 30, 2018 | 164,683 | 212,423 |
Inventories | 55,580 | 63,867 |
Prepaid expenses and other current assets | 35,371 | 30,484 |
Total current assets | 395,801 | 427,913 |
Property and equipment, net | 76,224 | 78,519 |
Intangible assets, net | 70,023 | 77,092 |
Goodwill | 139,082 | 139,082 |
Other assets | 50,754 | 47,642 |
Total assets | 731,884 | 770,248 |
Current liabilities: | ||
Current portion of long-term debt | 9,008 | 9,007 |
Accounts payable | 43,873 | 75,689 |
Accrued compensation and benefits | 36,387 | 50,351 |
Accrued warranty | 12,601 | 12,807 |
Deferred revenue | 137,991 | 130,865 |
Other accrued liabilities | 82,180 | 81,153 |
Total current liabilities | 322,040 | 359,872 |
Deferred revenue, less current portion | 45,874 | 43,660 |
Long-term debt, less current portion | 176,498 | 188,749 |
Deferred income taxes | 6,234 | 6,135 |
Other long-term liabilities | 64,107 | 59,100 |
Commitments and contingencies (Note 9) | ||
Stockholders’ equity: | ||
Convertible preferred stock, $.001 par value, issuable in series, 2,000 shares authorized; none issued | ||
Common stock, $.001 par value, 750,000 shares authorized; 118,270 shares issued and outstanding at September 30, 2018 and 116,124 shares issued and outstanding at June 30, 2018 | 118 | 116 |
Additional paid-in-capital | 956,356 | 942,397 |
Accumulated other comprehensive loss | (2,697) | (1,703) |
Accumulated deficit | (836,646) | (828,078) |
Total stockholders’ equity | 117,131 | 112,732 |
Total liabilities and stockholders’ equity | $ 731,884 | $ 770,248 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) (Unaudited) - USD ($) shares in Thousands, $ in Thousands | Sep. 30, 2018 | Jun. 30, 2018 |
Current assets: | ||
Allowance for doubtful accounts | $ 1,661 | $ 1,478 |
Stockholders’ equity: | ||
Convertible preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Convertible preferred stock, shares authorized | 2,000 | 2,000 |
Convertible preferred stock, shares issued | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 750,000 | 750,000 |
Common stock, shares issued | 118,270 | 116,124 |
Common stock, shares outstanding | 118,270 | 116,124 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Net revenues: | ||
Total net revenues | $ 239,886 | $ 211,715 |
Cost of revenues: | ||
Total cost of revenues | 107,815 | 99,334 |
Gross profit: | ||
Total gross profit | 132,071 | 112,381 |
Operating expenses: | ||
Research and development | 51,241 | 34,285 |
Sales and marketing | 67,582 | 55,561 |
General and administrative | 12,771 | 12,185 |
Acquisition and integration costs | 2,546 | 4,244 |
Restructuring charges, net of reversals | 808 | |
Amortization of intangibles | 2,141 | 1,614 |
Total operating expenses | 137,089 | 107,889 |
Operating (loss) income | (5,018) | 4,492 |
Interest income | 394 | 647 |
Interest expense | (3,526) | (2,215) |
Other (expense) income, net | 487 | 3,127 |
(Loss) income before income taxes | (7,663) | 6,051 |
Provision for income taxes | 1,402 | 1,675 |
Net (loss) income | $ (9,065) | $ 4,376 |
Basic and diluted net (loss) income per share: | ||
Net (loss) income per share - basic | $ (0.08) | $ 0.04 |
Net (loss) income per share - diluted | $ (0.08) | $ 0.04 |
Shares used in per share calculation - basic | 117,368 | 112,241 |
Shares used in per share calculation - diluted | 117,368 | 118,431 |
Product | ||
Net revenues: | ||
Total net revenues | $ 177,720 | $ 164,774 |
Cost of revenues: | ||
Total cost of revenues | 83,543 | 80,045 |
Gross profit: | ||
Total gross profit | 94,177 | 84,729 |
Service | ||
Net revenues: | ||
Total net revenues | 62,166 | 46,941 |
Cost of revenues: | ||
Total cost of revenues | 24,272 | 19,289 |
Gross profit: | ||
Total gross profit | $ 37,894 | $ 27,652 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive (Loss) Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Statement Of Income And Comprehensive Income [Abstract] | ||
Net (loss) income: | $ (9,065) | $ 4,376 |
Available for sale securities: | ||
Change in unrealized gains on available for sale securities | 183 | |
Net change in foreign currency translation adjustments | (497) | 355 |
Other comprehensive (loss) income, net of tax: | (497) | 538 |
Total comprehensive (loss) income | $ (9,562) | $ 4,914 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Cash flows from operating activities: | ||
Net (loss) income | $ (9,065) | $ 4,376 |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ||
Depreciation | 6,783 | 3,125 |
Amortization of intangible assets | 7,073 | 4,309 |
Provision for doubtful accounts | 515 | 489 |
Stock-based compensation | 6,825 | 4,803 |
Deferred income taxes | (25) | 488 |
Unrealized/realized (gain) loss on equity investment | (154) | (3,757) |
Non-cash interest | 995 | 227 |
Other non-cash items | (172) | 701 |
Changes in operating assets and liabilities, net of acquisitions | ||
Accounts receivable | 46,661 | (5,762) |
Inventories | 8,287 | 5,915 |
Prepaid expenses and other assets | (7,814) | (1,856) |
Accounts payable | (31,251) | 9,042 |
Accrued compensation and benefits | (13,964) | (5,360) |
Deferred revenue | 9,374 | 4,650 |
Other current and long-term liabilities | 10,262 | (2,792) |
Net cash provided by operating activities | 34,330 | 18,598 |
Cash flows from investing activities: | ||
Capital expenditures | (7,417) | (7,421) |
Business acquisitions | (68,047) | |
Proceeds from sale of investment | 727 | 4,922 |
Net cash used in investing activities | (6,690) | (70,546) |
Cash flows from financing activities: | ||
Borrowings under Term Loan | 80,000 | |
Repayments of debt | (12,375) | (4,093) |
Loan fees on borrowings | (273) | (1,494) |
Proceeds from issuance of common stock, net of tax withholding | 7,137 | 42 |
Capital lease financing | (91) | |
Contingent consideration obligations | (1,577) | |
Deferred payments on an acquisition | (1,000) | |
Net cash (used in) provided by financing activities | (8,179) | 74,455 |
Foreign currency effect on cash | (433) | 57 |
Net increase in cash and cash equivalents | 19,028 | 22,564 |
Cash and cash equivalents at beginning of period | 121,139 | 130,450 |
Cash and cash equivalents at end of period | $ 140,167 | $ 153,014 |
Description of Business and Bas
Description of Business and Basis of Presentation | 3 Months Ended |
Sep. 30, 2018 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Description of Business and Basis of Presentation | 1. Description of Business and Basis of Presentation Extreme Networks, Inc., together with its subsidiaries (collectively referred to as “Extreme” or the “Company”), is a leader in providing software-driven networking solutions for enterprise customers. The Company conducts its sales and marketing activities on a worldwide basis through distributors, resellers and the Company’s field sales organization. Extreme was incorporated in California in 1996 and reincorporated in Delaware in 1999. The unaudited condensed consolidated financial statements of Extreme included herein have been prepared under the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted under such rules and regulations. The condensed consolidated balance sheet at June 30, 2018 was derived from audited financial statements as of that date but does not include all disclosures required by generally accepted accounting principles for complete financial statements. These interim financial statements and notes should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2018. The unaudited condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments that, in the opinion of management, are necessary for a fair presentation of the results of operations and cash flows for the interim periods presented and the financial condition of Extreme at September 30, 2018. The results of operations for the three months ended September 30, 2018 are not necessarily indicative of the results that may be expected for fiscal 2019 or any future periods. Fiscal Year The Company uses a fiscal calendar year ending on June 30. All references herein to “fiscal 2019” or “2019” represent the fiscal year ending June 30, 2019. All references herein to “fiscal 2018” or “2018” represent the fiscal year ended June 30, 2018. Principles of Consolidation The consolidated financial statements include the accounts of Extreme and its wholly-owned subsidiaries. All inter-company accounts and transactions have been eliminated. The Company predominantly uses the United States Dollar as its functional currency. The functional currency for certain of its foreign subsidiaries is the local currency. For those subsidiaries that operate in a local currency functional environment, all assets and liabilities are translated to United States Dollars at current month end rates of exchange; and revenue and expenses are translated using the monthly average rate. Accounting Estimates The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. |
Business Combinations
Business Combinations | 3 Months Ended |
Sep. 30, 2018 | |
Business Combinations [Abstract] | |
Business Combinations | 2. Business Combinations Fiscal 2018 Acquisitions Data Center Business The Company completed its acquisition of the data center business (the “Data Center Business”) of Brocade Communication Systems, Inc.’s (“Brocade”) on October 27, 2017 (the “Data Center Closing Date”), pursuant to an Asset Purchase Agreement (the “Data Center Business APA”) dated as of October 3, 2017, by and between the Company and Brocade for an aggregate purchase consideration of $84.3 million. Under the terms and conditions of the Data Center Business APA, the Company acquired customers, employees, technology and other assets of the Data Center Business as well as assumed certain contracts and other liabilities of the Data Center Business. The following table below summarizes the final allocation of the tangible and identifiable intangible assets acquired and liabilities assumed (in thousands): Final Allocation Accounts receivables $ 33,488 Inventories 19,934 Prepaid expenses and other current assets 988 Property and equipment 18,938 Other assets 4,734 Accounts payable and accrued expenses (16,494 ) Deferred revenue (33,025 ) Net tangible assets acquired 28,563 Identifiable intangible assets 32,800 Goodwill 22,974 Total intangible assets acquired 55,774 Total net assets acquired $ 84,337 Campus Fabric Business The Company completed its acquisition of Avaya Inc.’s (“Avaya”) fabric-based secure networking solutions and network security solutions business (the “Campus Fabric Business”) on July 14, 2017, (the “Campus Fabric Business Closing Date”) pursuant to an Asset Purchase Agreement (the “Campus Fabric Business APA”) dated March 7, 2017. Under the terms and conditions of the Campus Fabric Business APA, the Company acquired the customers, employees, technology and other assets of the Campus Fabric Business, as well as assumed certain contracts and other liabilities of the Campus Fabric Business, for total consideration of $79.4 The following table below summarizes the final allocation of the tangible and identifiable intangible assets acquired and liabilities assumed (in thousands): Final Allocation Accounts receivables $ 19,527 Inventories 14,165 Prepaid expenses and other current assets 240 Property and equipment 5,406 Other assets 7,009 Accounts payable and accrued expenses (31,670 ) Deferred revenue (8,994 ) Other long-term liabilities (5,849 ) Net tangible assets acquired (166 ) Identifiable intangible assets 41,300 In-process research and development 2,400 Goodwill 35,892 Total intangible assets acquired 79,592 Total net assets acquired $ 79,426 Capital Financing Business On December 1, 2017, Company completed its acquisition of a capital financing business (the “CF Business”), pursuant to a Bill of Sale and Assignment and Assumption Agreement (the “Assumption Agreement”) between the Company and Broadcom. Under the terms and conditions of the Assumption Agreement, the Company acquired customers, employees, contracts and lease equipment of the CF Business equal to the earn out payments to Broadcom of 90% of acquired financing receivables to be collected commencing at the closing date. Net assets acquired included financing receivables of $13.7 million, lease equipment of $3.5 million and identifiable intangible assets of $0.8 million, and the fair value of the contingent consideration was $13.0 million. As the preliminary fair value of the net assets acquired exceeded the fair value of the purchase consideration, the Company recorded a bargain purchase gain of $5.0 million. Pro forma financial information The following unaudited pro forma results of operations are presented as though the acquisitions of the Data Center Business, CF Business and Campus Fabric Business had occurred as of the beginning of fiscal 2017 presented after giving effect to purchase accounting adjustments relating to inventories, deferred revenue, depreciation and amortization on acquired property and equipment and intangibles, acquisition costs, interest income and expense and related tax effects. The pro forma results of operations are not necessarily indicative of the combined results that would have occurred had the acquisition been consummated as of the beginning of fiscal 2017, nor are they necessarily indicative of future operating results. The unaudited pro forma results do not include the impact of synergies, nor any potential impacts on current or future market conditions which could alter the unaudited pro forma results. The unaudited pro forma financial information for the three months ended September 30, 2017, combines the historical results for Extreme for that period, which includes the results of the Campus Fabric Business subsequent to the acquisition date, with the historical results of the Data Center Business, CF Business and Campus Fabric Business, prior to the acquisition date, for the three months ended September 30, 2017. Pro forma results of operations from the Data Center Business, CF Business and Campus Fabric Business acquisitions included in the pro forma results of operations for the three months ended September 30, 2017, have not been adjusted for the adoption of Topic 606 because the Company determined that it is impractical to estimate the impact of the adoption. The following table summarizes the unaudited pro forma financial information (in thousands, except per share amounts): Three Months Ended September 30, 2017 Net revenues $ 284,508 Net loss $ (8,774 ) Net loss per share - basic $ (0.08 ) Net loss per share - diluted $ (0.08 ) Shares used in per share calculation - basic 112,241 Shares used in per share calculation - diluted 112,241 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 3. Summary of Significant Accounting Policies For a description of significant accounting policies, see Note 3, Summary of Significant Accounting Policies, to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2018. There have been no material changes to the Company’s significant accounting policies since the filing of the Annual Report on Form 10-K. Recently Adopted Accounting Pronouncements In January 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740) - Intra-Entity Transfers of Assets Other Than Inventory not have a material effect on the Company’s financial statements. In May 2017, the FASB issued ASU 2017-09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting Recently Issued Accounting Pronouncements In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40 In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820), In February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220) In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) The Company believes that Topic 842 will have a material impact on its financial position, as a result of recognizing right-of-use assets and lease liabilities on its consolidated balance sheets. |
Revenues
Revenues | 3 Months Ended |
Sep. 30, 2018 | |
Revenue From Contract With Customer [Abstract] | |
