Earnings call transcript Q3 2023

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Operator

Good day and welcome to the Extreme Networks Q3 Fiscal Year 2023 Financial Results Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions]. Please be advised that today's conference is being recorded.

to conference like speaker, to now Mr. would hand over the your I Kovler. Stan Please go ahead.

Stan Kovler

And everybody. been call. good Extreme operator. the were you, Thank morning, issues technical fiscal for patience. with XXXX experiencing all some Networks that Welcome quarter earnings now. you conference have Thank webcast your We resolved third the to

everyone is able So, to join.

With Meyercord, I lead CEO, Extreme Ed and Networks' CFO, are investor relations me and President today corporate Tate. Interim strategy. Cristina and

an distributed X-K earlier Extreme week our a results press the just filed announcing filed for and We financial detailing release X-K Networks' quarter this new and CFO. an

extremenetworks.com For GAAP with should which up of to copy the our the right our is be a link. now. reconciliations, which at available in includes of your along convenience, non-GAAP section Investor presentation, press a Relations There's release, website our

during to results, our about future business, that, I financial forward-looking strategies. would may you and statements operational today's like include expectations Extreme's call, and remind discussion growth

on Our made this stated on financial unless basis, call otherwise. disclosures non-GAAP a be will

statements, today report as of except statements and the June law. them risk not put we XX-K made materially or they can described undue as for these statements the no to our uncertainties forward-looking and XX, by by risks our our forward-looking involve actual update caution to anticipated these those as results period by have to with SEC. on cause reflect Any We ended from factors reliance XXXX differ filed in on you as analysis this duty required call that plans

Ed Extreme's to President Now, CEO, I will over call turn Meyercord. the and

Ed Meyercord

you execution quarter record morning. teams. of thank results, And driven for all Stan. this another solid joining of Extreme our by delivered you, us Thank

in performance XX% nine revenue growth our was by We Our of and on XX% drove chain supply the total top achieved quarters. growth a double-digit product revenue eight basis. past growth in year-over-year that improvements line highlighted

quarterly EBITDA Our records also and in achieved operating QX. margin

from substantial playing growth. orders timeframe. second in during sequentially new are this customers the grew X% quarter This grew a and our is role logos orders Product consecutive new XX% where

customers of our We the network, competitors. ownership as cloud continue believe demand our one trends the relative will total largest solutions one of to simplicity complexity cost recognize and of

sequentially fact Although from bookings December, March QX. quarter, our we robust, declined more With our in normal of in strong seasonality demand. sequential typically higher the opportunities QX grew and we in reflecting funnel expect growth remaining

from fiscal in availability. our gains reiterating impact We improved expect rate. revenue our given small XXXX the accelerate size through on take of on total a have we're to XX% market market, the where on year And mid-teens based confidence growth the outlook our growth share share, growth long-term product to based to in over prior big our ability

we cents mark, margin in year time, For and the operating XX% in the QX Extreme's ago first from EPS up surpassed of $X.XX from $X.XX $X.XX the quarter. in QX, non-GAAP achieved and

grow margins line We these expect leverage. increasing and trends to long bottom the operating given continue term, and than earnings faster revenues for gross to over earnings

strategic partners, the automation, best-in-class our a our networking the driven only We're cloud model. execution and solutions. and deployed teams, flexible hardware has the of fabric choice most being simplest that our differentiation is Demand competitive widely the with universal field licensing and combines by of vendor industry's

others. [ph], Cedar We in be it new via as brands our learning infrastructure SD-WAN Our seen wired, Fair, wireless to and entire success such offer machine one access across easy manage deals makes cloud. The AI cloud and end-to-end security, Ahold and the operationalizedX large marquee global network. can logo control solutions evidence with visibility, from single Blingo enterprise Kroger, of and

verticals gaining We're differentiation. across key by driven share our competitive our

notably against faster in most we gained grew we largest share, than market For and E-Rate, the competitors. example, our

spent who than customers highest quarter, with more in million the were bookings dollars our a from the history. Extreme During

for and and of being the elevated strategic with profile compete invited to partners, we're Given our we're our winning projects, larger strength solutions more.

