EXTR - Earnings call transcript Q1 2019

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Operator

Good day, ladies and gentlemen and welcome to the Extreme Networks’ Q1 Financial Year 2019 Fiscal Results – Financial Results. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions].

As a reminder, this conference is being recorded. to Director host of like Stan today’s now Executive Kovler, Investor would introduce for your conference, I Relations-Strategic Development. begin. may you Sir,

Stan Kovler

the Thank the behalf call. on for to fiscal welcome the be Internet call. being you, posted Networks’ being over conclusion company. operator quarter recorded replay The is first will on broadcast the live website XXXX the conference shortly Extreme This Extreme conference of Networks’ and after call of is earnings and recording

of a section convenience, press I and website your of laws. be a you statements. to the by statements statements For involve copy on will and forward-looking risks differ federal release anticipated securities management remind extremenetworks.com. making cause meaning supporting of within materially available that are the at harbor forward-looking the call, actual number These these which of during would to uncertainties, financial of could the materials those results from like provision Investor today’s Relations our safe

a and recent of the refer XX-Q, XX-K, please risks filed SEC. X-K uncertainties, description on Form most reports our to For detailed with

a Extremes’ Reconciliation our now, President corresponding to of Meyercord, not a earnings to not GAAP. And no the to, after should both to issued substitute We found only for, today. comments. release his as these place supplement take today. opening Ed non-GAAP turn financial may and which GAAP CEO, I call non-GAAP should on with this undue considered of prepared and statements, financial information You forward-looking measures for accordance statements press call, Throughout be this can speaks statements to call. update we and obligation GAAP will reliance refer Non-GAAP metrics. in over be in

Ed Meyercord

We better Welcome non-GAAP per row. improved fiscal to on Thank you, margin million results were the XX% of morning. a that total our year-over-year earnings all Today, we us Stan, for earnings year-over-year joining a $XXX.X QX share. gross growth announced expected, our than revenue highlighted call. thank in you this for to basis $X.XX by QX and in non-GAAP quarter XXth and

grew million $XXX of line product four acquisitions teams an cross-sell at have excellent Our portfolios the solutions QX. a converging job into done A engineering and from pillars. significant pipeline end distinct management three our product to

strengthening OmniEdge Agile collections embrace Our another is embraced to them. level Smart of Campus our we competitors. balance and quarter, quarter with Customers in solution. alike and rate that million OmniEdge, deploy contribution much growing record new adaptability And bookings beginning our attach Automated of faster service our Center field $XXX and We our multiyear posted is to easier in agreements. our know record uptime the cash solution our of our than partners and with Smart had customers improvement sheet. in the from of portfolio We and security given intelligence, Data

the need teams across Our concerns of performance for from need requirement to increased enterprise consistent the lower for campus. need top Internet and devices increased Things, The for of attacks, and pervasive the explosion the our with customers. The can Wi-Fi of protection address expenses. expectations the

We’re excited OmniEdge. Smart we the associated XXXX, have with really coming throughout product fiscal about innovations

wireless cloud partners and with QX. And interests XXX.XXax, of of product cloud name calendar week have in Partner IoT in Wi-Fi location wired Global customer with managed X, with extreme strong have our extreme next We coming with refreshes and Defender and at along for upgrades technology. we Prague the wireless software XXX the Summit in in the hardware ramp connection last generation And robust as our and to we Cisco a higher OmniEdge our with quality. alternative wireless Gartner’s reaffirm in the lower Gartner superior July cost feedback ownership favor solutions partner with software-driven portfolio the in our Quadrant, for that total of Smart and of distributors the Magic enterprises wired premier is sentiment leader status of XXXX and attendance, sentiment Extreme on was build strong direction as

and lines product in adoption year-over-year EMEA rising Our Automated in with growing continued Fabric strengthen, Campus business particular. particularly on our summit to VSP

market. exchange by fabric EMEA and we inherent the data software reinforced to embedded we automation and key simplicity network the center and QX from our line strong three Our visibility our success analytics by wins on center the of use targeting relates solution security the expectations with calendar the expect and is APAC, and strength highly cases year-end to business This in deliver the performed grounded single-pane-of-glass. our Meanwhile, of one tools, in introduced visibility running data with Internet in deployment, was our platforms. of adaptive delivering suite, center for intelligence our data