Revenues | 4. Revenues The Company accounts for revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers, which the Company adopted on July 1, 2017, using the retrospective method. The Company derives the majority of its revenue from sales of its networking equipment, with the remaining revenue generated from service fees relating to maintenance contracts, professional services, and training for its products. The Company sells its products and maintenance contracts direct to customers and to partners in two distribution channels, or tiers. The first tier consists of a limited number of independent distributors that stock its products and sell primarily to resellers. The second tier of the distribution channel consists of a non-stocking distributors and value-added resellers that sell directly to end-users. Products and services may be sold separately or in bundled packages. Revenue Recognition Performance Obligations. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in Topic 606. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Certain of the Company’s contracts have multiple performance obligations, as the promise to transfer individual goods or services is separately identifiable from other promises in the contracts and, therefore, is distinct. For contracts with multiple performance obligations, the Company allocates the contract’s transaction price to each performance obligation based on its relative standalone selling price. The stand-alone selling prices are determined based on the prices at which the Company separately sells these products. For items that are not sold separately, the Company estimates the stand-alone selling prices using the best estimated selling price approach. The Company’s performance obligations are satisfied at a point in time or over time as work progresses. Substantially all of the Company’s product sales revenues as reflected on the condensed consolidated statements of operations for the three months ended September 30, 2018 and 2017 are recognized at a point in time. Substantially all of the Company’s service revenue is recognized over time. For revenue recognized over time, the Company uses an input measure, days elapsed, to measure progress. On September 30, 2018, the Company had $183.9 million of remaining performance obligations, which is comprised of deferred maintenance revenue and services not yet delivered. The Company expects to recognize approximately 65 percent of its remaining performance obligations as revenue in fiscal 2019, an additional 22 percent in fiscal 2020 and 13 percent of the balance thereafter. Contract Balances. The timing of revenue recognition, billings and cash collections results in billed accounts receivable and deferred revenue in the consolidated balance sheet. Services provided under renewable support arrangements of the Company are billed in accordance with agreed-upon contractual terms, which are typically at periodic intervals (e.g., quarterly or annually). The Company sometimes receives payments from its customers in advance of services being provided, resulting in deferred revenues. These liabilities are reported on the consolidated balance sheet on a contract-by-contract basis at the end of each reporting period. Revenue recognized for the three months ended September 30, 2018 and 2017, that was included in the deferred revenue balance at the beginning of each period was $50.6 million and $42.0 million, respectively. Contract Costs . The Company recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets that the Company otherwise would have recognized is one year or less. Management expects that commission fees paid to sales representative as a result of obtaining service contracts and contract renewals are recoverable and therefore the Company capitalized them as contract costs in the amount of $4.9 million and $2.5 million at September 30, 2018 and 2017, respectively. Capitalized commission fees are amortized on a straight-line basis over the average period of service contracts of approximately three years, and are included in “Sales and marketing” in the accompanying condensed consolidated statements of operations. Amortization recognized during the three months ended September 30, 2018 and 2017, was $0.7 million and $0.4 million, respectively. There was no impairment loss in relation to the costs capitalized. Estimated Variable Consideration . There were no material changes in the current period to the estimated variable consideration for performance obligations which were satisfied or partially satisfied during previous periods. Revenue by Category The following table sets forth the Company’s revenue disaggregated by sales channel and geographic region based on the customer’s ship-to locations (in thousands): Three Months Ended September 30, 2018 September 30, 2017 Distributor Direct Total Distributor Direct Total Americas: United States $ 56,742 $ 59,936 $ 116,678 $ 42,392 $ 50,990 $ 93,382 Other 4,493 5,524 10,017 14,336 6,395 20,731 Total Americas 61,235 65,460 126,695 56,728 57,385 114,113 EMEA 61,331 30,838 92,169 51,232 27,903 79,135 APAC 2,349 18,673 21,022 3,264 15,203 18,467 Total net revenues $ 124,915 $ 114,971 $ 239,886 $ 111,224 $ 100,491 $ 211,715 Customer Concentrations The Company performs ongoing credit evaluations of its customers and generally does not require collateral in exchange for credit. The following table sets forth major customers accounting for 10% or more of the Company’s net revenues: Three Months Ended September 30, 2018 September 30, 2017 Tech Data Corporation 17% 11% Westcon Group Inc. 13% 15% Jenne Corporation 12% 14% The following table sets forth major customers accounting for 10% or more of the Company’s accounts receivable balance: September 30, 2018 June 30, 2018 Tech Data Corporation 21% 17% Westcon Group Inc. 12% * Jenne Corporation * 13% * Less than 10% of accounts receivable |
Balance Sheet Accounts
Balance Sheet Accounts | 3 Months Ended |
Sep. 30, 2018 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Balance Sheet Accounts | 5. Balance Sheet Accounts Cash, Cash Equivalents and Marketable Securities The following is a summary of cash, cash equivalents and marketable securities (in thousands): September 30, 2018 June 30, 2018 Cash $ 140,167 $ 121,139 Cash equivalents — — Total cash and cash equivalents 140,167 121,139 Marketable securities (consisting of available-for-sale securities) 887 1,459 Total cash, cash equivalents and marketable securities $ 141,054 $ 122,598 The Company considers highly liquid investments with maturities of three months or less at the date of purchase to be cash equivalents. Marketable equity securities are recorded in “Prepaid expense and other current assets” in the accompanying condensed consolidated balance sheets as these securities are publicly-traded with readily determinable values. Marketable equity securities are classified as available-for-sale and reported at fair value with unrealized gains and losses included in “Other (expense) income, net” in the accompanying condensed consolidated statements of operations. Inventories The Company values its inventory at lower of cost or net realizable value. Cost is computed using standard cost, which approximates actual cost, on a first-in, first-out basis. The Company has established inventory allowances when conditions exist that suggest that inventory may be in excess of anticipated demand or is obsolete based upon assumptions about future demand. At the point of the loss recognition, a new, lower-cost basis for that inventory is established, and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis. Any written down or obsolete inventory subsequently sold has not had a material impact on gross margin for any of the periods disclosed. Inventories consist of the following (in thousands): September 30, 2018 June 30, 2018 Finished goods $ 42,150 $ 49,393 Raw materials 13,430 14,474 Total Inventories $ 55,580 $ 63,867 Property and Equipment, Net Property and equipment consist of the following (in thousands): September 30, 2018 June 30, 2018 Computers and equipment $ 63,456 $ 60,677 Purchased software 21,558 21,389 Office equipment, furniture and fixtures 15,034 14,980 Leasehold improvements 50,959 50,070 Total property and equipment 151,007 147,116 Less: accumulated depreciation and amortization (74,783 ) (68,597 ) Property and equipment, net $ 76,224 $ 78,519 Intangibles The following tables summarize the components of gross and net intangible asset balances (dollars in thousands) Weighted Average Remaining Amortization Gross Carrying Accumulated Net Carrying Period Amount Amortization Amount September 30, 2018 Developed technology 3.1 years $ 117,000 $ 63,106 $ 53,894 Customer relationships 2.8 years 51,639 41,578 10,061 Maintenance contracts 0.1 years 17,000 16,717 283 Trade names 3.2 years 9,100 4,506 4,594 License agreements 7.3 years 2,232 1,244 988 Other intangibles 1.3 years 1,382 1,179 203 Total intangibles, net $ 198,353 $ 128,330 $ 70,023 Weighted Average Remaining Amortization Gross Accumulated Net Carrying Period Amount Amortization Amount June 30, 2018 Developed technology 3.3 years $ 117,000 $ 58,299 $ 58,701 Customer relationships 3.0 years 51,639 40,634 11,005 Maintenance contracts 0.3 years 17,000 15,866 1,134 Trade names 3.4 years 9,100 4,141 4,959 Backlogs — years 1,800 1,800 — License agreements 5.8 years 2,445 1,390 1,055 Other intangibles 1.6 years 1,382 1,144 238 Total intangibles, net $ 200,366 $ 123,274 $ 77,092 The amortization expense of intangibles for the periods presented is summarized below (in thousands): Three Months Ended September 30, 2018 September 30, 2017 Amortization in “Cost of revenues: Product” $ 4,932 $ 2,695 Amortization of intangibles 2,141 1,614 Total amortization $ 7,073 $ 4,309 The amortization expense that is recognized in “Cost of revenues: Product” is comprised of amortization for developed technology, license agreements and other intangibles. Deferred Revenue The Company offers for sale to its customers, renewable support arrangements that range from one to five years as well as professional and training services, which results in deferred revenue. Debt The Company’s debt is comprised of the following (in thousands): September 30, 2018 June 30, 2018 Current portion of long-term debt: Term Loan $ 9,500 $ 9,500 Less: unamortized debt issuance costs (492 ) (493 ) Current portion of long-term debt $ 9,008 $ 9,007 Long-term debt, less current portion: Term Loan $ 178,125 $ 180,500 Revolving Facility — 10,000 Less: unamortized debt issuance costs (1,627 ) (1,751 ) Total long-term debt, less current portion 176,498 188,749 Total debt $ 185,506 $ 197,756 On May 1, 2018, the Company entered into a Credit Agreement (the “Credit Agreement”), by and among the Company, as borrower, BMO Harris Bank N.A., as an issuing lender and swingline lender, Bank of Montreal, as administrative and collateral agent, and the financial institutions or entities that are a party thereto as lenders. The Credit Agreement provides for i) $40 million five-year revolving credit facility (the “New Revolving Facility”) ii) a $190 million five-year term loan (the “New Term Loan”) and iii) an uncommitted additional incremental loan facility in the principal amount of up to $100 million (“New Incremental Facility”). On May 1, 2018, the Company borrowed $200 million under the Credit Agreement to pay off existing debt and for general corporate purposes. Borrowings under the Credit Agreement will bear interest, at the Company’s election, as of May 1, 2018, at a rate per annum equal to LIBOR plus 1.50% to 2.75%, or the adjusted base rate plus 0.50% to 1.75%, based on the Company’s Consolidated Leverage Ratio. In addition, the Company is required to pay a commitment fee of between 0.25% and 0.40% quarterly (currently 0.35%) on the unused portion of the New Revolving Facility, also based on the Company’s consolidated leverage ratio. Principal installments are payable on the New Term Loan in varying percentages quarterly starting June 30, 2018 and to the extent not previously paid, all outstanding balances are to be paid at maturity. The Credit Agreement is secured by substantially all of the Company’s assets. The Credit Agreement requires the Company to maintain certain minimum financial ratios at the end of each fiscal quarter. The Credit Agreement also includes covenants and restrictions that limit, among other things, the Company’s ability to incur additional indebtedness, create liens upon any of its property, merge, consolidate or sell all or substantially all of its assets. The Credit Agreement also includes customary events of default which may result in acceleration of the outstanding balance. Financing costs incurred in connection with obtaining long-term financing are deferred and amortized over the term of the Credit Agreement. Amortization of deferred financing costs included in “Interest expense” in the accompanying condensed consolidated statements of operations totaled $0.2 million The Company had $38.7 million of availability under the New Revolving Facility as of September 30, 2018. The Company had $1.3 million of outstanding letters of credit as of September 30, 2018. Guarantees and Product Warranties Networking products may contain undetected hardware or software errors when new products or new versions or updates of existing products are released to the marketplace. The Company’s standard hardware warranty period is typically 12 months from the date of shipment to end-users and 90 days for software. For certain access products, the Company offers a limited lifetime hardware warranty commencing on the date of shipment from the Company and ending five (5) years following the Company’s announcement of the end of sale of such product. Upon shipment of products to its customers, the Company estimates expenses for the cost to repair or replace products that may be returned under warranty and accrue a liability in cost of product revenue for this amount. The determination of the Company’s warranty requirements is based on actual historical experience with the product or product family, estimates of repair and replacement costs and any product warranty problems that are identified after shipment. The Company estimates and adjusts these accruals at each balance sheet date in accordance with changes in these factors. Upon issuance of a standard product warranty, the Company discloses and recognizes a liability for the obligations it assumes under the product warranty. The following table summarizes the activity related to the Company’s product warranty liability during the three months ended September 30, 2018 and 2017 (in thousands): Three Months Ended September 30, 2018 September 30, 2017 Balance beginning of period $ 12,807 $ 10,584 Warranties assumed due to acquisitions — 3,156 New warranties issued 3,722 2,272 Warranty expenditures (3,928 ) (2,513 ) Balance end of period $ 12,601 $ 13,499 To facilitate sales of its products in the normal course of business, the Company indemnifies its resellers and end-user customers with respect to certain matters. The Company has agreed to hold the customer harmless against losses arising from a breach of intellectual property infringement or other. These agreements may limit the time within which an indemnification claim can be made and the amount of the claim. It is not possible to estimate the maximum potential amount under these indemnification agreements due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. Historically, payments made by the Company under these agreements have not had a material impact on its operating results or financial position. Other long-term liabilities The following is a summary of long-term liabilities (in thousands): September 30, 2018 June 30, 2018 Acquisition related deferred payments, less current portion $ 12,350 $ 13,251 Contingent consideration obligations, less current portion 4,711 4,898 Other contractual obligations, less current portion 31,402 31,200 Other 15,644 9,751 Total other long-term liabilities $ 64,107 $ 59,100 Advertising All advertising costs are expensed as incurred. Advertising expenses for three months ended September 30, 2018 and 2017, were immaterial. Concentrations The Company may be subject to concentration of credit risk as a result of certain financial instruments consisting of accounts receivable and marketable securities. The Company does not invest an amount exceeding 10% of its combined cash or cash equivalents in the securities of any one obligor or maker, except for obligations of the United States government, obligations of United States government agencies and money market accounts. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Sep. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 6. Fair Value Measurements A three-tier fair value hierarchy is utilized to prioritize the inputs used in measuring fair value. The hierarchy gives the highest priority to quoted prices in active markets (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels are defined as follows: • Level 1 Inputs - unadjusted quoted prices in active markets for identical assets or liabilities; • Level 2 Inputs - quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument; and • Level 3 Inputs - unobservable inputs reflecting the Company’s own assumptions in measuring the asset or liability at fair value. The following table presents the Company’s fair value hierarchy for its financial assets and liabilities measured at fair value on a recurring basis (in thousands): September 30, 2018 Level 1 Level 2 Level 3 Total Assets Investments: Marketable securities $ 887 $ — $ — $ 887 Total assets measured at fair value $ 887 $ — $ — $ 887 Liabilities Acquisition-related contingent consideration obligations $ — $ — $ 11,233 $ 11,233 Total liabilities measured at fair value $ — $ — $ 11,233 $ 11,233 June 30, 2018 Level 1 Level 2 Level 3 Total Assets Investments: Marketable securities $ 1,459 $ — $ — $ 1,459 Total assets measured at fair value $ 1,459 $ — $ — $ 1,459 Liabilities Acquisition-related contingent consideration obligations $ — $ — $ 12,749 $ 12,749 Total liabilities measured at fair value $ — $ — $ 12,749 $ 12,749 Level 1 investments : The Company holds an investment in marketable equity securities which is classified as available-for-sale marketable securities at Level 1 as the investments have readily determinable fair value (see below, Level 3 investments). An unrealized holding gain on the investments was $0.5 million as of June 30, 2018. Level 2 assets and liabilities : The Company includes U.S. government and sovereign obligations, most government agency securities, investment-grade corporate bonds, and state, municipal and provincial obligations for which quoted prices are available as Level 2. There were no transfers of assets or liabilities between Level 1 and Level 2 for the periods presented. The fair value of the borrowings under the Credit Agreement is estimated based on valuations provided by alternative pricing sources supported by observable inputs which is considered Level 2. Due to the short duration until maturity of the Credit Agreement, the fair value approximates the face amount of the Company’s indebtedness of $187.6 million and $200.0 million as of September 30, 2018 and June 30, 2018, respectively. Such differences are immaterial for all periods presented. Level 3 assets and liabilities: Certain of the Company’s assets, including intangible assets and goodwill are measured at fair value on a non-recurring basis if impairment is indicated. At June 30, 2018, the Company reflected a liability for contingent consideration related to a certain acquisition completed in Fiscal 2018. The fair value measurement of the contingent consideration obligation is determined using Level 3 inputs. The fair value of contingent consideration obligations is based on a discounted cash flow model. These fair value measurements represent Level 3 measurements as they are based on significant inputs not observable in the market. Significant judgment is employed in determining the appropriateness of these assumptions as of the acquisition date and for each subsequent period. Accordingly, changes in assumptions could have a material impact on the amount of contingent consideration expense the Company records in any given period. Changes in the value of the contingent consideration obligations would be recorded in general and administrative expenses in the accompanying condensed consolidated statements of operations. The change in the acquisition-related contingent consideration obligations is as follows (in thousands): Three Months Ended September 30, 2018 September 30, 2017 Beginning balance $ 12,749 $ — Payments (1,577 ) — Accretion on discount 61 — Ending balance $ 11,233 $ — There were no transfers of assets or liabilities between Level 2 and Level 3 during the three months ended September 30, 2018 or 2017. There were no impairments recorded for the three months ended September 30, 2018 or 2017. |