We expect these trends continue. to

Some the the grocers US top the X,XXX deployment world's quarter across This managed access will stores points managed ExtremeCloud. become Kroger, with wins via largest than country. including with one largest the network, of for cloud XXX,XXX more

XE, from Kroger entire With Wi-Fi and faster will speeds, across latency lower security network. its benefit more

drive to streamline experience, the technology business create Our future. initiatives their energy shopper will Kroger store transformation and drive help improve operations, the savings,

wireless Heijn, CoPilot driven into for global countries Extreme extended cloud XX available chain Albert supermarket and its success stores XX week, Europe, where Our insights serving million our in AI/ML across chose with a also ExtremeCloud. deployment a retail Ahold shoppers in

we East, a Arabia. enabled Extreme deployed hospitals. new health fabric one partner the Extreme n a facilities and Middle providers network the of Saudi secure wide will a new end-to-end The two on secure at and to care largest digital of state-of-the-art In services. rely new support won in range

five XE properties signage, Extreme across Wi-Fi America, and hotels deploy Cedar connectivity selected operational networks digital for provide of speed like Fair, parks, amusement payments, needs device and across guest ready operator North to high and bandwidth owner cashless its to XX connectivity.

IT curriculum. North Catawba Catawba offer CoPilot also Extreme of part leverage featured and machine will and learning to AI proactively Academy performance, streamline improve time detect science operations. tasks computer for anomalies, in consuming as Carolina College reduce team network will its the network in

franchises the won of success Devils. with In home the New Mutual Jersey, and in and had Arena Rhode we New sports space, continued Jersey arena Island venue Prudential Amica in

our over times visibility taken revenue will were give in confidence quarter us we the of that product our year supply lead and greater deliveries to we down position. expected past in our quarter, putting and faster This QX, consistently than us bring up the have healthier actions continue. chain a ramp able with The

a million QX fiscal expect We will range XXXX. $XXX our normalize to in backlog million our to $XX of

growth. Our of the share go-to-market double-digit market, growth exposure drive growing areas and expanding ample to partnerships networking our to gains the fastest provide opportunities bookings

business entire to our subscription hardware portfolio expand XXXX. fiscal also We our in will

leveraging forecasting with market the example. new are targeted core integrated solutions We gains of existing our and our for large, with partnerships new and and Verizon, have market strength share verticals, go-to-market partners, with Comcast motions

we with since more our Extreme XX% the one grew total a XXX% in reseller relationship awards year-over-year established large US-based despite by with of softness behalf E-Rate this market. strategic on reseller, up bids submitted particularly Additionally,

We will other and these this build on enter relationships we as XXXX. fiscal

SaaS a to As shareholder excited a focus we several next operational about Kevin quarter, look who clear Rhodes, incoming value. of from I'm Kevin forward a XX delivering the starts great record experience and wealth excellence May track successful CFO, has with on on of companies. our financial and brings

Interim executed Extreme flawlessly. Thank she the forward move drive I Last has quarter, you, financial CFO and I asked next Cristina. to Cristina with her into the of level. strategy continuing Tate to to take to step our and Kevin role will partnership

I with And turn the that, call to over Cristina. will

Cristina Tate

Thanks, increased Ed. debt by product million pay QX our to EBITDA, able repurchase just financial at leaving results million. net and of in We driven $XX record debt shares, were down worth also $XX reflect operating margin availability. revenue, and $XX million

The ARR of our teams drove growth continued execution our bookings strong XX% SaaS rise. SaaS in to new and

mid-teens fiscal reiterate FY year QX XXXX XXXX. confident in to commitment our and our term through long We and growth outlook are

XX% sequentially, wireless our LAN, decline attributable entering Our switching center. a year-over-year third XX% quarter of X% quarter. both offset and expectations and the revenue in the high and to campus $XXX.X Product grew to partially growth end of million X% quarter-over-quarter, by exceeding data accelerated revenue year-over-year