On customer the unique customers cloud our are enterprise are operating environments. to have these Automation, critical needs. diverse and adaptability we address critical visibility side, in solutions and

experienced improve the On within key verticals and With U.S. sales data tariffs goods made for hires on model businesses front, federal to our provider coverage across import in have key our produced We we of increases our these center. that service we to $XXX million $XXX anticipate the strength line. in range China, to added revenue price QX million. ahead of expected QX top ordering to be

margin fiscal $X.XX gross EPS a revenue X% our the Overall, As of elaborate, to QX Matt line of of on expectations, and laid the with tariffs. our year. to in negative $X.XX EPS outlook remains will due beginning out at U.S. the half we assumes outlook first sense impact

revenue. throughout to in to fiscal XXXX expect billion grow continue to $X We over sequentially

new training Our transformation Extreme. out it make partners investment We tools. and in our a business for rolled released with will digital and do portal. customers sales easier partner enablement We’ve to

incentives underway faster XX pricing Partner are lot a some our benefits. partners. turnaround excitement months this our about are next targeted already over we at will for channel There’s of for seeing These that authorizations, and and Conference. initiatives implementing continue We’re the distribution and

become most a selling Insights Peer were their strategic to customers, pillars, across year-over-year fiscal solutions-based are sizes, end us that Customers’ XX% we going data in Our through a which Choice software transformation. In up three sales for more our teams resulting our QX, our continue Gartner for users helps of as were XXXX with digital whom software sales center by improve networking. deal lead recognized own partner as is

today, the highest position data premier the our to industry, both remains customer of Cisco. wired the As as our of networking, in wireless for one supporting satisfaction and center among and edge alternative

had we quarter, This several wins. exciting

Asia-Pac university our all large across campus Our where a on locations. simplification staffs Smart competitors, in with XXXX for OmniEdge HPE. project, portfolio Cisco including and XX,XXX students display was of head-to-head is XX selected Extreme with upgrade major went we serving and

just of features XMC end-to-end the simple vertical, applications single-pane-of-glass. in retail obvious we’ll In and using substantial The local IT to want break software the customer wireless nation, be was simplicity of able management an that so of functionality our different existing a who laptop network a inside to one deployment. Cisco our through our replicate an in wireless to grocers its According stores. we over of solution from copy. top is XMC with led team in team and had refresh our customer, seven run Our the all technology compelling our demonstration the to was for to with with team

receptive very are our vision. to customers retail Smart Our OmniEdge

enable and expansion And incumbent over has continue XX captured core us lease center markets customer, Cisco, who services data customer. data data major next to solutions, XXXX center research. and We our and products The opportunity is to new won points won of and we large internet relates two deploy research with at sector center engagement XXX routing solution our exchange that U.S. U.S. just tariffs network here We’re in has our new with by notified X% refresh deployed global the Automated and as customers next the customer world Phase multimillion services to our XMC dollar our in products. backbone agreement. platform a center and dramatically generation IP significant U.S. power quarters. provide institute factor, We out costs of the due to potential center our to it raising with who the by data November this volume its with SLX this public in to X on which This into to countries, the five-year and be the of small also We reducing Campus a using Xst this to X% cancer as also space with its prices requirements. rest center our a for list is beat existing data and working and one in closely been a are the data using of integrates a has combination We our the deployment cross-selling customer. Fabric existing recently focused form component

XXXX memory increase below our our four for same such the greater remained cost along without value passing absorb have to it from and of ownership cost remains rising of as prices customers perspective. competitor in increases price as A prior a deliver to list Our we largest still years our we total costs that customers.

of the products, U.S. moving China from process manufacturing For underway. is

the moved volume mitigation our to we by move EPS and fiscal pricing tariffs Through by China of neutral of high and September. Our expect be skews impact have our out end March, actions, the for will will the to a XXXX. rest

of long-term This this off shareholder Matt million with and prudent over program turn and to us will and a We EPS started We outlook; program. today, support to With fiscal Extreme with that, coupled with share our will goals. our we call cash board strong I strategy planning. deliver collections to the the help stockholders our and XXXX and sheet. a our expectation CFO, will on balance reiterate $XX stock full of interim to ongoing existing our commitment believe announced accretion buyback drive enhance to commitment Finally, repurchase Cleaver. our fiscal value our strength our

Matt Cleaver

Thanks, Ed.