Share-based Compensation
Share-based Compensation | 3 Months Ended |
Sep. 30, 2018 | |
Share Based Compensation [Abstract] | |
Share-based Compensation | 7. Shares reserved for issuance The Company had reserved for issuance for the periods noted (in thousands): September 30, 2018 June 30, 2018 2013 Equity Incentive Plan shares available for grant 7,804 9,957 Employee stock options and awards outstanding 12,236 12,060 2014 Employee Stock Purchase Plan 4,084 5,365 Total shares reserved for issuance 24,124 27,382 Share-based compensation expense recognized in the condensed consolidated financial statements by line item caption is as follows (in thousands): Three Months Ended September 30, 2018 September 30, 2017 Cost of product revenue $ 178 $ 92 Cost of service revenue 345 133 Research and development 2,342 1,051 Sales and marketing 2,359 1,643 General and administrative 1,601 1,884 Total share-based compensation expense $ 6,825 $ 4,803 During the three months ended September 30, 2018 or 2017, the Company did not capitalize any share-based compensation expense in inventory, as the amounts were immaterial. Stock Awards Stock awards may be granted under the 2013 Equity Incentive Plan (the “2013 Plan”) on terms approved by the Compensation Committee of the Board of Directors. Stock awards generally provide for the issuance of restricted stock units (“RSUs”) including performance or market-based RSUs which vest over a fixed period of time or based upon the satisfaction of certain performance criteria. The Company uses the straight-line method for expense attribution, and beginning with fiscal 2017, the Company does not estimate forfeitures, but accounts for them as incurred. The following table summarizes stock award activity for the three months ended September 30, 2018 (in thousands, except grant date fair value): Number of Shares Weighted- Average Grant Date Fair Value Aggregate Fair Market Value Non-vested stock awards outstanding at June 30, 2018 7,764 $ 8.60 $ 61,804 Granted 3,337 6.44 Vested (1,142 ) 6.28 Cancelled (565 ) 8.69 Non-vested stock awards outstanding at September 30, 2018 9,394 $ 8.11 $ 51,479 The following table summarizes stock option activity for the three months ended September 30, 2018 (in thousands, except per share and contractual term): Number of Shares Weighted-Average Exercise Price Per Share Weighted-Average Remaining Contractual Term (years) Aggregate Intrinsic Value Options outstanding at June 30, 2018 2,193 $ 3.88 2.90 $ 8,996 Granted 852 6.40 Exercised (123 ) 3.81 Cancelled (80 ) 6.18 Options outstanding at September 30, 2018 2,842 $ 4.57 3.88 $ 3,343 Vested and expected to vest at September 30, 2018 2,842 $ 4.57 3.88 $ 3,343 Exercisable at September 30, 2018 1,939 $ 3.98 2.68 $ 2,946 The fair value of each stock option grant under the 2013 Plan and 2005 Equity Incentive Plan is estimated on the date of grant using the Black-Scholes-Merton option valuation model with the weighted average assumptions noted in the following table. The Company uses the Monte-Carlo simulation model to determine the fair value and the derived service period of stock awards with market conditions, on the date of the grant. The expected term of options granted is derived from historical data on employee exercise and post-vesting employment termination behavior. The risk-free rate is based upon the estimated life of the option and the U.S. Treasury yield curve in effect at the time of grant. Expected volatility is based on the historical volatility on the Company’s stock. The fair value of each RSUs grant with performance-based vesting criteria (“PSUs”) under the 2013 Plan is estimated on the date of grant using the Monte-Carlo simulation model to determine the fair value and the derived service period of stock awards with market conditions, on the date of the grant. During the first quarter of fiscal 2019, the Company approved the grant of 1,269,800 stock awards to its vice president level employees or above (“VPs”), including 278,000 stock awards to its Executive Officers, and 2,067,074 stock awards to its other employees. Company. For the PSUs referenced in the preceding paragraph, they will be considered earned once the Company s combined earnings per share equals or exceeds $0.20 over two consecutive quarters (the FY19 Performance Threshold ). Upon satisfying the FY19 Performance Threshold, the PSUs shall vest with respect to the same number of RSUs that have vested which were granted on the same date and thereafter, shall vest on the same schedule as the RSUs, subject to continued service to the Company. If the FY19 Performance Threshold is not met by the third anniversary of the grant date the award is canceled. In addition, the FY19 Performance Threshold shall be deemed satisfied upon the closing of a Change in Control (within the meaning of the Company’s 2013 Equity Incentive Plan) in the event the per share consideration received by the Company’s stockholders equals or exceeds $10.00 per share. During the first quarter of fiscal 2019, the Company granted 851,700 Performance Stock Options (“PSOs”) to certain officers and executive vice presidents that will vest if the Company’s stock price achieves a price hurdle of $10.00 during the three-year performance period from August 29, 2018 through August 31, 2021. The price hurdle will be deemed to have been achieved if, at any time over the performance period, the Company’s stock maintains a price of $10.00 for 30 consecutive days. If the price hurdle is achieved, the PSOs will vest as follows: If the price hurdle is met before or on August 31, 2019, one-third of the PSOs will vest on August 31, 2019 and the remainder will vest quarterly over two years. If the price hurdle is met after August 31, 2019, a number of the PSOs will vest (ratably calculated based upon the time elapsed between August 31, 2018 and the date the hurdle is met) and the remainder will vest quarterly through August 31, 2021. The grant date fair value was $2.62. 2014 Employee Stock Purchase Plan The fair value of each share purchase option under the Company ’ There were 1,280,708 and 1,267,930 shares issued under the ESPP during the three months ended September 30, 2018 and 2017, respectively. The following assumptions were used to calculate the fair value of shares granted under the ESPP during the following periods: Employee Stock Purchase Plan Three Months Ended September 30, 2018 September 30, 2017 Expected life 0.5 years 0.5 years Risk-free interest rate 2.20 % 1.15 % Volatility 63 % 42 % Dividend yield — % — % The weighted-average fair value of shares granted under the ESPP during the three months ended September 30, 2018 and 2017 was $2.73 and $2.41, respectively. |
Restructuring Charges, Net of R
Restructuring Charges, Net of Reversals | 3 Months Ended |
Sep. 30, 2018 | |
Restructuring And Related Activities [Abstract] | |
Restructuring Charges, Net of Reversals | 8. Restructuring Charges, net of reversals Restructuring liabilities consisted of obligations pertaining to the estimated future obligations for non-cancelable lease payments, as well as severance and benefits obligations. The restructuring liabilities are recorded in “Other accrued liabilities” and “Other long-term liabilities” in the accompanying condensed consolidated balance sheets. The Company recorded $0.8 million of additional restructuring charges, net of reversals during the three months ended September 30, 2018, associated with a reduction-in-force in the fourth quarter of fiscal 2018. Cash payments of $3.4 million were paid during the first three months of fiscal 2019. The balance of the severance and benefits obligations are expected to be paid by the end of fiscal 2019. The excess facilities obligations will continue through fiscal year 2023. Total restructuring and related liabilities consist of (in thousands): Excess Facilities Severance Benefits Total Balance as of June 30, 2018 $ 1,797 $ 4,658 $ 6,455 Period charges — 999 999 Period reversals — (191 ) (191 ) Period payments — (3,402 ) (3,402 ) Balance as of September 30, 2018 $ 1,797 $ 2,064 $ 3,861 Less: current portion included in Other accrued liabilities 2,601 Restructuring accrual included in Other long-term liabilities $ 1,260 |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Sep. 30, 2018 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 9. Commitments and Contingencies Purchase Commitments The Company currently has arrangements with contract manufacturers and suppliers for the manufacture of its products. Those arrangements allow the contract manufactures to procure long lead-time component inventory based upon a rolling production forecast provided by the Company. The Company is obligated to purchase long lead-time component inventory that its contract manufacturer procures in accordance with the Company’s forecast, unless the Company gives notice of order cancellation outside of applicable component lead-times. As of September 30, 2018, the Company had non-cancelable commitments to purchase $158.7 million of such inventory. As of September 30, 2018 the Company had non-cancelable commitments to purchase $117.5 million of software and new product support services. Legal Proceedings The Company may from time to time be party to litigation arising in the course of its business, including, without limitation, allegations relating to commercial transactions, business relationships or intellectual property rights. Such claims, even if not meritorious, could result in the expenditure of significant financial and managerial resources. Litigation in general, and intellectual property and securities litigation in particular, can be expensive and disruptive to normal business operations. Moreover, the results of legal proceedings are difficult to predict. In accordance with applicable accounting guidance, the Company records accruals for certain of its outstanding legal proceedings, investigations or claims when it is probable that a liability will be incurred and the amount of loss can be reasonably estimated. The Company evaluates, at least on a quarterly basis, developments in legal proceedings, investigations or claims that could affect the amount of any accrual, as well as any developments that would result in a loss contingency to become both probable and reasonably estimable. When a loss contingency is not both probable and reasonably estimable, the Company does not record a loss accrual. However, if the loss (or an additional loss in excess of any prior accrual) is at least a reasonable possibility and material, then the Company would disclose an estimate of the possible loss or range of loss, if such estimate can be made, or disclose that an estimate cannot be made. The assessment whether a loss is probable or a reasonable possibility, and whether the loss or a range of loss is estimable, involves a series of complex judgments about future events. Even if a loss is reasonably possible, the Company may not be able to estimate a range of possible loss, particularly where (i) the damages sought are substantial or indeterminate, (ii) the proceedings are in the early stages, or (iii) the matters involve novel or unsettled legal theories or a large number of parties. In such cases, there is considerable uncertainty regarding the ultimate resolution of such matters, including the amount of any possible loss, fine or penalty. Accordingly, for current proceedings, except as noted below, the Company is currently unable to estimate any reasonably possible loss or range of possible loss. However, an adverse resolution of one or more of such matters could have a material adverse effect on the Company's results of operations in a particular quarter or fiscal year. Brazilian Tax Assessment Matter On May 28, 2007, the Public Treasury Department of the State of Sao Paolo, Brazil (the “Tax Authority”) assessed the Company’s Brazilian subsidiary, Enterasys Networks do Brasil Ltda. (“Enterasys Brasil”), based on an alleged underpayment of taxes. The Tax Authority also charged interest and penalties with respect to the assessment (collectively, the “ICMS Tax Assessment”). The Tax Authority denied Enterasys Brasil the use of certain presumed tax credits granted by the State of Espirito Santo, Brazil under the terms of the FUNDAP program for the period from February 2003 to December 2004. The value of the disallowed presumed tax credits is BRL 3.4 million (USD $0.8 million), excluding interest and penalties. All currency conversions in this Legal Proceedings section are as of September 30, 2018. Unable to resolve the matter at the administrative level, on October 1, 2014, Enterasys Brasil filed a lawsuit in the 11th Public Treasury Court of the Sao Paolo State Court of Justice (Judiciary District of Sao Paolo) to overturn or reduce the ICMS Tax Assessment. As part of this lawsuit, Enterasys Brasil requested a stay of execution, so that no tax foreclosure could be filed and no guarantee would be required until the court issued its final ruling. On or about October 6, 2014, the court granted a preliminary injunction staying any execution on the assessment, but requiring that Enterasys Brasil deposit the assessed amount with the court. Enterasys Brasil appealed this ruling and, on or about January 28, 2015, the appellate court ruled that no cash deposit (or guarantee) was required. In a decision dated August 28, 2017, and published on October 3, 2017, the court validated the assessment and penalty imposed by the Tax Authority, but ruled that the Tax Authority was charging an unlawfully high interest rate on the tax assessment and penalty amounts, and ordered the interest rate reduced to the maximum Federal rate. The August 28, 2017 decision, were it to become final, would require Enterasys Brasil to pay a total of BRL 19.6 million (USD $4.8 million), which includes penalties, court costs, attorneys’ fees, and accrued interest as of September 30, 2018. The Company believes the ICMS Tax Assessment against Enterasys Brasil is without merit and has appealed the lower court’s decision. The appellate court ruled that no cash deposit (or guarantee) is required during the pendency of the appeal. Based on the currently available information, the Company believes the ultimate outcome of the ICMS Tax Assessment litigation will not have a material adverse effect on the Company's financial position or overall results of operations. However, due to the complexities and uncertainty surrounding the judicial process in Brazil and the nature of the claims asserted, there can be no assurance of a favorable outcome for Enterasys Brasil, which recorded an accrual of BRL 9.4 million (USD $2.3 million) as of the date the Company acquired Enterasys Networks. The Company made a demand on April 11, 2014 for a defense from, and indemnification by, the former equity holder of Enterasys Networks, Inc. (“Seller”) in connection with the ICMS Tax Assessment. Seller agreed to assume the defense of the ICMS Tax Assessment on May 20, 2014. In addition, through the settlement of an indemnification-related lawsuit with the Seller on June 18, 2015, Seller agreed to continue to defend the Company with respect to the ICMS Tax Assessment and to indemnify the Company for losses related thereto subject to certain conditions. These conditions include the offsetting of foreign income tax benefits realized by the Company in connection with the acquisition of Enterasys. Based upon current projections of the foreign income tax benefits to be