New million up SaaS million, to Subscription subscription grew million. bookings $XX $XXX year-over-year ARR grew XX% deferred quarter. $XXX was by year-over-year the up XX% XX% year-over-year. to year-ago from in revenue

again once the basis reflects shipments geographic a across on distributors Revenue of timing to our the regions. product

mentioned, bookings are expected. and sequential coming The lead Ed environment bookings grew down continue than we into sequentially, product improving chain significantly is our as well. faster performance, times as bookings to growth X% expect and we Regarding QX supply

their During QX, order stocking customer our lead timing. our our level. align distributors coming remain backlog QX, expected delivery X product with are backlog At did our orders the flat. of to times down, normalized times direct end With represented shipment adjusting

$XX We fiscal range backlog to normalized of $XXX the in million to level continue the be QX expect XXXX. year to by of million

revenue pace, scenario fiscal confidence an reiterate the releasing range based at gives is mid-teens through in of backlog planning long XXXX. to and margin distributor our accelerated of growth XX Although to term XX% guidance our us gross

bookings. vertical transportation to XX%, and retail, and this over large at education of mix The total largest increased XX% than vertical sector while our standpoint, grew quarter. bookings XX% XX% government the a remained retail logistics and vertical of around remains slightly less of entertainment wins From Manufacturing to in the bookings. sports

year-over-year. revenue revenue, subscription up XX% $XX.X largely driven was and year-over-year. X% cloud the subscription strength growth This of by million, Services up was

revenue deferred ago growth Total $XXX revenue, the X% total $XX at and and subscriptions company sequentially. the and drove total maintenance year services recurring including was from maintenance, million up of million, XX% or The managed subscriptions, cloud of revenue. QX XX% quarter to

XXX points from as revenue distribution up improvement and ago Our and our improvements gross at in supply well the basis from higher and came both to gross benefited and margin services XX was costs product year an quarter. gross in attributable margin points This Product margin. gross product margin XX.X%, in chain as basis sequentially mix.

XX year due and costs points quarter at quality. from on from gross in percentage RMA services based last QX, prior services up the to better managed subscription and XX.X% basis margin product X.X Our was points and lower

down investment million was million and up in last XXXX, business. in points and percentage we support expenses quarter QX operating higher $XXX versus R&D marketing of revenue revenue drive operating in QX as $XXX and sales points Total XX.X%, as leverage and were basis percentage from the growth. reflecting $XXX year down operating expense compared to expenses higher to million, the XX a X.X continue to from quarter last year-ago

record combination the XX.X%, to operating of operating XX.X% ago XX.X% leverage in strong quarter year and margin achieving a revenue and gross growth, from The contributed margin expansion in up from QX. of

end entering per guidance earnings high of at quarter. the were our share QX $X.XX the

This quarter, in of record EBITDA XX a improvement as $XX.X days. flow cash by as our well we million, conversion driven free cash to cycle two-day sequential generated

revenue confident Now deferred turning and by outlook our We balance. strong the QX supported revenue funnel product remain our subscription for of backlog our and as guidance. to services in opportunities,

until customers products match bookings and should cases service billings delivered or terms. to and installed, delivered many delayed As subscription are and been to are products that have services networks get this deferred drive in

of to our XXXX. the shipping will and impact pricing that continue We fees into continued recent QX actions combined to margin gross lead in the reduction with recovery fiscal a in expect in and full expedite year costs

$XXX backdrop, to range be of in of gross in Against revenue in be $X.XX earnings for XX% the the of range million, XX.X%, to the expect operating be of XX%, to we this to margin to range diluted share. to $X.XX and million to the range $XXX XX.X% in QX to be margin per

with midpoint the fiscal For around operating XXXX, an revenue growth year of at full expect margin we of XX% XX%.

With operator that, question-and-answer it to turn begin the to now the session. I over will

Operator

Instructions]. [Operator

Our with first question will come Genovese from Rosenblatt Securities. the Mike of line

Mike Genovese

I I going more is maybe guys one just that, you quarter-over-quarter? guess if this guess the change, I quarter, quarter, give sort went question backlog on numbers in be on that. backlog can the about the And I of million have quarter color of you to ask is, could revenue you or that to of guess after actually distributor us $XXX from calculating down about "go the away." is all some that next gave