revenue year-over-year, noted, guidance of above high earnings share, EPS benefited strong year-over-year XX% of Ed end and our quarter-over-quarter generating of both is up the margin As $X.XX $XXX.X in revenues range. both performance. from our per million

business by X.X% XX% year-over-year during $XXX.X outlook, To distributors actions that revenue as data of in center seasonality. while and quarter-over-quarter. million the on continue in and provided our number our quarter business distributor we X% year-over-year services product and of consolidation last plan Our execute QX XX% typical by we’ll the to consolidation reduced addressing outlined We quarter. grew end, grew the we we

maintenance is team and focused increasing our attach renewals new on rates. services renewal Our

success week, wrote offerings, increase. out provide to are services been multiyear and we premier service glove white drive a Our value. offerings where seeing customers incremental Earlier an has by enhanced we this standalone

During to APAC XX% the closed X%. Americas out and the total EMEA the revenue, remaining contributed quarter, XX%

healthcare, manufacturing, on out overall outpaced was revenue the typical XX% and retail margin education, compared We revenue by the growth continued last was X% XX.X grew top-performing and where for seasonality vertical followed XX% our strengths and to XX.X second Non-GAAP EMEA, outperforming gross XXXX Globally, quarter, discipline. discount EMEA % improved at see government consecutive to in particular we in to year-over-year. top year. five. finish QX in QX quarter-over-quarter,

Our X% impact consolidation approximately gross tariffs despite for quarter headwinds increased to total in the XXth consecutive expenses QX. resulting from and one-time margin an wearhouse in margins gross

not non-GAAP marketing QX in our On XXXX previous the and from XX.X%, million, QX expenses QX up addition $XX was basis, XX.X% gross and lower full the our was operating from in sequential to expenses $XX to in $XXX.X acquisitions increased and operating non-GAAP resulting accrued of million were increased year. QX $XXX.X The due revenues Cash Our million lower were sales margin cost from last $XX.X operating mainly a year-over-year. quarter and million XXXX. product in compared of of to compensation $XX QX QX from XXXX. in that decrease million flow non-GAAP operations year-over-year tied in expenses structure present expenses expenses. and million

the equivalents XX $XXX in cash company’s our $XXX and six was the of of and down from the cash, XX decreased took strongest revolver. our of during $XXX.X to of pay the quarter by at million financial in advantage QX approximately DSO balance compared XXXX. fiscal end at QX. million, the history, million We overall days collections quarter end position total Our XX September single up QX of investment to strengthen to million

agreement Our benefited the collections with to service transition acquisition our DSO from of the following and Fabric final Avaya the business. collections completion Campus related cash of our

scale XXXX revenues increase – QX million, over QX on made of approximately significant greater our million XXXX multi-year and offerings. increasing of including progress bookings, $XXX.X million on from deferred renewal to also $XX an and growth $XX strong on We service

Life of have As of Ed intent which prices for four relate our pricing, respect increasing referenced, fiscal programs. most owing changes costs raised into our of component on with previously our to not absorbed to we End that to to Heading we prices in years skews, have year, our customers. XX except was raise this in behalf

the and on X, raised by X% average a an As U.S. in to average November of result tariffs. U.S. outside import the of recover an we prices by of X%

XXXX. Our channel partners for programs incentive are excited calendar about new

Diamond on focused Center. particularly Our OmniEdge, specific technical our will our program master Black Data our XXXX. This for performing level program pillars, drive training for introduce of calendar Smart and Agile new and enter create in solution growth Campus three is certifications partners and designed to highest partners products goals for each we results, as Automated

better higher our are number we channel delivering We the total multiplier be fiscal of force XXXX. Cisco believe value will to a and cost and alternative ownership, one market for

guidance. to turning Now

anticipated $XXX non-GAAP to a to in a of $XXX.X $XXX expected lower expenses million to is be the QX gross XX.X%, of We the on million in per be on range impact is and actions in expect that pricing of our be will GAAP that, million tariffs GAAP XX.X%. share loss is is be overall $X.X range gross may break-even. range $X.XX be outlook $X.X the of will any With estimated QX to in to now to the of million we margin operating Non-GAAP a In range non-GAAP impact we $XXX slightly QX XXXX. million, margin $XXX.X we to to range XXX be the turn a or GAAP to $XXX.X of I GAAP million QX total will accretive loss million $XX.X basis to Overall, in session. average to net QX, $X.X $XXX million. on XX.X% be million on $X.XX have to to basis. expected margin the point begin basis, the the of gross estimate margin relative provided. to million basis of and expect to be approximately million expect gross to up the the our $XXX.X to net per and to a shares range income to to non-GAAP we million or outstanding share. shares XX.X% on diluted for We excluding over it to question-and-answer in repurchase. revenue operator neutral QX the are $X.XX expected basis

Operator

Thank you. Instructions]. [Operator

from Mark with comes Davidson. Kelleher question first Our D.A.

is line now Your open.