realized, and the potential liability in the event of an adverse final judgment in the ICMS Tax Assessment litigation, the Company does not presently anticipate that any amounts under the indemnification will be due from the Seller in connection with the ICMS Tax Assessment. In re Extreme Networks, Inc. Securities Litigation On October 23 and 29, 2015, punitive class action complaints alleging violations of securities laws were filed in the U.S. District Court for the Northern District of California against the Company and three of its former officers (Charles W. Berger, Kenneth B. Arola, and John T. Kurtzweil). Subsequently, the cases were consolidated (In re Extreme Networks, Inc. Securities Litigation, No. 3:15-CY-04883-BLF). Plaintiffs allege that defendants violated the securities laws by disseminating materially false and misleading statements and concealing material adverse facts regarding the Company’s financial condition, business operations and growth prospects. Plaintiffs seek unspecified damages on behalf of a purported class of investors who purchased the Company’s common stock from September 12, 2013 through April 9, 2015. On June 28, 2016, the Court appointed a lead plaintiff. On September 26, 2016, the lead plaintiff filed a consolidated complaint. On November 10, 2016, defendants filed a motion to dismiss, which the Court granted with leave to amend on April 27, 2017. On June 2, 2017, the lead plaintiff filed an amended complaint, which, on July 10, 2017, defendants again moved to dismiss. In a March 21, 2018 Order (the “March 2018 Order”), the Court granted in part and denied in part the defendants’ motion. The March 2018 Order narrowed the scope of the case, but allowed certain claims to proceed. The parties have signed a term sheet to settle the litigation and are preparing further documentation for the settlement to submit for court approval. On February 18, 2016, a shareholder derivative case was filed in the Superior Court of California, Santa Clara County (Shaffer v. Kispert et al., No. 16 CV 291726). The complaint names current and former officers and directors as defendants, and seeks recovery on behalf of the Company based on substantially the same allegations as the securities class action litigation described above. As a result of the March 2018 Order, the stipulated stay of the derivative litigation ended. The parties have reached an agreement in principle to settle the case, and are preparing further documentation for the settlement to submit for court approval. XR Communications, LLC d/b/a Vivato Technologies v. Extreme Networks, Inc. Patent Infringement Suit On April 19, 2017, XR Communications, LLC (“XR”) (d/b/a Vivato Technologies) filed a patent infringement lawsuit against the Company in the Central District of California (XR Communications, LLC, dba Vivato Technologies v. Extreme Networks, Inc., No. 2:17-cv-2953-AG). The operative Second Amended Complaint asserts infringement of U.S. Patent Nos. 7,062,296, 7,729,728, and 6,611,231 based on the Company’s manufacture, use, sale, offer for sale, and/or importation into the United States of certain access points and routers supporting multi-user, multiple-input, multiple-output technology. XR seeks unspecified damages, on-going royalties, pre- and post-judgment interest, and attorneys’ fees (but no injunction). In orders dated April 10 and May 22, 2018, the Court stayed the case pending a resolution by the Patent Trial and Appeal Board (PTAB) of inter partes review (IPR) petitions filed by several defendants in other XR-related patent lawsuits challenging the validity of the asserted patents. The PTAB has now instituted IPR proceedings as to all three patents and all patent claims asserted in the litigation. Given the stay, the Court took off calendar all previously scheduled events (including a Markman hearing and potential trial date). During a status conference on October 22, 2018, the Court continued the stay and set a status conference for February 11, 2019. The Company believes the claims are without merit, and intends to defend them vigorously. Orckit IP, LLC v. Extreme Networks, Inc., Extreme Networks Ireland Ltd., and Extreme Networks GmbH On February 1, 2018, Orckit IP, LLC (“Orckit”) filed a patent infringement lawsuit against the Company and its Irish and German subsidiaries in the District Court in Dusseldorf, Germany. The lawsuit alleges direct and indirect infringement of the German portion of European Patent EP 1 958 364 B1 based on the offer, distribution, use, possession and/or importation into Germany of certain network switches equipped with the ExtremeXOS operating system. Orckit is seeking injunctive relief, an accounting, and an unspecified declaration of liability for damages and costs of the lawsuit. On May 3, 2018, Extreme Networks GmbH filed a separate nullity action in the Federal Patent Court in Munich, seeking to invalidate the asserted patents, and on May 4, 2018, the defendants answered the complaint, denying any infringement and seeking a stay of the action pending the conclusion of the nullity action. The Company believes the claims are without merit, and intends to defend them vigorously. Indemnification Obligations Subject to certain limitations, the Company may be obligated to indemnify its current and former directors, officers and employees. These obligations arise under the terms of its certificate of incorporation, its bylaws, applicable contracts, and applicable law. The obligation to indemnify, where applicable, generally means that the Company is required to pay or reimburse, and in certain circumstances the Company has paid or reimbursed, the individuals' reasonable legal expenses and possibly damages and other liabilities incurred in connection with certain legal matters. For example, the Company currently is paying or reimbursing legal expenses being incurred by certain current and former officers and directors in connection with the shareholder litigation described above. The Company also procures Directors and Officers insurance to help cover its defense and/or indemnification costs, although its ability to recover such costs through insurance is uncertain. While it is not possible to estimate the maximum potential amount that could be owed under these indemnification agreements due to the Company’s limited history with prior indemnification claims, indemnification (including defense) costs could, in the future, have a material adverse effect on the Company’s consolidated financial position, results of operations and cash flows. As of September 30, 2018, the Company has the outstanding indemnification claims described above. |
Income Taxes
Income Taxes | 3 Months Ended |
Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 10. Income Taxes For the three months ended September 30, 2018 and 2017, the Company recorded income tax provision of $1.4 million and $1.7 million, respectively. The income tax provisions for the three months ended September 30, 2018 and 2017, consisted primarily of taxes on the income of the Company’s foreign subsidiaries as well as tax expense associated with the establishment of a U.S. deferred tax liability for amortizable goodwill resulting from the acquisition of Enterasys Networks, Inc., the WLAN Business, the Campus Fabric Business and for the three months ended September 30, 2018, the Data Center Business. The income tax provisions for both fiscal years were calculated based on the actual results of operations for the three months ended September 30, 2018 and 2017, respectively and therefore may not reflect the annual effective tax rate. On December 22, 2017, the President of the United States signed and enacted into law H.R. 1, the Tax Cuts and Jobs Act (“TCJA”), which, except for certain provisions, is effective for the Company’s fiscal year ended 2019. As a fiscal year taxpayer, the Company was not subject to the majority of the tax law provisions until the first quarter of fiscal year 2019; however, there were certain significant items of impact that were recognized in fiscal year 2018, the year the TCJA was enacted. The TCJA’s primary change is a reduction in the U.S. Federal statutory corporate tax rate from 35% to 21%. As a result, the Company recognized a tax benefit in the amount of $2.5 million in the second quarter of fiscal 2018 due to the revaluation of the Company's deferred tax liability related to amortizable goodwill to reflect the lower statutory rate. Because the U.S. deferred tax assets are offset by a full valuation allowance, the reduction in deferred tax assets for the lower rate was fully offset by a corresponding reduction in valuation allowance resulting in no additional tax provision. The TCJA moves the U.S. from a global taxation regime to a modified territorial regime. Under the territorial regime, the company’s foreign earnings will generally not be subject to tax in the US. As part of transitioning to this new regime, U.S. companies were required to pay tax on historical earnings generated offshore that have not been repatriated to the U.S. (“Transition Tax”). The Company has estimated there will be no incremental tax provision relating to the Transition Tax given the Company’s ability to utilize existing tax attributes to offset the impact of the deemed repatriation. The TCJA makes broad and complex changes to the U.S. tax code, and in certain instances, lacks clarity and is subject to interpretation until additional U.S. Treasury guidance is issued. On December 22, 2017, the SEC issued guidance under Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act Amounts recorded where accounting is complete principally relate to the reduction in the U.S. federal tax rate to 21 percent, which resulted in the Company reporting an income tax benefit of $2.5 million in the fiscal year ended June 30, 2018 to remeasure deferred tax liabilities associated with indefinitely lived intangible assets that will reverse at the new 21% rate. Absent this deferred tax liability, the Company is in a net deferred tax asset position that is offset by a full valuation allowance. Though the impact of the rate change related to net deferred tax assets has a net tax effect of zero, the accounting to determine the gross change in the deferred tax position and the offsetting valuation is not yet complete. In accordance with SAB 118, the estimated income tax impact associated with the Transition Tax of zero represents our best estimate based on interpretation of the U.S. legislation as we are still accumulating data to finalize the underlying calculation. In accordance with SAB 118, estimated income tax impact associated with the Transition Tax is considered provisional and will be finalized prior to the end of the measurement period. The ultimate impact may differ from these provisional amounts, due to, among other things, additional analysis, changes in interpretations and assumptions the Company has made, additional regulatory guidance that may be issued, and actions the Company may take as a result of the TCJA. With respect to provisions of the TCJA effective for the Company’s fiscal year ended 2019, the Company anticipates several new provisions may potentially impact tax provisions in future periods including limitations on the deductibility of interest expense and certain executive compensation, a minimum tax on certain foreign earnings (i.e., global intangible low-taxed income or “GILTI”). The GILTI provisions require the Company to include in its U.S. income tax return foreign subsidiary earnings in excess of an allowable return on the foreign subsidiary’s tangible assets. Based on initial assessment and interpretation of the new provision, the Company expects that it will be subject to incremental U.S. tax on GILTI income beginning in fiscal 2019. The Company may elect to account for GILTI tax as a component of tax expense in the period in which it is incurred or account for the GILTI tax in the measurement of deferred taxes. The Company is continuing to evaluate this particular provision and therefore has not yet elected a method but will do so once our analysis is complete. The Base Erosion and Anti-Abuse Tax (“BEAT”) provisions in the Tax Reform Act eliminate the deduction of certain base-erosion payments made to related foreign corporations and impose a minimum tax if greater than regular tax. There is a reasonable amount of uncertainty surrounding the interpretation of this new provision, however, based on initial assessment and a reasonable interpretation of the new provision, the Company expects that it will not be subject to the incremental U.S. tax on BEAT income beginning in fiscal 2019, due to a realignment of the Company’s international structure. In the three months ended September 30, 2019, the Company adopted ASU 2016-16, Intra-Entity Transfers of Assets Other Than Inventory The Company has provided a full valuation allowance against all of its U.S. federal and state deferred tax assets as well as the deferred tax assets in Australia and a portion of the deferred tax assets in Ireland. A valuation allowance is determined by assessing both negative and positive evidence to determine whether it is “more likely than not” that the deferred tax assets are recoverable; such assessment is required on a jurisdiction by jurisdiction basis. The Company's inconsistent earnings in recent periods, including a cumulative loss over the last three years, coupled with its difficulty in forecasting future revenue trends as well as the cyclical nature of its business represent sufficient negative evidence to require a full valuation allowance against its U.S. federal and state net deferred tax assets as well as the above mentioned foreign jurisdictions. This valuation allowance will be evaluated periodically and can be reversed partially or in whole if business results and the economic environment have sufficiently improved to support realization of some or all of the Company's deferred tax assets. The acquisition of Enterasys in October 2013 included a U.S. parent company as well as its wholly-owned foreign subsidiaries. The Company elected to treat this stock acquisition as an asset purchase by filing the required election forms under IRC Sec 338(h)(10). In addition, the Company completed asset purchases of the WLAN Business, the Campus Fabric Business and the Data Center Business in October 2016, July 2017 and October 2017, respectively. The Company has estimated the value of the intangible assets from these transactions and is amortizing the amounts over 15 years for tax purposes. During the three months ended September 30, 2018 and 2017, the Company deducted $0.5 million and $1.6 million of tax amortization expense respectively, for each period related to capitalized goodwill resulting from these acquisitions. As of September 30, 2018, the Company recorded a deferred tax liability of $5.9 million related to this goodwill amortization which is not considered a future source of taxable income in evaluating the need for a valuation allowance against its deferred tax assets. The Company had $17.2 million of unrecognized tax benefits as of September 30, 2018. The future impact of the unrecognized tax benefit of $17.2 million, if recognized, would result in adjustments to deferred tax assets and corresponding adjustments to the valuation allowance. The Company does not anticipate any events to occur during the next twelve months that would reduce the unrealized tax benefit as currently stated in the Company’s balance sheet. The Company’s policy is to accrue interest and penalties related to the underpayment of income taxes as a component of tax expense in the accompanying condensed consolidated statements of operations. In general, the Company’s U.S. federal income tax returns are subject to examination by tax authorities for fiscal years 2001 forward due to net operating losses and the Company's state income tax returns are subject to examination for fiscal years 2000 forward due to net operating losses. The Company is in the process of settling examination by the state of North Carolina for fiscal years ended 2014, 2015 and 2016. . |
Net Loss Per Share
Net Loss Per Share | 3 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share [Abstract] | |
Net Loss Per Share | 11. Net Loss Per Share Basic earnings per share is calculated by dividing net earnings by the weighted average number of common shares outstanding during the period. Dilutive earnings per share is calculated by dividing net earnings by the weighted average number of common shares used in the basic earnings per share calculation plus the dilutive effect of shares subject to repurchase, options, warrants and unvested restricted stock units. The following table presents the calculation of net loss per share of basic and diluted (in thousands, except per share data): Three Months Ended September 30, 2018 September 30, 2017 Net (loss) income $ (9,065 ) $ 4,376 Weighted-average shares used in per share calculation - basic 117,368 112,241 Effect of potentially dilutive shares: Options to purchase common stock — 1,760 Restricted stock units — 4,007 Employee Stock Purchase Plan shares — 423 Weighted-average shares used in per share calculation - diluted 117,368 118,431 Net (loss) income per share: Net (loss) income per share - basic $ (0.08 ) $ 0.04 Net (loss) income per share - diluted $ (0.08 ) $ 0.04 The following securities were excluded from the computation of net loss per diluted share of common stock for the periods presented as their effect would have been anti-dilutive (in thousands): Three Months Ended September 30, 2018 September 30, 2017 Options to purchase common stock 989 — Restricted stock units 1,913 496 Employee Stock Purchase Plan shares — 204 Total shares excluded 2,902 700 |