Ed Meyercord

getting experienced our the good did will their effectively deliver times able me that to older let the healthier ordering it news quarter, orders the go And sooner. effectively and earlier adjusted faster we of lead is not early modified customer would follow. away to backlog the which would orders market and said, in. But time, we feel be lead customers the that distributors and in by because came At during shorter order than There's Cristina adjust free products that means and is that same had means ordering expected to time. component occurrence jump the backlog accordingly. as component. times and it to we're the driven order customer distributor we is change And then this a the Mike, distributor component lead there's then quarter. of And

caught point So, trying on through target people, outlook revenue our and million Mike, $XXX we're doing keep – We more way confirming on more of focus in what on inventory forward backlog. mid-teens revenue cycle. are that to fiscal new got get going we're this going orders to is they have $XX don't caught and they'll so our and XXXX the with to hand, they'll million growth we're think ending have last the they a us distributors

for then we want focus calling what revenue landing to million to growth So backlog, what million be we're through is $XX rate point this and mid-teens a XXX people fiscal be is XXXX. then going and to that on on do would that focus

to want if add know that. anything you don't to I Cristina,

Cristina Tate

the I us the supply lead as constrained And on come that, would environment, were was this environment through just days distributors mentioned, that elevated. get as QX to Ed orders we normalized, distributor And the down, normalized as to add $XXX around XXXX. to chain $XX to million level the went is times the order and of with level at whole and so getting is that coming expect that backlog we million.

And confidence we gave. said, in gives our planning as us Ed and scenario based that the guidance commitment

Mike Genovese

when next macro do for couple don't sort here. years, look of and at for what of negative growth the projecting the year rate anything Clearly, this I we see you're

of in of healthy could be play and in And of sort so, if you if you verticals wondering you that's go believe it'd function I a great that trends the of was more those a as main some of see you seeing. Or what's Or function it the verticals through what of there? share and how is your rank gains? you're driver do sort success

Ed Meyercord

I on Mike, you think three. all hit

First larger the how mix. there, and networking doing do strong. and resellers we're local of we Kroger, in strong they'll pretty and governments has categories. terms out you think when internationally in think of of quarter. like is tell enterprise mentioned we're get I this – one and wins government our Retail And verticals you I in networking the resilient probably on Manufacturing Cristina all, when effect an of huge accounts has checks particularly some more spending think education. I that with our us state remains some reviewed resilient. the for been was that and of market Obviously, and you Overall, distributors playing

And we taking have of winning down The one the obviously, and other in a very Extreme. also, our an terms batting very E-Rate being channel large share, mentioned Kroger and example. in doubling we average well-known out a processes, is, where also then we're share that's taking competitive reseller, we're great market, on win

bids by E-Rate more. their won XX% XXX%. grew a they with then So Extreme we And

growth. year, So, considered even in saw was market be that soft somewhat XX% that partner we to with channel a E-Rate this

So have we to grow opportunities partners. with our

in resilient. very is looks overall, because batting enterprise continues market funnel our up. well mentioned, competitive performing I think, I where healthy hold And we our and As to of We're play average the differentiation. pretty

Mike Genovese

we we one that quarterly won't do just I If Should a change backlog and that the assume in final, the that forward? the quick in future see follow-up. just book-to-bill the is presentation? going So

Ed Meyercord

we'll that what know Yeah, think I we're towards we'll is let trending how goal. you do end

Mike Genovese

Congratulations on outlook. great a

Operator

One Henderson of for from Needham. that will the come And question. our Alex next with line moment

Alex Henderson

improves, create was timing me back had inventory a will of to might that surprised Obviously, supply The start you print. when excellent of Obviously, the normalize went a us nice down nice but come as give sense expecting, was quarter, flow in inventory that you cash thing flow. very that up. up. cash generation cash when I only and that and you the actually and inventory go to in occur? Can inventory quarter, a went expect additional

Ed Meyercord

Alex, level, more we're high expecting shipments increase. a shipping and a product product out At we're to our lot

I inventory expect product. Cristina jump to we're So, see support let think more But building of in. build shipments you'll is, that have me to is

Cristina Tate

chain supply the unnaturally during actually constrained was Inventory low environment.