Mark Kelleher

about Nice good. Thanks for the with Great. the particular taking of on just its that how talk the questions. update you I little you the Could is your us way work an balance really up? bit – sheet. last struggled working give piece you versus that Brocade, on struggled core revenue? know and products, quarter a the puzzle acquisition That’s core

Ed Meyercord

in as that changes segments provider this Sure. that saw the in is done made large on, we’ve up. the some in we stabilization Thanks, how hiring – and there they’re business really key pieces nice customer center of Mark. brought did have And we’re side. ramping quickly Yes, and business our federal and like we there some data wins, we’ve mentioned, of talent on about and on yes, we’ve excited some service some of that that in we see work quarter, the going – data we a lot we center

adaptability going advantages starting cross-domain Data We’ve it’s we seeing from gives pipeline. an you opportunities to data our really terms some of customers. us exchange some these internet the it in our that to the We’ve have is automation, already week, the this us our if really we’re of – nice Extreme of the with it’s some see So, center calling third From regarding some our customers Center in our agility of announcement we��re launch opportunities real and embrace pillar and next these Agile the will, platforms you’re advantage. management an had center tied and for and to starting flexibility. wins to the field enterprise

honest taken longer Now than like. it’s and I’ll be we’d say,

it adopting that’s picking someone momentum. and in and always the the we’re is deal my I think but up, seat, prerogative of seeing

our we from we’ve and line data what – we So, going with expect right we’re center was expectation here, – to growth. see think a to in

Mark Kelleher

All You reduction your down on update right. And you distributor XX%. program? about were how an said,

from maybe So, by headed XXX, my somewhere Can math, tell you to in just you you’re where XXX went that neighborhood. there? us

Ed Meyercord

Yes. progress That’s about We’ve made right. of a lot there.

XX% by distribution our has number the our reduction. and team an supply right field. Our excellent about done of of job, in Yes, supported XX team terms is the chain

XX found past. opportunities Pacific, XXX other some had Asia the our The in that that present And our where Conference. also in haven’t on is, XX% of had the through like business. for we a distributors of markets runs Prague our about stocking Partner business about about our at opportunities Remember today distributors thing and running our we’ve XX% of We at XX% direct in about of side. product top are distributors is

progress we’re lot on The would doing there. So making we’ve rationalization, of team I is The – a is plan. right say, well.

Mark Kelleher

Okay, great. you. Thank

Operator

Thank you.

comes Needham question & Alex Henderson next with Company. from Our

Your now is line open.

Dan Park

guys. Park This Hey, Good morning. is Alex. for on Dan

competition seeing you on So, color provide quarter? just meaningful seen if wondering any I could terms what center Have changes the the side. throughout was you’re you on in of data some

Ed Meyercord

– mind of really. base a Not Keep that the of one that have. the the why one in of that huge just acquisition was are about customers we reasons things we excited

I us our as see to to hasn’t much existing run to the that they’re is competitors likely where have addition some think and say would that of that we changed. in our in People back into verticals, cross-selling opportunity is in – of Arista. our often and and large, sell Yes. We have deployments to strong. other big to customers base do we’re a the with into existing obvious and we’ve base the Cisco, customers So, Arista go about where network. to play I don’t by ask they strong versus where that most and has places

be continues capabilities dominant done our The new work teams internet terms We platform. in SLX work. market. business the in of market and are there’s to healthy, our the teams engineering by – good advancing share our That being of have lot of we PLM exchange a and

running to suspects So to yes, of say nothing has I for the into. we base guess this big be us, likely changed, continue opportunity customers we’re I that who just – would and that’s who the are really sell into have

Dan Park

follow-up Okay, to great. vertical clarify And called sort out know on government for us you of Can Thank adoption? just sort there and you. on, what’s was driving the growth I just customer the our the of call.