Foreign Exchange Forward Contra
Foreign Exchange Forward Contracts | 3 Months Ended |
Sep. 30, 2018 | |
Derivative Instruments And Hedging Activities Disclosure [Abstract] | |
Foreign Exchange Forward Contracts | 12. Foreign Exchange Forward Contracts The Company uses derivative financial instruments to manage exposures to foreign currency. The Company’s objective for holding derivatives is to use the most effective methods to minimize the impact of these exposures. The Company does not enter into derivatives for speculative or trading purposes. The fair value of the Company’s derivatives in a gain position are recorded in “Prepaid expenses and other current assets” and derivatives in a loss position are recorded in “Other accrued liabilities” in the accompanying condensed consolidated balance sheets. Changes in the fair value of derivatives are recorded in “Other income (expense), net” in the accompanying condensed consolidated statements of operations. The Company enters into foreign exchange forward contracts to mitigate the effect of gains and losses generated by foreign currency transactions related to certain operating expenses and re-measurement of certain assets and liabilities denominated in foreign currencies. These derivatives do not qualify as hedges. As of September 30, 2018, the Company did not have any forward foreign currency contracts. As of September 30, 2017 forward foreign currency contracts had a notional principal amount of $9.6 million and an immaterial unrealized loss. These contracts typically have maturities of less than 90 days. Changes in the fair value of these foreign exchange forward contracts are offset largely by re-measurement of the underlying assets and liabilities. Foreign currency transactions gains and losses from operations was a gain of $0.2 million and loss from operations of $0.6 million for the three months ended September 30, 2018 and 2017, respectively. |
Disclosure about Segments of an
Disclosure about Segments of an Enterprise and Geographic Areas | 3 Months Ended |
Sep. 30, 2018 | |
Segment Reporting [Abstract] | |
Disclosure about Segments of an Enterprise and Geographic Areas | 13. Disclosure about Segments of an Enterprise and Geographic Areas The Company operates in one segment, the development and marketing of network infrastructure equipment. The Company conducts business globally and is managed geographically. Revenue is attributed to a geographical area based on the location of its customers. The Company operates in three geographical areas: Americas, which includes the United States, Canada, Mexico, Central America and South America; EMEA, which includes Europe, Russia, Middle East and Africa; and APAC which includes Asia Pacific, South Asia, India, Australia and Japan. The Company’s chief operating decision maker, who is its CEO, reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance. See Note 4 Net Revenues for the Company’s revenues by geographic regions and channel based on the customer’s ship-to location. The Company’s long-lived assets are attributed to the geographic regions as follows (in thousands): Long-lived Assets September 30, 2018 June 30, 2018 Americas $ 147,276 $ 178,251 EMEA 46,119 15,106 APAC 9,187 9,896 Total long-lived assets $ 202,582 $ 203,253 |
Subsequent Event
Subsequent Event | 3 Months Ended |
Sep. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Event | 14. Subsequent Event On November 2, 2018, the Company announced that its Board of Directors has authorized the Company to repurchase up to $60.0 million of its common stock over the next two years. Purchases may be made from time to time in the open market, in privately negotiated transactions or otherwise. The manner, timing and amount of any purchases will be determined by the Company's management based on their evaluation of market conditions, stock price, Extreme’s ongoing determination that it is the best use of available cash and other factors. The repurchase program does not obligate Extreme to acquire any common stock, may be suspended or terminated at any time without prior notice and will be subject to regulatory considerations. No repurchases were made during the quarter ended September 30, 2018. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Fiscal Year | Fiscal Year The Company uses a fiscal calendar year ending on June 30. All references herein to “fiscal 2019” or “2019” represent the fiscal year ending June 30, 2019. All references herein to “fiscal 2018” or “2018” represent the fiscal year ended June 30, 2018. |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of Extreme and its wholly-owned subsidiaries. All inter-company accounts and transactions have been eliminated. The Company predominantly uses the United States Dollar as its functional currency. The functional currency for certain of its foreign subsidiaries is the local currency. For those subsidiaries that operate in a local currency functional environment, all assets and liabilities are translated to United States Dollars at current month end rates of exchange; and revenue and expenses are translated using the monthly average rate. |
Accounting Estimates | Accounting Estimates The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements In January 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740) - Intra-Entity Transfers of Assets Other Than Inventory not have a material effect on the Company’s financial statements. In May 2017, the FASB issued ASU 2017-09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting Recently Issued Accounting Pronouncements In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40 In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820), In February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220) In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) The Company believes that Topic 842 will have a material impact on its financial position, as a result of recognizing right-of-use assets and lease liabilities on its consolidated balance sheets. |
Revenue Recognition | Revenue Recognition Performance Obligations. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in Topic 606. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Certain of the Company’s contracts have multiple performance obligations, as the promise to transfer individual goods or services is separately identifiable from other promises in the contracts and, therefore, is distinct. For contracts with multiple performance obligations, the Company allocates the contract’s transaction price to each performance obligation based on its relative standalone selling price. The stand-alone selling prices are determined based on the prices at which the Company separately sells these products. For items that are not sold separately, the Company estimates the stand-alone selling prices using the best estimated selling price approach. The Company’s performance obligations are satisfied at a point in time or over time as work progresses. Substantially all of the Company’s product sales revenues as reflected on the condensed consolidated statements of operations for the three months ended September 30, 2018 and 2017 are recognized at a point in time. Substantially all of the Company’s service revenue is recognized over time. For revenue recognized over time, the Company uses an input measure, days elapsed, to measure progress. On September 30, 2018, the Company had $183.9 million of remaining performance obligations, which is comprised of deferred maintenance revenue and services not yet delivered. The Company expects to recognize approximately 65 percent of its remaining performance obligations as revenue in fiscal 2019, an additional 22 percent in fiscal 2020 and 13 percent of the balance thereafter. Contract Balances. The timing of revenue recognition, billings and cash collections results in billed accounts receivable and deferred revenue in the consolidated balance sheet. Services provided under renewable support arrangements of the Company are billed in accordance with agreed-upon contractual terms, which are typically at periodic intervals (e.g., quarterly or annually). The Company sometimes receives payments from its customers in advance of services being provided, resulting in deferred revenues. These liabilities are reported on the consolidated balance sheet on a contract-by-contract basis at the end of each reporting period. Revenue recognized for the three months ended September 30, 2018 and 2017, that was included in the deferred revenue balance at the beginning of each period was $50.6 million and $42.0 million, respectively. Contract Costs . The Company recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets that the Company otherwise would have recognized is one year or less. Management expects that commission fees paid to sales representative as a result of obtaining service contracts and contract renewals are recoverable and therefore the Company capitalized them as contract costs in the amount of $4.9 million and $2.5 million at September 30, 2018 and 2017, respectively. Capitalized commission fees are amortized on a straight-line basis over the average period of service contracts of approximately three years, and are included in “Sales and marketing” in the accompanying condensed consolidated statements of operations. Amortization recognized during the three months ended September 30, 2018 and 2017, was $0.7 million and $0.4 million, respectively. There was no impairment loss in relation to the costs capitalized. Estimated Variable Consideration . There were no material changes in the current period to the estimated variable consideration for performance obligations which were satisfied or partially satisfied during previous periods. Revenue by Category The following table sets forth the Company’s revenue disaggregated by sales channel and geographic region based on the customer’s ship-to locations (in thousands): Three Months Ended September 30, 2018 September 30, 2017 Distributor Direct Total Distributor Direct Total Americas: United States $ 56,742 $ 59,936 $ 116,678 $ 42,392 $ 50,990 $ 93,382 Other 4,493 5,524 10,017 14,336 6,395 20,731 Total Americas 61,235 65,460 126,695 56,728 57,385 114,113 EMEA 61,331 30,838 92,169 51,232 27,903 79,135 APAC 2,349 18,673 21,022 3,264 15,203 18,467 Total net revenues $ 124,915 $ 114,971 $ 239,886 $ 111,224 $ 100,491 $ 211,715 |
Cash, Cash Equivalents and Marketable Securities | Cash, Cash Equivalents and Marketable Securities The following is a summary of cash, cash equivalents and marketable securities (in thousands): September 30, 2018 June 30, 2018 Cash $ 140,167 $ 121,139 Cash equivalents — — Total cash and cash equivalents 140,167 121,139 Marketable securities (consisting of available-for-sale securities) 887 1,459 Total cash, cash equivalents and marketable securities $ 141,054 $ 122,598 The Company considers highly liquid investments with maturities of three months or less at the date of purchase to be cash equivalents. Marketable equity securities are recorded in “Prepaid expense and other current assets” in the accompanying condensed consolidated balance sheets as these securities are publicly-traded with readily determinable values. Marketable equity securities are classified as available-for-sale and reported at fair value with unrealized gains and losses included in “Other (expense) income, net” in the accompanying condensed consolidated statements of operations. |
Inventories | Inventories The Company values its inventory at lower of cost or net realizable value. Cost is computed using standard cost, which approximates actual cost, on a first-in, first-out basis. The Company has established inventory allowances when conditions exist that suggest that inventory may be in excess of anticipated demand or is obsolete based upon assumptions about future demand. At the point of the loss recognition, a new, lower-cost basis for that inventory is established, and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis. Any written down or obsolete inventory subsequently sold has not had a material impact on gross margin for any of the periods disclosed. Inventories consist of the following (in thousands): September 30, 2018 June 30, 2018 Finished goods $ 42,150 $ 49,393 Raw materials 13,430 14,474 Total Inventories $ 55,580 $ 63,867 |
Property and Equipment, Net | Property and Equipment, Net Property and equipment consist of the following (in thousands): September 30, 2018 June 30, 2018 Computers and equipment $ 63,456 $ 60,677 Purchased software 21,558 21,389 Office equipment, furniture and fixtures 15,034 14,980 Leasehold improvements 50,959 50,070 Total property and equipment 151,007 147,116 Less: accumulated depreciation and amortization (74,783 ) (68,597 ) Property and equipment, net $ 76,224 $ 78,519 |
Intangibles | Intangibles The following tables summarize the components of gross and net intangible asset balances (dollars in thousands) Weighted Average Remaining Amortization Gross Carrying Accumulated Net Carrying Period Amount Amortization Amount September 30, 2018 Developed technology 3.1 years $ 117,000 $ 63,106 $ 53,894 Customer relationships 2.8 years 51,639 41,578 10,061 Maintenance contracts 0.1 years 17,000 16,717 283 Trade names 3.2 years 9,100 4,506 4,594 License agreements 7.3 years 2,232 1,244 988 Other intangibles 1.3 years 1,382 1,179 203 Total intangibles, net $ 198,353 $ 128,330 $ 70,023 Weighted Average Remaining Amortization Gross Accumulated Net Carrying Period Amount Amortization Amount June 30, 2018 Developed technology 3.3 years $ 117,000 $ 58,299 $ 58,701 Customer relationships 3.0 years 51,639 40,634 11,005 Maintenance contracts 0.3 years 17,000 15,866 1,134 Trade names 3.4 years 9,100 4,141 4,959 Backlogs — years 1,800 1,800 — License agreements 5.8 years 2,445 1,390 1,055 Other intangibles 1.6 years 1,382 1,144 238 Total intangibles, net $ 200,366 $ 123,274 $ 77,092 The amortization expense of intangibles for the periods presented is summarized below (in thousands): Three Months Ended September 30, 2018 September 30, 2017 Amortization in “Cost of revenues: Product” $ 4,932 $ 2,695 Amortization of intangibles 2,141 1,614 Total amortization $ 7,073 $ 4,309 The amortization expense that is recognized in “Cost of revenues: Product” is comprised of amortization for developed technology, license agreements and other intangibles. |
Deferred Revenue | Deferred Revenue The Company offers for sale to its customers, renewable support arrangements that range from one to five years as well as professional and training services, which results in deferred revenue. |
Debt | Debt The Company’s debt is comprised of the following (in thousands): September 30, 2018 June 30, 2018 Current portion of long-term debt: Term Loan $ 9,500 $ 9,500 Less: unamortized debt issuance costs (492 ) (493 ) Current portion of long-term debt $ 9,008 $ 9,007 Long-term debt, less current portion: Term Loan $ 178,125 $ 180,500 Revolving Facility — 10,000 Less: unamortized debt issuance costs (1,627 ) (1,751 ) Total long-term debt, less current portion 176,498 188,749 Total debt $ 185,506 $ 197,756 On May 1, 2018, the Company entered into a Credit Agreement (the “Credit Agreement”), by and among the Company, as borrower, BMO Harris Bank N.A., as an issuing lender and swingline lender, Bank of Montreal, as administrative and collateral agent, and the financial institutions or entities that are a party thereto as lenders. The Credit Agreement provides for i) $40 million five-year revolving credit facility (the “New Revolving Facility”) ii) a $190 million five-year term loan (the “New Term Loan”) and iii) an uncommitted additional incremental loan facility in the principal amount of up to $100 million (“New Incremental Facility”). On May 1, 2018, the Company borrowed $200 million under the Credit Agreement to pay off existing debt and for general corporate purposes. Borrowings under the Credit Agreement will bear interest, at the Company’s election, as of May 1, 2018, at a rate per annum equal to LIBOR plus 1.50% to 2.75%, or the adjusted base rate plus 0.50% to 1.75%, based on the Company’s Consolidated Leverage Ratio. In addition, the Company is required to pay a commitment fee of between 0.25% and 0.40% quarterly (currently 0.35%) on the unused portion of the New Revolving Facility, also based on the Company’s consolidated leverage ratio. Principal installments are payable on the New Term Loan in varying percentages quarterly starting June 30, 2018 and to the extent not previously paid, all outstanding balances are to be paid at maturity. The Credit Agreement is secured by substantially all of the Company’s assets. The Credit Agreement requires the Company to maintain certain minimum financial ratios at the end of each fiscal quarter. The Credit Agreement also includes covenants and restrictions that limit, among other things, the Company’s ability to incur additional indebtedness, create liens upon any of its property, merge, consolidate or sell all or substantially all of its assets. The Credit Agreement also includes customary events of default which may result in acceleration of the outstanding balance. Financing costs incurred in connection with obtaining long-term financing are deferred and amortized over the term of the Credit Agreement. Amortization of deferred financing costs included in “Interest expense” in the accompanying condensed consolidated statements of operations totaled $0.2 million The Company had $38.7 million of availability under the New Revolving Facility as of September 30, 2018. The Company had $1.3 million of outstanding letters of credit as of September 30, 2018. |
Guarantees and Product Warranties | Guarantees and Product Warranties Networking products may contain undetected hardware or software errors when new products or new versions or updates of existing products are released to the marketplace. The Company’s standard hardware warranty period is typically 12 months from the date of shipment to end-users and 90 days for software. For certain access products, the Company offers a limited lifetime hardware warranty commencing on the date of shipment from the Company and ending five (5) years following the Company’s announcement of the end of sale of such product. Upon shipment of products to its customers, the Company estimates expenses for the cost to repair or replace products that may be returned under warranty and accrue a liability in cost of product revenue for this amount. The determination of the Company’s warranty requirements is based on actual historical experience with the product or product family, estimates of repair and replacement costs and any product warranty problems that are identified after shipment. The Company estimates and adjusts these accruals at each balance sheet date in accordance with changes in these factors. Upon issuance of a standard product warranty, the Company discloses and recognizes a liability for the obligations it assumes under the product warranty. The following table summarizes the activity related to the Company’s product warranty liability during the three months ended September 30, 2018 and 2017 (in thousands): Three Months Ended September 30, 2018 September 30, 2017 Balance beginning of period $ 12,807 $ 10,584 Warranties assumed due to acquisitions — 3,156 New warranties issued 3,722 2,272 Warranty expenditures (3,928 ) (2,513 ) Balance end of period $ 12,601 $ 13,499 To facilitate sales of its products in the normal course of business, the Company indemnifies its resellers and end-user customers with respect to certain matters. The Company has agreed to hold the customer harmless against losses arising from a breach of intellectual property infringement or other. These agreements may limit the time within which an indemnification claim can be made and the amount of the claim. It is not possible to estimate the maximum potential amount under these indemnification agreements due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. Historically, payments made by the Company under these agreements have not had a material impact on its operating results or financial position. |
Other Long-term Liabilities | Other long-term liabilities The following is a summary of long-term liabilities (in thousands): September 30, 2018 June 30, 2018 Acquisition related deferred payments, less current portion $ 12,350 $ 13,251 Contingent consideration obligations, less current portion 4,711 4,898 Other contractual obligations, less current portion 31,402 31,200 Other 15,644 9,751 Total other long-term liabilities $ 64,107 $ 59,100 |
Advertising | Advertising All advertising costs are expensed as incurred. Advertising expenses for three months ended September 30, 2018 and 2017, were immaterial. |
Concentrations | Concentrations The Company may be subject to concentration of credit risk as a result of certain financial instruments consisting of accounts receivable and marketable securities. The Company does not invest an amount exceeding 10% of its combined cash or cash equivalents in the securities of any one obligor or maker, except for obligations of the United States government, obligations of United States government agencies and money market accounts. |
Earnings Per Share | Dilutive earnings per share is calculated by dividing net earnings by the weighted average number of common shares used in the basic earnings per share calculation plus the dilutive effect of shares subject to repurchase, options, warrants and unvested restricted stock units. |
Business Combinations (Tables)
Business Combinations (Tables) | 3 Months Ended |
Sep. 30, 2018 | |
Summary of Unaudited Pro Forma Financial Information | The following table summarizes the unaudited pro forma financial information (in thousands, except per share amounts): Three Months Ended September 30, 2017 Net revenues $ 284,508 Net loss $ (8,774 ) Net loss per share - basic $ (0.08 ) Net loss per share - diluted $ (0.08 ) Shares used in per share calculation - basic 112,241 Shares used in per share calculation - diluted 112,241 |
Data Center Business | |
Summary of Final Allocation of Tangible and Identifiable Intangible Assets Acquired and Liabilities Assumed | The following table below summarizes the final allocation of the tangible and identifiable intangible assets acquired and liabilities assumed (in thousands): Final Allocation Accounts receivables $ 33,488 Inventories 19,934 Prepaid expenses and other current assets 988 Property and equipment 18,938 Other assets 4,734 Accounts payable and accrued expenses (16,494 ) Deferred revenue (33,025 ) Net tangible assets acquired 28,563 Identifiable intangible assets 32,800 Goodwill 22,974 Total intangible assets acquired 55,774 Total net assets acquired $ 84,337 |
Campus Fabric Business | |
Summary of Final Allocation of Tangible and Identifiable Intangible Assets Acquired and Liabilities Assumed | The following table below summarizes the final allocation of the tangible and identifiable intangible assets acquired and liabilities assumed (in thousands): Final Allocation Accounts receivables $ 19,527 Inventories 14,165 Prepaid expenses and other current assets 240 Property and equipment 5,406 Other assets 7,009 Accounts payable and accrued expenses (31,670 ) Deferred revenue (8,994 ) Other long-term liabilities (5,849 ) Net tangible assets acquired (166 ) Identifiable intangible assets 41,300 In-process research and development 2,400 Goodwill 35,892 Total intangible assets acquired 79,592 Total net assets acquired $ 79,426 |
Revenues (Tables)
Revenues (Tables) | 3 Months Ended |
Sep. 30, 2018 | |
Revenue From Contract With Customer [Abstract] | |
Schedule of Revenue Disaggregated by Sales Channel and Geographic Region | The following table sets forth the Company’s revenue disaggregated by sales channel and geographic region based on the customer’s ship-to locations (in thousands): Three Months Ended September 30, 2018 September 30, 2017 Distributor Direct Total Distributor Direct Total Americas: United States $ 56,742 $ 59,936 $ 116,678 $ 42,392 $ 50,990 $ 93,382 Other 4,493 5,524 10,017 14,336 6,395 20,731 Total Americas 61,235 65,460 126,695 56,728 57,385 114,113 EMEA 61,331 30,838 92,169 51,232 27,903 79,135 APAC 2,349 18,673 21,022 3,264 15,203 18,467 Total net revenues $ 124,915 $ 114,971 $ 239,886 $ 111,224 $ 100,491 $ 211,715 |
Schedule of Major Customers Accounting for 10% or More of Net Revenues and Accounts Receivable Balance | The following table sets forth major customers accounting for 10% or more of the Company’s net revenues: Three Months Ended September 30, 2018 September 30, 2017 Tech Data Corporation 17% 11% Westcon Group Inc. 13% 15% Jenne Corporation 12% 14% The following table sets forth major customers accounting for 10% or more of the Company’s accounts receivable balance: September 30, 2018 June 30, 2018 Tech Data Corporation 21% 17% Westcon Group Inc. 12% * Jenne Corporation * 13% * Less than 10% of accounts receivable |
Balance Sheet Accounts (Tables)
Balance Sheet Accounts (Tables) | 3 Months Ended |
Sep. 30, 2018 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Summary of Cash, Cash Equivalents and Marketable Securities | The following is a summary of cash, cash equivalents and marketable securities (in thousands): September 30, 2018 June 30, 2018 Cash $ 140,167 $ 121,139 Cash equivalents — — Total cash and cash equivalents 140,167 121,139 Marketable securities (consisting of available-for-sale securities) 887 1,459 Total cash, cash equivalents and marketable securities $ 141,054 $ 122,598 |
Components of Inventories | Inventories consist of the following (in thousands): September 30, 2018 June 30, 2018 Finished goods $ 42,150 $ 49,393 Raw materials 13,430 14,474 Total Inventories $ 55,580 $ 63,867 |
Components of Property and Equipment | Property and equipment consist of the following (in thousands): September 30, 2018 June 30, 2018 Computers and equipment $ 63,456 $ 60,677 Purchased software 21,558 21,389 Office equipment, furniture and fixtures 15,034 14,980 Leasehold improvements 50,959 50,070 Total property and equipment 151,007 147,116 Less: accumulated depreciation and amortization (74,783 ) (68,597 ) Property and equipment, net $ 76,224 $ 78,519 |
Components of Gross and Net Intangible Asset Balances | The following tables summarize the components of gross and net intangible asset balances (dollars in thousands) Weighted Average Remaining Amortization Gross Carrying Accumulated Net Carrying Period Amount Amortization Amount September 30, 2018 Developed technology 3.1 years $ 117,000 $ 63,106 $ 53,894 Customer relationships 2.8 years 51,639 41,578 10,061 Maintenance contracts 0.1 years 17,000 16,717 283 Trade names 3.2 years 9,100 4,506 4,594 License agreements 7.3 years 2,232 1,244 988 Other intangibles 1.3 years 1,382 1,179 203 Total intangibles, net $ 198,353 $ 128,330 $ 70,023 Weighted Average Remaining Amortization Gross Accumulated Net Carrying Period Amount Amortization Amount June 30, 2018 Developed technology 3.3 years $ 117,000 $ 58,299 $ 58,701 Customer relationships 3.0 years 51,639 40,634 11,005 Maintenance contracts 0.3 years 17,000 15,866 1,134 Trade names 3.4 years 9,100 4,141 4,959 Backlogs — years 1,800 1,800 — License agreements 5.8 years 2,445 1,390 1,055 Other intangibles 1.6 years 1,382 1,144 238 Total intangibles, net $ 200,366 $ 123,274 $ 77,092 |
Summary of Amortization Expense of Intangibles | The amortization expense of intangibles for the periods presented is summarized below (in thousands): Three Months Ended September 30, 2018 September 30, 2017 Amortization in “Cost of revenues: Product” $ 4,932 $ 2,695 Amortization of intangibles 2,141 1,614 Total amortization $ 7,073 $ 4,309 |
Components of Debt | The Company’s debt is comprised of the following (in thousands): September 30, 2018 June 30, 2018 Current portion of long-term debt: Term Loan $ 9,500 $ 9,500 Less: unamortized debt issuance costs (492 ) (493 ) Current portion of long-term debt $ 9,008 $ 9,007 Long-term debt, less current portion: Term Loan $ 178,125 $ 180,500 Revolving Facility — 10,000 Less: unamortized debt issuance costs (1,627 ) (1,751 ) Total long-term debt, less current portion 176,498 188,749 Total debt $ 185,506 $ 197,756 |
Summary of Product Warranty Liability Activity | The following table summarizes the activity related to the Company’s product warranty liability during the three months ended September 30, 2018 and 2017 (in thousands): Three Months Ended September 30, 2018 September 30, 2017 Balance beginning of period $ 12,807 $ 10,584 Warranties assumed due to acquisitions — 3,156 New warranties issued 3,722 2,272 Warranty expenditures (3,928 ) (2,513 ) Balance end of period $ 12,601 $ 13,499 |
Summary of Long-term Liabilities | The following is a summary of long-term liabilities (in thousands): September 30, 2018 June 30, 2018 Acquisition related deferred payments, less current portion $ 12,350 $ 13,251 Contingent consideration obligations, less current portion 4,711 4,898 Other contractual obligations, less current portion 31,402 31,200 Other 15,644 9,751 Total other long-term liabilities $ 64,107 $ 59,100 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Sep. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value for Financial Assets and Liabilities Measured on Recurring Basis | The following table presents the Company’s fair value hierarchy for its financial assets and liabilities measured at fair value on a recurring basis (in thousands): September 30, 2018 Level 1 Level 2 Level 3 Total Assets Investments: Marketable securities $ 887 $ — $ — $ 887 Total assets measured at fair value $ 887 $ — $ — $ 887 Liabilities Acquisition-related contingent consideration obligations $ — $ — $ 11,233 $ 11,233 Total liabilities measured at fair value $ — $ — $ 11,233 $ 11,233 June 30, 2018 Level 1 Level 2 Level 3 Total Assets Investments: Marketable securities $ 1,459 $ — $ — $ 1,459 Total assets measured at fair value $ 1,459 $ — $ — $ 1,459 Liabilities Acquisition-related contingent consideration obligations $ — $ — $ 12,749 $ 12,749 Total liabilities measured at fair value $ — $ — $ 12,749 $ 12,749 |
Schedule of Change in Acquisition-related Contingent Consideration Obligations | The change in the acquisition-related contingent consideration obligations is as follows (in thousands): Three Months Ended September 30, 2018 September 30, 2017 Beginning balance $ 12,749 $ — Payments (1,577 ) — Accretion on discount 61 — Ending balance $ 11,233 $ — |
Share-based Compensation (Table
Share-based Compensation (Tables) | 3 Months Ended |
Sep. 30, 2018 | |
Share Based Compensation [Abstract] | |
Shares Reserved for Issuance | The Company had reserved for issuance for the periods noted (in thousands): September 30, 2018 June 30, 2018 2013 Equity Incentive Plan shares available for grant 7,804 9,957 Employee stock options and awards outstanding 12,236 12,060 2014 Employee Stock Purchase Plan 4,084 5,365 Total shares reserved for issuance 24,124 27,382 |
Schedule of Recognized Share-based Compensation Expense | Share-based compensation expense recognized in the condensed consolidated financial statements by line item caption is as follows (in thousands): Three Months Ended September 30, 2018 September 30, 2017 Cost of product revenue $ 178 $ 92 Cost of service revenue 345 133 Research and development 2,342 1,051 Sales and marketing 2,359 1,643 General and administrative 1,601 1,884 Total share-based compensation expense $ 6,825 $ 4,803 |
Summary of Stock Award Activity | The following table summarizes stock award activity for the three months ended September 30, 2018 (in thousands, except grant date fair value): Number of Shares Weighted- Average Grant Date Fair Value Aggregate Fair Market Value Non-vested stock awards outstanding at June 30, 2018 7,764 $ 8.60 $ 61,804 Granted 3,337 6.44 Vested (1,142 ) 6.28 Cancelled (565 ) 8.69 Non-vested stock awards outstanding at September 30, 2018 9,394 $ 8.11 $ 51,479 |
Summary of Stock Option Activity | The following table summarizes stock option activity for the three months ended September 30, 2018 (in thousands, except per share and contractual term): Number of Shares Weighted-Average Exercise Price Per Share Weighted-Average Remaining Contractual Term (years) Aggregate Intrinsic Value Options outstanding at June 30, 2018 2,193 $ 3.88 2.90 $ 8,996 Granted 852 6.40 Exercised (123 ) 3.81 Cancelled (80 ) 6.18 Options outstanding at September 30, 2018 2,842 $ 4.57 3.88 $ 3,343 Vested and expected to vest at September 30, 2018 2,842 $ 4.57 3.88 $ 3,343 Exercisable at September 30, 2018 1,939 $ 3.98 2.68 $ 2,946 |
Schedule of Fair Value Assumptions for Stock Options and Employee Stock Purchase Plan Awards | The following assumptions were used to calculate the fair value of shares granted under the ESPP during the following periods: Employee Stock Purchase Plan Three Months Ended September 30, 2018 September 30, 2017 Expected life 0.5 years 0.5 years Risk-free interest rate 2.20 % 1.15 % Volatility 63 % 42 % Dividend yield — % — % |
Restructuring Charges, Net of_2
Restructuring Charges, Net of Reversals (Tables) | 3 Months Ended |
Sep. 30, 2018 | |
Restructuring And Related Activities [Abstract] | |
Restructuring Liabilities | Total restructuring and related liabilities consist of (in thousands): Excess Facilities Severance Benefits Total Balance as of June 30, 2018 $ 1,797 $ 4,658 $ 6,455 Period charges — 999 999 Period reversals — (191 ) (191 ) Period payments — (3,402 ) (3,402 ) Balance as of September 30, 2018 $ 1,797 $ 2,064 $ 3,861 Less: current portion included in Other accrued liabilities 2,601 Restructuring accrual included in Other long-term liabilities $ 1,260 |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 3 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The following table presents the calculation of net loss per share of basic and diluted (in thousands, except per share data): Three Months Ended September 30, 2018 September 30, 2017 Net (loss) income $ (9,065 ) $ 4,376 Weighted-average shares used in per share calculation - basic 117,368 112,241 Effect of potentially dilutive shares: Options to purchase common stock — 1,760 Restricted stock units — 4,007 Employee Stock Purchase Plan shares — 423 Weighted-average shares used in per share calculation - diluted 117,368 118,431 Net (loss) income per share: Net (loss) income per share - basic $ (0.08 ) $ 0.04 Net (loss) income per share - diluted $ (0.08 ) $ 0.04 |