Ed Meyercord

are embracing fabric people happening that Yes, in I our it’s in say Automated of the the large would EMEA. and a our customers when customers What’s catching the we simplicity with fabric, our is I really combination technology the globally, – a have strength of OmniEdge ease particular field of Again, is government of really think. and is, deployment Smart large our with Campus. and base on

these come to field successfully. together. policy, embrace So, the really and been They between our our and management that rolling our of out and of the can out our deployment the Extreme copy ease beginning they’ve rolling then fabric, – combination the that drive hypersegmentation our of that center, of the and any technologies efficiencies understand we security have been and partners how

government of customers. So, a large we have base

can a base product together. customers strength the mind, it’s in say we with I the really large have coming of of keep in I would portfolio guess just that of overlap this government And education. you byproduct If that

Dan Park

so questions. Okay, much great. Thanks my taking for

Operator

Instructions]. [Operator you. Thank

question Suppiger next from with JMP. comes Erik Our

Your line is now open.

Erik Suppiger

does then viewing you how position you is one the of had taking that? to why times raising the understanding are you customers. for the market HP, the to question One, U.S.? two And questions. in you. for when U.S. say just the customers the prices secondly, are outside you number their the you going that Cisco. repeated as couple Thanks on a – alternative are that yourself How Yes. tariffs Thank My of be view

Ed Meyercord

in been created had commented new to structure a and I we we and the prices really increase Sure. rising Well, incurring our come is one this raised other forcing raise do Extreme that have and of about it our because as this that elements in in the list companies cost to relates pricing together we it function, price memory cost intention the of U.S. Extreme. on talked very hadn’t in the And it it things over four the of that tariffs the long of time that issue was years. all we year, to and raising list the price kind have

opportunity list the then took globally. price we our to raise So,

up some So, altogether something need about that and costs component customers. our this we been with fact it’s going really of and eating that to that the we’ve is our share

a that’s U.S. as that into going would that forward look on pricing tariff, actions XX% that what’s outside only customers. and I question. the January So relate hope we point of that prospect to from answers

Erik Suppiger

thoughts as quick outside one Do have along, how any pass on it A like much you’re move China? you to might one. sounds given manufacturing versus you absorb fairly particularly might Yes. quickly that moving of how you to much that

Ed Meyercord

Sure.

the our top preserving also trying – margin. to and our underway. objective we of we’re different impact to we’re initiatives same about partners. thinking So, time, and our at the the a end lot our a we’re customers day, of minimize the – it’s our And field gross have mitigation investors at That’s and

of balancing prices, and competitors, and Cisco. gross for raising prices we’re that total that, they’re has particularly, good is to that balancing our the we’re cost is already Cisco, raising The more that we below neutral. us announced be ownership margin fact are larger that than and So news our they’re

operate we’re more believe that be that us also able moving and because a and quickly, which positive to is giving umbrella nimble they’re us move out China. to an we’ll for manufacturing under, more So, of we

mitigate to that we’ll that sooner. be cost able So

only be So, from a that will advantage think greater. standpoint, pricing we

helpful. that’s – hope I So, I hope that

Erik Suppiger

Yes, Yes. great.

Ed Meyercord

made Magic competitive right the interesting a down that Quadrant, only been into in you From up moving Gartner leadership the being move player the five only moving quadrant kind and actually. over the at had if we’ve can see Cisco last HP of two each you the while look years, it’s the year, perspective, the

moved for the we so into the up very And first quadrant leadership time.

you data in look we’re challenger center the a MQ, Gartner’s If market. at of half top the

it as HP, a and they’re that’s they story. relationships, story have relates So, about to reselling solution. in of those they’ve They struggle not robot end-to-end compelling. Arista, an quite go-to-market a end-to-end through But kinds always talked edge great an don’t really have

we So, resonating and with if think that’s and well partners customers. our that’s powerful

we’re just of the MQ look, talk your So player the to is networking more in they’ll if toe-to-toe, hardware good solutions, next other are software your when say, only top perspective, a your the And Gartner, from elegant. you Cisco. as to solutions go you

superior; You’re glass your is cost total single a pane of is of lower. ownership

higher value superior. delivering You’re and your is service

hoping I hearing extreme something So, It’s very not leverage partners is get this resonate. embracing, you’re saying from we’re going and parties partners just and this it marketplace that in is as we’re saying this. and the message It’s this. to third the it galvanize the from to this premier alternative pounding that’s to think, table something Cisco our

Erik Suppiger

Very good. Thank you.

Ed Meyercord

Okay.

Operator

you. Thank

Christian from group. comes question Schwab with next Capital Craig-Hallum Our

Your is line open. now

Christian Schwab

my for Thanks call. taking Good Great. execution.

volume two going we China? of to So, where March tell you’re move you – out take us as it the in when can you

Matt Cleaver

Taiwan.

Christian Schwab

expect or Is that to increase of effects gross a stay six the of any, year, to over the XX.X this now of are forward. for Okay. and Thank you. raising kind of and margins, range we’re assume time of type kind year gross that non-GAAP margins we going margins there should the have that prices look the XX.X, – When of in puts we we at neutral could guidance handle kind gross at remainder front? that takes non-GAAP

Matt Cleaver

haven’t our Yes. XX% up I the goal, mean, target, on Christian. given we

the timing the caught This bit. us a tariffs of quarter,

a have perspective, then get date took and the pretty smart. XX. of days’ timing tariffs quarter We hit this little notice. effective bit our the of customers are XX to a and We got was from a September partners We

first We’re we linearity orders people prices how great from if are this quarter in quarter is will, have the month you visibility seeing that the we’re the pulling good quarter, because benefit to of based linearity on lower seeing. the which of the into

of quarter. somewhat strategy, a this And pricing in of is mitigation neutral. for to impact we’re managing then this be our So, one-time efforts our terms

earlier, each we as to that up we of changed. step the quarter into gross So, go we expect margins hasn’t QX, said year, as

expecting step are to QX, we’re and and to believe to we a XX% that in then we QX So, and from target. QX over QX, be QX to going

Christian Schwab

basis? as that And a driving previously business still end this time towards hoping you’re margin model still I a is margin of some kind type year, you’ve fabulous. that – the in there to yearly to and know operate structure, of spent far any opportunity operate digit that objective. on as Is about Okay, operating to talking a double of or XX% operating

Ed Meyercord

where changed. yes. answer is, going. That’s hasn’t we’re The That

we’ll talking build awhile. this our QX. longer we’ve the we’ll of a again, fiscal and for for and – As with and we’ve reset, been there us QX over It’s year, started be guiding you this bit taken know, about little we’re

is plan our margin XX% June, for that double-digit operating and in income margin. gross So a

Christian Schwab

who and ask took of ago, outlook we’ll that that and K-XX then or may be take schools ago, And three said, of are this money you make first being window years the market for may next the window, top able of with had the I money for last will, has that most program. you to you guys to in those it structural get Fabulous. or recovery, successful to And number years back take architecture, There did education the impacts a understand, question one money. a schools, see E-rate. if and dialogue States, being to that United for in been where my do Three Okay. run the a year has industry to as that in very education any schools, money. transition can’t three-year in Wi-Fi the positive in priority a in the changes there’s or But all with schools generation who at not some easier prosperous funding come again beginning market?

Ed Meyercord

And half was and lot in in left QX, that the of expect of of and year our overcome. the education see Yes. some of you’re that quarterly of to we’ve teams is funding to some and a This quarter bit to that this spending from and for are we’re a and there us but significant it’s given in over second tough a education in year. don’t highlighting, QX, QX as return strength back program it headwinds expecting been a are E-rate tough tough last dollars comparisons had customers expecting. it’s year come the year, a the quite and expecting program. given us are and They’re pretty this We prior

Christian Schwab

what great. Thanks. too. Okay, we’re That’s No questions. other hearing

Ed Meyercord

Okay.

Operator

from Thank comes And John Marchetti our you. next question Stifel. with

Your line is now open.