Schedule of Antidilutive Securities Excluded from Earnings Per Share Calculation | The following securities were excluded from the computation of net loss per diluted share of common stock for the periods presented as their effect would have been anti-dilutive (in thousands): Three Months Ended September 30, 2018 September 30, 2017 Options to purchase common stock 989 — Restricted stock units 1,913 496 Employee Stock Purchase Plan shares — 204 Total shares excluded 2,902 700 |
Disclosure about Segments of _2
Disclosure about Segments of an Enterprise and Geographic Areas (Tables) | 3 Months Ended |
Sep. 30, 2018 | |
Segment Reporting [Abstract] | |
Schedule of Long Lived Assets by Segment | The Company’s long-lived assets are attributed to the geographic regions as follows (in thousands): Long-lived Assets September 30, 2018 June 30, 2018 Americas $ 147,276 $ 178,251 EMEA 46,119 15,106 APAC 9,187 9,896 Total long-lived assets $ 202,582 $ 203,253 |
Business Combinations (Narrativ
Business Combinations (Narratives) (Details) - USD ($) $ in Thousands | Dec. 01, 2017 | Oct. 27, 2017 | Jul. 14, 2017 | Mar. 07, 2017 |
Data Center Business | ||||
Business Acquisition [Line Items] | ||||
Asset purchase agreement closing date | Oct. 27, 2017 | |||
Business acquisition, purchase price | $ 84,300 | |||
Net assets acquired, financing receivables | 33,488 | |||
Net assets acquired, identifiable intangible assets | $ 32,800 | |||
Campus Fabric Business | ||||
Business Acquisition [Line Items] | ||||
Asset purchase agreement closing date | Jul. 14, 2017 | |||
Business acquisition, provisional consideration | $ 79,400 | |||
Net assets acquired, financing receivables | $ 19,527 | |||
Net assets acquired, identifiable intangible assets | $ 41,300 | |||
Capital Financing Business | ||||
Business Acquisition [Line Items] | ||||
Asset purchase agreement closing date | Dec. 1, 2017 | |||
Business combination, payments to seller in percentage of finance receivables | 90.00% | |||
Net assets acquired, financing receivables | $ 13,700 | |||
Net assets acquired, lease equipment | 3,500 | |||
Net assets acquired, identifiable intangible assets | 800 | |||
Fair value of contingent consideration | 13,000 | |||
Recorded gain from bargain purchase | $ 5,000 |
Business Combinations (Summary
Business Combinations (Summary of Final Allocation of Tangible and Identifiable Intangible Assets Acquired and Liabilities Assumed) (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Jun. 30, 2018 | Oct. 27, 2017 | Jul. 14, 2017 |
Final Allocation | ||||
Goodwill | $ 139,082 | $ 139,082 | ||
Data Center Business | ||||
Final Allocation | ||||
Accounts receivables | $ 33,488 | |||
Inventories | 19,934 | |||
Prepaid expenses and other current assets | 988 | |||
Property and equipment | 18,938 | |||
Other assets | 4,734 | |||
Accounts payable and accrued expenses | (16,494) | |||
Deferred revenue | (33,025) | |||
Total tangible assets acquired and liabilities assumed | 28,563 | |||
Identifiable intangible assets | 32,800 | |||
Goodwill | 22,974 | |||
Total intangible assets acquired | 55,774 | |||
Total net assets acquired | $ 84,337 | |||
Campus Fabric Business | ||||
Final Allocation | ||||
Accounts receivables | $ 19,527 | |||
Inventories | 14,165 | |||
Prepaid expenses and other current assets | 240 | |||
Property and equipment | 5,406 | |||
Other assets | 7,009 | |||
Accounts payable and accrued expenses | (31,670) | |||
Deferred revenue | (8,994) | |||
Other long-term liabilities | (5,849) | |||
Total tangible assets acquired and liabilities assumed | (166) | |||
Identifiable intangible assets | 41,300 | |||
In-process research and development | 2,400 | |||
Goodwill | 35,892 | |||
Total intangible assets acquired | 79,592 | |||
Total net assets acquired | $ 79,426 |
Business Combinations (Summar_2
Business Combinations (Summary of Unaudited Pro Forma Financial Information) (Details) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended |
Sep. 30, 2017USD ($)$ / sharesshares | |
Business Acquisition Pro Forma Information [Abstract] | |
Net revenues | $ | $ 284,508 |
Net loss | $ | $ (8,774) |
Net loss per share - basic | $ / shares | $ (0.08) |
Net loss per share - diluted | $ / shares | $ (0.08) |
Shares used in per share calculation - basic | shares | 112,241 |
Shares used in per share calculation - diluted | shares | 112,241 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Narratives) (Details) - USD ($) $ in Thousands | Jul. 01, 2018 | Sep. 30, 2017 |
Significant Accounting Policies [Line Items] | ||
Change in unrealized gains on available for sale securities | $ 183 | |
ASU 2016-01 | ||
Significant Accounting Policies [Line Items] | ||
Change in unrealized gains on available for sale securities | $ 500 |
Revenues (Narratives) (Details)
Revenues (Narratives) (Details) | 3 Months Ended | |
Sep. 30, 2018USD ($)Distribution_Channels | Sep. 30, 2017USD ($) | |
Disaggregation Of Revenue [Line Items] | ||
Number of distribution channels | Distribution_Channels | 2 | |
Estimated selling price determination approach | Certain of the Company’s contracts have multiple performance obligations, as the promise to transfer individual goods or services is separately identifiable from other promises in the contracts and, therefore, is distinct. For contracts with multiple performance obligations, the Company allocates the contract’s transaction price to each performance obligation based on its relative standalone selling price. The stand-alone selling prices are determined based on the prices at which the Company separately sells these products. For items that are not sold separately, the Company estimates the stand-alone selling prices using the best estimated selling price approach. | |
Remaining revenue performance obligations | $ 183,900,000 | |
Revenue recognized for deferred revenue balance | $ 50,600,000 | $ 42,000,000 |
Commission Fees | ||
Disaggregation Of Revenue [Line Items] | ||
Revenue, practical expedient, incremental cost of obtaining contract [true false] | true | |
Contract costs capitalized, amount | $ 4,900,000 | 2,500,000 |
Contract costs capitalized, amortization period | 3 years | |
Contract costs capitalized, amortization method | straight-line basis | |
Contract costs capitalized, amortization expense | $ 700,000 | 400,000 |
Contract costs capitalized, impairment loss | $ 0 | $ 0 |
Revenues (Narratives) (Details
Revenues (Narratives) (Details 1) | 3 Months Ended |
Sep. 30, 2018 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2018-10-01 | |
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction [Line Items] | |
Percentage of remaining performance obligations expected to recognize, period | 1 year |
Percentage of remaining performance obligations expected to recognize | 65.00% |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2019-07-01 | |
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction [Line Items] | |
Percentage of remaining performance obligations expected to recognize, period | 1 year |
Percentage of remaining performance obligations expected to recognize | 22.00% |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2020-07-01 | |
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction [Line Items] | |
Percentage of remaining performance obligations expected to recognize, description | thereafter |
Percentage of remaining performance obligations expected to recognize | 13.00% |
Revenues (Schedule of Revenue D
Revenues (Schedule of Revenue Disaggregated by Sales Channel and Geographic Region) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Disaggregation Of Revenue [Line Items] | ||
Net Revenues | $ 239,886 | $ 211,715 |
Distributor | ||
Disaggregation Of Revenue [Line Items] | ||
Net Revenues | 124,915 | 111,224 |
Direct | ||
Disaggregation Of Revenue [Line Items] | ||
Net Revenues | 114,971 | 100,491 |
United States | ||
Disaggregation Of Revenue [Line Items] | ||
Net Revenues | 116,678 | 93,382 |
United States | Distributor | ||
Disaggregation Of Revenue [Line Items] | ||
Net Revenues | 56,742 | 42,392 |
United States | Direct | ||
Disaggregation Of Revenue [Line Items] | ||
Net Revenues | 59,936 | 50,990 |
Other Americas | ||
Disaggregation Of Revenue [Line Items] | ||
Net Revenues | 10,017 | 20,731 |
Other Americas | Distributor | ||
Disaggregation Of Revenue [Line Items] | ||
Net Revenues | 4,493 | 14,336 |
Other Americas | Direct | ||
Disaggregation Of Revenue [Line Items] | ||
Net Revenues | 5,524 | 6,395 |
Total Americas | ||
Disaggregation Of Revenue [Line Items] | ||
Net Revenues | 126,695 | 114,113 |
Total Americas | Distributor | ||
Disaggregation Of Revenue [Line Items] | ||
Net Revenues | 61,235 | 56,728 |
Total Americas | Direct | ||
Disaggregation Of Revenue [Line Items] | ||
Net Revenues | 65,460 | 57,385 |
EMEA | ||
Disaggregation Of Revenue [Line Items] | ||
Net Revenues | 92,169 | 79,135 |
EMEA | Distributor | ||
Disaggregation Of Revenue [Line Items] | ||
Net Revenues | 61,331 | 51,232 |
EMEA | Direct | ||
Disaggregation Of Revenue [Line Items] | ||
Net Revenues | 30,838 | 27,903 |
APAC | ||
Disaggregation Of Revenue [Line Items] | ||
Net Revenues | 21,022 | 18,467 |
APAC | Distributor | ||
Disaggregation Of Revenue [Line Items] | ||
Net Revenues | 2,349 | 3,264 |
APAC | Direct | ||
Disaggregation Of Revenue [Line Items] | ||
Net Revenues | $ 18,673 | $ 15,203 |
Revenues (Schedule of Major Cus
Revenues (Schedule of Major Customers Accounting for 10% or More of Net Revenues and Accounts Receivable Balance) (Details) - Customer Concentration Risk | 3 Months Ended | 12 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | Jun. 30, 2018 | |
Westcon Group Inc. | Net Revenue | |||
Concentration Risk [Line Items] | |||
Concentration risk (percent) | 13.00% | 15.00% | |
Westcon Group Inc. | Accounts Receivable | |||
Concentration Risk [Line Items] | |||
Concentration risk (percent) | 12.00% | ||
Jenne Corporation | Net Revenue | |||
Concentration Risk [Line Items] | |||
Concentration risk (percent) | 12.00% | 14.00% | |
Jenne Corporation | Accounts Receivable | |||
Concentration Risk [Line Items] | |||
Concentration risk (percent) | 13.00% | ||
Tech Data Corporation | Net Revenue | |||
Concentration Risk [Line Items] | |||
Concentration risk (percent) | 17.00% | 11.00% | |
Tech Data Corporation | Accounts Receivable | |||
Concentration Risk [Line Items] | |||
Concentration risk (percent) | 21.00% | 17.00% |
Balance Sheet Accounts (Summary
Balance Sheet Accounts (Summary of Cash, Cash Equivalents and Marketable Securities) (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Jun. 30, 2018 | Sep. 30, 2017 | Jun. 30, 2017 |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | ||||
Cash | $ 140,167 | $ 121,139 | ||
Total cash and cash equivalents | 140,167 | 121,139 | $ 153,014 | $ 130,450 |
Marketable securities (consisting of available-for-sale securities) | 887 | 1,459 | ||
Total cash, cash equivalents and marketable securities | $ 141,054 | $ 122,598 |
Balance Sheet Accounts (Compone
Balance Sheet Accounts (Components of Inventories) (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Jun. 30, 2018 |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | ||
Finished goods | $ 42,150 | $ 49,393 |
Raw materials | 13,430 | 14,474 |
Total Inventories | $ 55,580 | $ 63,867 |
Balance Sheet Accounts (Compo_2
Balance Sheet Accounts (Components of Property and Equipment) (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Jun. 30, 2018 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 151,007 | $ 147,116 |
Less: accumulated depreciation and amortization | (74,783) | (68,597) |
Property and equipment, net | 76,224 | 78,519 |
Computers and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 63,456 | 60,677 |
Purchased software | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 21,558 | 21,389 |
Office equipment, furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 15,034 | 14,980 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 50,959 | $ 50,070 |
Balance Sheet Accounts (Compo_3
Balance Sheet Accounts (Components of Gross and Net Intangible Asset Balances) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Jun. 30, 2018 | |
Finite-Lived and Indefinite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 198,353 | $ 200,366 |
Accumulated Amortization | 128,330 | 123,274 |
Net Carrying Amount | $ 70,023 | $ 77,092 |
Developed technology | ||
Finite-Lived and Indefinite-Lived Intangible Assets [Line Items] | ||
Weighted Average Remaining Amortization Period | 3 years 1 month 6 days | 3 years 3 months 18 days |
Gross Carrying Amount | $ 117,000 | $ 117,000 |
Accumulated Amortization | 63,106 | 58,299 |
Net Carrying Amount | $ 53,894 | $ 58,701 |
Customer relationships | ||
Finite-Lived and Indefinite-Lived Intangible Assets [Line Items] | ||
Weighted Average Remaining Amortization Period | 2 years 9 months 18 days | 3 years |
Gross Carrying Amount | $ 51,639 | $ 51,639 |
Accumulated Amortization | 41,578 | 40,634 |
Net Carrying Amount | $ 10,061 | $ 11,005 |
Maintenance contracts | ||
Finite-Lived and Indefinite-Lived Intangible Assets [Line Items] | ||
Weighted Average Remaining Amortization Period | 1 month 6 days | 3 months 18 days |
Gross Carrying Amount | $ 17,000 | $ 17,000 |
Accumulated Amortization | 16,717 | 15,866 |
Net Carrying Amount | $ 283 | $ 1,134 |
Trade names | ||
Finite-Lived and Indefinite-Lived Intangible Assets [Line Items] | ||
Weighted Average Remaining Amortization Period | 3 years 2 months 12 days | 3 years 4 months 24 days |
Gross Carrying Amount | $ 9,100 | $ 9,100 |
Accumulated Amortization | 4,506 | 4,141 |
Net Carrying Amount | $ 4,594 | $ 4,959 |
Backlogs | ||
Finite-Lived and Indefinite-Lived Intangible Assets [Line Items] | ||
Weighted Average Remaining Amortization Period | 0 years | |
Gross Carrying Amount | $ 1,800 | |
Accumulated Amortization | $ 1,800 | |
License agreements | ||
Finite-Lived and Indefinite-Lived Intangible Assets [Line Items] | ||
Weighted Average Remaining Amortization Period | 7 years 3 months 18 days | 5 years 9 months 18 days |
Gross Carrying Amount | $ 2,232 | $ 2,445 |
Accumulated Amortization | 1,244 | 1,390 |
Net Carrying Amount | $ 988 | $ 1,055 |
Other intangibles | ||
Finite-Lived and Indefinite-Lived Intangible Assets [Line Items] | ||
Weighted Average Remaining Amortization Period | 1 year 3 months 18 days | 1 year 7 months 6 days |
Gross Carrying Amount | $ 1,382 | $ 1,382 |
Accumulated Amortization | 1,179 | 1,144 |
Net Carrying Amount | $ 203 | $ 238 |
Balance Sheet Accounts (Summa_2
Balance Sheet Accounts (Summary of Amortization Expense of Intangibles) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | ||
Amortization in “Cost of revenues: Product” | $ 4,932 | $ 2,695 |
Type Of Cost Good Or Service Extensible List | us-gaap:ProductMember | us-gaap:ProductMember |
Amortization of intangibles | $ 2,141 | $ 1,614 |
Total amortization | $ 7,073 | $ 4,309 |
Balance Sheet Accounts (Narrati
Balance Sheet Accounts (Narratives) (Details) - USD ($) | May 01, 2018 | Sep. 30, 2018 | Sep. 30, 2017 |
Balance Sheet Accounts [Line Items] | |||
Outstanding letters of credit | $ 1,300,000 | ||
Standard hardware warranty period (in months) | 12 months | ||
Standard software warranty period (in days) | 90 days | ||
Limited lifetime hardware warranty maximum period after end of sale of product (in years) | 5 years | ||
Maximum investment in one obligor or maker (percent) | 10.00% | ||
Interest Expense | |||
Balance Sheet Accounts [Line Items] | |||
Amortization of deferred financing costs | $ 200,000 | $ 200,000 | |
Second Amendment | |||
Balance Sheet Accounts [Line Items] | |||
Termination date | May 1, 2018 | ||
Credit Agreement | |||
Balance Sheet Accounts [Line Items] | |||
Borrowings under Term Loan | $ 200,000,000 | ||
Credit Agreement | Term Loan | |||
Balance Sheet Accounts [Line Items] | |||
Credit Facility, term | 5 years | ||
Amount borrowed under Term Loan | $ 190,000,000 | ||
Credit Agreement | Revolving Facility | |||
Balance Sheet Accounts [Line Items] | |||
Credit Facility, term | 5 years | ||
Borrowing capacity from Credit Agreement | $ 40,000,000 | ||
Commitment fee | 0.35% | ||
Borrowings available under facility | $ 38,700,000 | ||
Minimum | |||
Balance Sheet Accounts [Line Items] | |||
Extended warranty period | 1 year | ||
Minimum | Credit Agreement | London Interbank Offered Rate (LIBOR) | |||
Balance Sheet Accounts [Line Items] | |||
Borrowings, interest rate | 1.50% | ||
Minimum | Credit Agreement | Adjusted Base Rate | |||
Balance Sheet Accounts [Line Items] | |||
Borrowings, interest rate | 0.50% | ||
Minimum | Credit Agreement | Revolving Facility | |||
Balance Sheet Accounts [Line Items] | |||
Commitment fee | 0.25% | ||
Maximum | |||
Balance Sheet Accounts [Line Items] | |||
Extended warranty period | 5 years | ||
Maximum | Credit Agreement | |||
Balance Sheet Accounts [Line Items] | |||
Additional incremental loan facility | $ 100,000,000 | ||
Maximum | Credit Agreement | London Interbank Offered Rate (LIBOR) | |||
Balance Sheet Accounts [Line Items] | |||
Borrowings, interest rate | 2.75% | ||
Maximum | Credit Agreement | Adjusted Base Rate | |||
Balance Sheet Accounts [Line Items] | |||
Borrowings, interest rate | 1.75% | ||
Maximum | Credit Agreement | Revolving Facility | |||
Balance Sheet Accounts [Line Items] | |||
Commitment fee | 0.40% |
Balance Sheet Accounts (Compo_4
Balance Sheet Accounts (Components of Debt) (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Jun. 30, 2018 |
Line Of Credit Facility [Line Items] | ||
Current portion of long-term debt | $ 9,008 | $ 9,007 |
Less: unamortized debt issuance costs | (492) | (493) |
Long-term debt, less current portion | 176,498 | 188,749 |