John Marchetti

like guys. taking in there that of of how you trying Thanks side of some you if bit you out your that on morning will get into question. pocket forward? move so and some we what Curious as of – the bit stuff demand run as pulled a looks to there’s you any currently with kind couple mitigate are this you of a little being for you of an visibility if some quarters we that customers air can as Good there, ahead Thanks tariff risk look some talked my about a actions, very much. in pulled or orders

Ed Meyercord

John, great of helped of and seen far. a our that it’s makes bit last little which we’ve a so saw We this quarter, quarter. question top line a What sense. lot it

we people which put front of linearity, and relates stronger trying to get be that. seeing in this global may increase to We’re price place, in

as as as QX linearity concerned. unprecedented this seeing far we’re So,

We talked about going Really in we talked at QX in I been million confidence right turn we’re giving the assumed pipeline. what’s look of million pretty what you $XXX pulling have anything you leads year. quarter we’re now of at of the cross-sell And what’s us on? with this as from Geo quality into to opportunities we’re haven’t that confident the the – that’s we the And stage. the Last in if sales and seeing. $XXX pipeline half calendar second of talked about cross-sell XXXX, we’re and our pipeline we and go the feeling that quarter, pipeline

that driven would pipeline this I we in assumed say, point it’s our a big guides pool QX. really So, haven’t at there’s and win

John Marchetti

be you time, price a I’m on gave in bit bit it and network we’ve sort that that on impact pushing sort the others next curious, the increases a the do seem in be had to in demands, fine with had they things of think that high. works do work reacting if in the in tariffs that back kind may seem see little for at of sort then up, raise the pull of broadly. the just actually maybe And to of been term go bit, we question mentioned Great. to some with if some back and purchasing and a higher, as customers just little Had their the sort the grapple tariff ahead demand tranche of increases, have of of ahead sort little trigger to even and been just least you to they that these to that decisions significant that sort telegraphed climb done, I’m go how curious, of start more or you intermediate this excuse

Ed Meyercord

behind take then a jump me. I’ll and matt Let in me shot let

terms I talk not with automation, what’s in the need of drive in networking terms with for happening the the we environments the software understands tools, your these our when requirements very what’s changing, that’s driving is networking for what’s data of strong. isn’t edge multi-cloud think centers, changing, going complex in that of capabilities, everybody at Internet with on of the Wi-Fi about customers, Things new First all,

but going demand, go analysis, in to we’ve Cisco we I if have to stop terms because been make mind, that’s around, people it’s to of all do realize continue not has think in to So, been raising market at out relative a they to price. keep look grow. purchases, to. the beneficiary, It’s turn who have going and you And

basis, we’re we theirs, our a that to advantage only below Cisco move the we our – increases marketplace. mitigate continue if in to and are the increases price So on and relative can more if below expenses quickly

sticky. our they’re say installed I from is thing, of captive We’ve revenue base our XX% that, other customers selling are comes and more would these somewhat and The been software.

our And three to to meaningful. talk to Matt, so the to anything less that you we are impact the add continue to solutions, want able pillars the drive becomes about, we pricing extent do that?

Matt Cleaver

Yes. Thanks, Ed.

So perspective, at not past just forecasts from services the have occurring years with two things related. a of the price timeframe, add changes a to and expectation October-November associated other couple to only, changes we all associated services implemented price that in our with hardware the around

When most we total price our perspective, impact from an the resulting the change. from up And And the at perspective timeframe at below I be have. Cisco around so associated QX, expect we item. from cost with identify as in to note both to think and fiscal change January the the Cisco, one customers identify a our below key January the our here of make we line And we’re The driving we that the to were change that. the price underlying to aligned with it tariff timeframe make cost is concern pricing changes tariff, from expected, – overall to U.S. time cost the will is structure impact same so that structure continue to lower before probably ownership as a wanted the sure our was timing QX change notable that rate. going the well the and was the international only we

John Marchetti

much. very you Thank Helpful.

Operator

Q&A Thank for and will concludes CEO back Ed today’s you. turn session. remarks. to closing President now to This the I Meyercord, call over like

Ed Meyercord

in employees, thank join the a Well, done. extreme our want thanks today. of listening to who us could call are I job who all in for everybody well also

this XX is everybody that for running now of today. we over something a and the was and looking companies terms three think I on was did optimizing. XX-month And that in that hard. period. buying an platform team knows is are Everything complicated extreme very XX, running We

we process, we’re integration back. the During hit some bumps in but road, the

on We’re, looking Conference up one as Thanks again conferences on well as in have at board to again next and and Needham your this Barclays back December. forward on Cowen time November with and We to for for day. one quarter. speak XXth now the the a you hope great executing

Operator

thank you conclude This gentlemen, conference. in does the participating and program. for today’s Ladies

You may day. disconnect. Everyone great all a have

Extreme Networks (EXTR) 2 Nov 182019 Q1 Earnings call transcript