Less: unamortized debt issuance costs | (1,627) | (1,751) |
Total debt | 185,506 | 197,756 |
Term Loan | ||
Line Of Credit Facility [Line Items] | ||
Current portion of long-term debt | 9,500 | 9,500 |
Long-term debt, less current portion | $ 178,125 | 180,500 |
Revolving Facility | ||
Line Of Credit Facility [Line Items] | ||
Long-term debt, less current portion | $ 10,000 |
Balance Sheet Accounts (Summa_3
Balance Sheet Accounts (Summary of Product Warranty Liability Activity) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Movement in Standard Product Warranty Accrual [Roll Forward] | ||
Balance beginning of period | $ 12,807 | $ 10,584 |
Warranties assumed due to acquisitions | 3,156 | |
New warranties issued | 3,722 | 2,272 |
Warranty expenditures | (3,928) | (2,513) |
Balance end of period | $ 12,601 | $ 13,499 |
Balance Sheet Accounts (Summa_4
Balance Sheet Accounts (Summary of Long-term Liabilities) (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Jun. 30, 2018 |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | ||
Acquisition related deferred payments, less current portion | $ 12,350 | $ 13,251 |
Contingent consideration obligations, less current portion | 4,711 | 4,898 |
Other contractual obligations, less current portion | 31,402 | 31,200 |
Other | 15,644 | 9,751 |
Total other long-term liabilities | $ 64,107 | $ 59,100 |
Fair Value Measurements (Schedu
Fair Value Measurements (Schedule of Fair Value for Financial Assets and Liabilities Measured on Recurring Basis) (Details) - Recurring - USD ($) $ in Thousands | Sep. 30, 2018 | Jun. 30, 2018 |
Assets | ||
Total assets measured at fair value | $ 887 | $ 1,459 |
Liabilities | ||
Acquisition-related contingent consideration obligations | 11,233 | 12,749 |
Total liabilities measured at fair value | 11,233 | 12,749 |
Marketable securities | ||
Assets | ||
Investments | 887 | 1,459 |
Level 1 | ||
Assets | ||
Total assets measured at fair value | 887 | 1,459 |
Level 1 | Marketable securities | ||
Assets | ||
Investments | 887 | 1,459 |
Level 3 | ||
Liabilities | ||
Acquisition-related contingent consideration obligations | 11,233 | 12,749 |
Total liabilities measured at fair value | $ 11,233 | $ 12,749 |
Fair Value Measurements (Narrat
Fair Value Measurements (Narratives) (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | Jun. 30, 2018 | |
Level 1 Investments | |||
Assets | |||
Unrealized holding gain on investments | $ 500,000 | ||
Level 2 Assets and Liabilities | |||
Assets | |||
Transfers of assets between Level 1 and Level 2 | $ 0 | 0 | |
Transfers of liabilities between Level 1 and Level 2 | 0 | 0 | |
Long-term debt, fair value | 187,600,000 | $ 200,000,000 | |
Level 3 Assets and Liabilities | |||
Assets | |||
Transfers of assets between Level 2 and Level 3 | 0 | $ 0 | |
Transfers of liabilities between Level 2 and Level 3 | 0 | 0 | |
Intangible asset and goodwill impairment | $ 0 | $ 0 |
Fair Value Measurements (Sche_2
Fair Value Measurements (Schedule of Change in Acquisition-related Contingent Consideration Obligations) (Details) - Level 3 Assets and Liabilities $ in Thousands | 3 Months Ended |
Sep. 30, 2018USD ($) | |
Business Acquisition Contingent Consideration [Line Items] | |
Beginning balance | $ 12,749 |
Payments | (1,577) |
Accretion on discount | 61 |
Ending balance | $ 11,233 |
Share-based Compensation (Share
Share-based Compensation (Shares Reserved for Issuance) (Details) - shares shares in Thousands | Sep. 30, 2018 | Jun. 30, 2018 |
Class Of Stock [Line Items] | ||
Shares reserved for issuance | 24,124 | 27,382 |
2014 Employee Stock Purchase Plan | ||
Class Of Stock [Line Items] | ||
Shares reserved for issuance | 4,084 | 5,365 |
Employee Stock Options and Awards Outstanding | ||
Class Of Stock [Line Items] | ||
Shares reserved for issuance | 12,236 | 12,060 |
2013 Equity Incentive Plan Shares Available for Grant | ||
Class Of Stock [Line Items] | ||
Shares reserved for issuance | 7,804 | 9,957 |
Share-based Compensation (Sched
Share-based Compensation (Schedule of Recognized Share-based Compensation Expense) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||
Share-based compensation expense | $ 6,825 | $ 4,803 |
Cost of Product Revenue | ||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||
Share-based compensation expense | 178 | 92 |
Cost of Service Revenue | ||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||
Share-based compensation expense | 345 | 133 |
Research and Development | ||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||
Share-based compensation expense | 2,342 | 1,051 |
Sales and Marketing | ||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||
Share-based compensation expense | 2,359 | 1,643 |
General and Administrative | ||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||
Share-based compensation expense | $ 1,601 | $ 1,884 |
Share-based Compensation (Summa
Share-based Compensation (Summary of Stock Award Activity) (Details) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended |
Sep. 30, 2018USD ($)$ / sharesshares | |
Number of Shares | |
Non-vested stock awards outstanding at June 30, 2018 | shares | 7,764 |
Granted | shares | 3,337 |
Vested | shares | (1,142) |
Cancelled | shares | (565) |
Non-vested stock awards outstanding at September 30, 2018 | shares | 9,394 |
Weighted-Average Grant Date Fair Value | |
Non-vested stock awards outstanding at June 30, 2018 | $ / shares | $ 8.60 |
Granted | $ / shares | 6.44 |
Vested | $ / shares | 6.28 |
Cancelled | $ / shares | 8.69 |
Non-vested stock awards outstanding at September 30, 2018 | $ / shares | $ 8.11 |
Aggregate Fair Market Value | |
Non-vested stock awards outstanding at June 30, 2018 | $ | $ 61,804 |
Non-vested stock awards outstanding at September 30, 2018 | $ | $ 51,479 |
Share-based Compensation (Sum_2
Share-based Compensation (Summary of Stock Option Activity) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Jun. 30, 2018 | |
Number of Shares | ||
Options outstanding at June 30, 2018 | 2,193 | |
Granted | 852 | |
Exercised | (123) | |
Cancelled | (80) | |
Options outstanding at September 30, 2018 | 2,842 | 2,193 |
Vested and expected to vest at September 30, 2018 | 2,842 | |
Exercisable at September 30, 2018 | 1,939 | |
Weighted-Average Exercise Price Per Share | ||
Options outstanding at June 30, 2018 | $ 3.88 | |
Granted | 6.40 | |
Exercised | 3.81 | |
Cancelled | 6.18 | |
Options outstanding at September 30, 2018 | 4.57 | $ 3.88 |
Vested and expected to vest at September 30, 2018 | 4.57 | |
Exercisable at September 30, 2018 | $ 3.98 | |
Weighted-Average Remaining Contractual Term | ||
Options outstanding | 3 years 10 months 17 days | 2 years 10 months 24 days |
Vested and expected to vest at September 30, 2018 | 3 years 10 months 17 days | |
Exercisable at September 30, 2018 | 2 years 8 months 4 days | |
Aggregate Intrinsic Value | ||
Options outstanding | $ 3,343 | $ 8,996 |
Vested and expected to vest at September 30, 2018 | 3,343 | |
Exercisable at September 30, 2018 | $ 2,946 |
Share-based Compensation (Narra
Share-based Compensation (Narratives) (Details) | 3 Months Ended | |
Sep. 30, 2018Quarter$ / sharesshares | Sep. 30, 2017$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted stock units granted | shares | 3,337,000 | |
Stock options/units granted, grant date fair value | $ / shares | $ 6.44 | |
Stock options granted | shares | 852,000 | |
2014 Employee Stock Purchase Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Shares issued under stock purchase plan | shares | 1,280,708 | 1,267,930 |
Weighted-average grant-date fair value of options granted (in dollars per share) | $ / shares | $ 2.73 | $ 2.41 |
Restricted Stock Units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation arrangement by share-based payment award, award vesting percentage | The RSUs vest from the original grant date as to one-third (1/3) on the one-year anniversary and one-twelfth (1/12) each quarter thereafter, subject to continued service to the Company. | |
Service-based Restricted Stock Units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted stock units granted, percentage | 50.00% | |
VPs | Restricted Stock Units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted stock units granted | shares | 1,269,800 | |
Executive Officers | Restricted Stock Units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted stock units granted | shares | 278,000 | |
Other Employees | Restricted Stock Units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted stock units granted | shares | 2,067,074 | |
Vice President and Chief Executive Officer | Performance Shares | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted stock units granted, percentage | 50.00% | |
Stock options/units granted, grant date fair value | $ / shares | $ 6.40 | |
Employees | Performance Shares | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Performance stock unit vesting, earnings per share | $ / shares | $ 0.20 | |
Performance stock unit vesting, consecutive quarters | Quarter | 2 | |
Stock options/units vesting, stock trigger price | $ / shares | $ 10 | |
Certain Officers and Executive Vice Presidents | Performance Stock Options | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock options/units granted, grant date fair value | $ / shares | 2.62 | |
Stock options/units vesting, stock trigger price | $ / shares | $ 10 | |
Stock options granted | shares | 851,700 | |
Stock options vesting performance period | 3 years | |
Stock options vesting, Threshold consecutive trading days from August 29, 2018 through August 31, 2021 | 30 days | |
Certain Officers and Executive Vice Presidents | Performance Stock Options | Price Hurdle Met Before or on August 31, 2019 | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation arrangement by share-based payment award, award vesting percentage | one-third of the PSOs will vest on August 31, 2019 and the remainder will vest quarterly over two years. | |
Award vesting percentage | 33.33% | |
Certain Officers and Executive Vice Presidents | Performance Stock Options | Price Hurdle Met After August 31, 2019 | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation arrangement by share-based payment award, award vesting percentage | a number of the PSOs will vest (ratably calculated based upon the time elapsed between August 31, 2018 and the date the hurdle is met) and the remainder will vest quarterly through August 31, 2021. |
Share-based Compensation (Sch_2
Share-based Compensation (Schedule of Fair Value Assumptions for Stock Options and Employee Stock Purchase Plan Awards) (Details) - Employee Stock Purchase Plan | 3 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract] | ||
Expected life | 6 months | 6 months |
Risk-free interest rate | 2.20% | 1.15% |
Volatility | 63.00% | 42.00% |
Restructuring Charges, Net of_3
Restructuring Charges, Net of Reversals (Narratives) (Details) $ in Thousands | 3 Months Ended |
Sep. 30, 2018USD ($) | |
Restructuring Cost And Reserve [Line Items] | |
Additional restructuring charges, net of reversals | $ 808 |
Cash payments | 3,402 |
Reduction-in-force | |
Restructuring Cost And Reserve [Line Items] | |
Additional restructuring charges, net of reversals | 800 |
Cash payments | $ 3,400 |
Restructuring Charges, Net of_4
Restructuring Charges, Net of Reversals (Restructuring Liabilities) (Details) $ in Thousands | 3 Months Ended |
Sep. 30, 2018USD ($) | |
Restructuring Cost And Reserve [Line Items] | |
Beginning balance | $ 6,455 |
Period charges | 999 |
Period reversals | (191) |
Period payments | (3,402) |
Ending balance | 3,861 |
Less: current portion included in Other accrued liabilities | 2,601 |
Restructuring accrual included in Other long-term liabilities | 1,260 |
Excess Facilities | |
Restructuring Cost And Reserve [Line Items] | |
Beginning balance | 1,797 |
Ending balance | 1,797 |
Severance Benefits | |
Restructuring Cost And Reserve [Line Items] | |
Beginning balance | 4,658 |
Period charges | 999 |
Period reversals | (191) |
Period payments | (3,402) |
Ending balance | $ 2,064 |
Commitments and Contingencies (
Commitments and Contingencies (Narratives) (Details) - Sep. 30, 2018 R$ in Millions | USD ($) | BRL (R$) |
Foreign | Secretariat of the Federal Revenue Bureau of Brazil | ||
Loss Contingencies [Line Items] | ||
Value of tax credits disallowed | $ 800,000 | R$ 3.4 |
Penalties, court costs, attorneys' fees, and accrued interest | 4,800,000 | 19.6 |
Tax liability related to the ICMS Tax Assessments, accrued | 2,300,000 | R$ 9.4 |
Inventory Purchase Commitments | ||
Loss Contingencies [Line Items] | ||
Non-cancelable purchase commitments | 158,700,000 | |
Software and New Product Support Services Commitments | ||
Loss Contingencies [Line Items] | ||
Non-cancelable purchase commitments | $ 117,500,000 |
Income Taxes (Narratives) (Deta
Income Taxes (Narratives) (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Dec. 31, 2017 | Jun. 30, 2018 | |
Operating Loss Carryforwards [Line Items] | |||||
Provision for income taxes | $ 1,402,000 | $ 1,675,000 | |||
Description of effective date of enacted tax rate implementation | Effective for tax years beginning on or after January 1, 2018. | ||||
U.S. Federal tax rate | 21.00% | 35.00% | |||
Tax benefit | $ 2,500,000 | $ 2,500,000 | |||
Additional tax provision resulting corresponding reduction in valuation allowance | $ 0 | ||||
Unrecognized tax benefits | 17,200,000 | ||||
Unrecognized tax benefit future impact if recognized | $ 17,200,000 | ||||
State | |||||
Operating Loss Carryforwards [Line Items] | |||||
Income tax examination, years under examination | 2014 2015 2016 | ||||
Enterasys, Zebra WLAN Business, Campus Fabric Business and Brocade Data Center Business | |||||
Operating Loss Carryforwards [Line Items] | |||||
Tax amortization deduction for capitalized goodwill | $ 500,000 | $ 1,600,000 | |||
Deferred tax liability, goodwill | $ 5,900,000 | ||||
Amortization period of intangible assets resulting from acquisitions | 15 years | ||||
ASU 2016-16 | Ireland | Subsidiary | |||||
Operating Loss Carryforwards [Line Items] | |||||
Deferred tax asset relating to a transfer of certain assets to subsidiary | $ 5,400,000 |
Net Loss Per Share (Schedule of
Net Loss Per Share (Schedule of Earnings Per Share, Basic and Diluted) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Earnings Per Share Diluted [Line Items] | ||
Net (loss) income | $ (9,065) | $ 4,376 |
Weighted-average shares used in per share calculation - basic | 117,368 | 112,241 |
Weighted-average shares used in per share calculation - diluted | 117,368 | 118,431 |
Net (loss) income per share: | ||
Net (loss) income per share - basic | $ (0.08) | $ 0.04 |
Net (loss) income per share - diluted | $ (0.08) | $ 0.04 |
Options to purchase common stock | ||
Earnings Per Share Diluted [Line Items] | ||
Effect of potentially dilutive shares | 1,760 | |
Restricted Stock Units | ||
Earnings Per Share Diluted [Line Items] | ||
Effect of potentially dilutive shares | 4,007 | |
Employee Stock Purchase Plan shares | ||
Earnings Per Share Diluted [Line Items] | ||
Effect of potentially dilutive shares | 423 |
Net Loss Per Share (Schedule _2
Net Loss Per Share (Schedule of Anti-Dilutive Shares Excluded from Earnings Per Share Calculation) (Details) - shares shares in Thousands | 3 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of EPS | 2,902 | 700 |
Options to purchase common stock | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of EPS | 989 | |
Restricted stock units | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of EPS | 1,913 | 496 |
Employee Stock Purchase Plan shares | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of EPS | 204 |
Foreign Exchange Forward Cont_2
Foreign Exchange Forward Contracts (Narratives) (Details) | 3 Months Ended | |
Sep. 30, 2018USD ($)Contract | Sep. 30, 2017USD ($) | |
Derivative [Line Items] | ||
Foreign currency transactions realized gain (loss) | $ 200,000 | $ (600,000) |
Not Designated as Hedging Instrument | Forward Foreign Currency Contracts | ||
Derivative [Line Items] | ||
Number of derivative financial instruments | Contract | 0 | |
Notional principal amount of forward foreign currency contracts | $ 9,600,000 | |
Maximum maturities for contracts | 90 days |
Disclosure about Segments of _3
Disclosure about Segments of an Enterprise and Geographic Areas (Narratives) (Details) | 3 Months Ended |
Sep. 30, 2018SegmentGeographic_Area | |
Segment Reporting [Abstract] | |
Number of operating segments | Segment | 1 |
Number of geographic regions | Geographic_Area | 3 |
Disclosure about Segments of _4
Disclosure about Segments of an Enterprise and Geographic Areas (Schedule of Long Lived Assets by Segment) (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Jun. 30, 2018 |
Segment Reporting Information [Line Items] | ||
Total long-lived assets | $ 202,582 | $ 203,253 |
Americas | ||
Segment Reporting Information [Line Items] | ||
Total long-lived assets | 147,276 | 178,251 |
EMEA | ||
Segment Reporting Information [Line Items] | ||
Total long-lived assets | 46,119 | 15,106 |
APAC | ||
Segment Reporting Information [Line Items] | ||
Total long-lived assets | $ 9,187 | $ 9,896 |
Subsequent Event - Additional I
Subsequent Event - Additional Information (Details) - USD ($) | 3 Months Ended | |
Sep. 30, 2018 | Nov. 02, 2018 | |
Subsequent Event [Line Items] | ||
Number of stock repurchased | 0 | |
Subsequent Event | ||
Subsequent Event [Line Items] | ||
Stock repurchase, authorized amount in two years | $ 60,000,000 |