to that goods. And the that improving, able building material our is to finished another flowing, increasing supply out. so, our is goods is inventory raw is ship the fact We're environment sign chain be finished

actually and is there we'll then for But the this keep as going level. get normalized expect quarters an to next flows up as element to do inventory product few to timing well. the So of we

were the normalized reiterate of not were well. more say, I'll inventory natural level we're to and we just again just that levels getting seeing a as internally

Alex Henderson

contracts period subscription the portion mechanics the had creates been the subscription at SaaS in reduction of high subscription. in that revenue the If you in order SaaS that of Looking particularly, with instead the SaaS the growth ended order, of higher those realized of obviously, upfront on the SaaS generally business, a would a a up have a direct sales just small product revenues instead happen.

sense in the of the give as success a you growth can is of to SaaS your high rate a So us of the contribution reduction result business? what in

Cristina Tate

cannibalization. We're not seeing a high level of

So, I pretty or we a call business has was would – time, very that over had down but trending upfront low it significant material. software been not

product from our subscription is so, And that cannibalizing the sales. not growth from or

Alex Henderson

same the that it's sold the SaaS. of SaaS would a if but in recognized periods not less more product subscription, it's future It's cannibalizing, being you normally, of and in get the current sign because deferred the product, you Well, Whereas not amount in being into mechanics the future you periods. period. of upfront

you purchased, you if March no XX, the So the whereas almost you quarter, revenues entire in have definition, by something on signed if was revenue. get it would

So recognition clearly, to has of the it revenue. reduce

Cristina Tate

Sure.

to As the contract, SaaS single or such our the it recurring we to absolutely, as and that more contract, over revenue subscription, a we happen mix be contract but because is time. of going shifts year revenue, booked multi-year that recognize a revenue may

yes, it you that So, some definitely shifts, saying other will there. mix I of phenomenon our was part thought actually overall business. our that were reducing be as

Alex Henderson

timing The of it. recognition

Cristina Tate

agree. Yes,

Alex Henderson

in If the sales, it been quarter? how additional product straight growth revenue have had much would been

Ed Meyercord

I if that don't know have answer. we

Cristina Tate

Yeah, I that don't have answer.

Ed Meyercord

it Maybe in and we offline deeper. come dig back can a little and take

rate. as tied then because the that backlog, we releases, of of mentioned do to are And things of as in that, lot subscription, growth that acceleration expecting backlog. a see Cristina service that maintenance in well up as One we is have earlier that an and

nice don't a work, all our of wave we addition subscriptions also our thing can really sell growth – on of we we're that with packaging I the together that create a to in we're mentioned the that today. of of will And lot so putting doing the that hardware, that other which effectively and have other partners. some The that is some services

Alex Henderson

last margin shipped increasing result benefit as supply of When the is you've parts that this costs One I'm that's logistics The question. to percentage have exit XXXX/XXXX? that that we how much year, of as is as universal And of a a additionally making a that of gross assuming progress. left product. in absorbing you cost revenues. There's been lot of costs. and increases product as a chain normalize inflated percentage

Cristina Tate

margin, of XX% long of expectation Our to our the term gross by XX% XXXX. reiterating guidance we're end FY for

how that of XXXX. a in we So a that FY midpoint We're of XX.X% expect to and end step QX, gives by sense we're XX% to you much see QX, improvement to the left. then the range of at XX% XX% guiding in

Alex Henderson

So XXX points that's basis variables. points to two of up margin XXX in those caught basis

Cristina Tate

supply higher our in as as Both gross as contribute the costs subscription as will subscription, mix, that margin to revenue, margin seeing well chain also in improvement expansion. the well margin and mix

Operator

that One with Riley. the our come B. Dave moment will for next Kang line question. And from of

Dave Kang

regarding My is margins. gross first question

fourth and to you've for fiscal XXXX. XX% provided then fiscal So, for guiding you're XX% quarter

think should from to gross fourth – For fiscal ramp it we margin XXXX? about a XXXX, going linear sort fiscal of to is like quarter be like

Cristina Tate

see a XXXX. quarter. to through FY expect guidance each of we in what we head communicated point that change half to Similar improvement to quarter Exactly. that point No last a about as sequentially a we

Dave Kang

expect When platform, an you update? XXX% give universal full should us your universal? On we can

Ed Meyercord

course platform We build of this the year. over out will our universal be of completing the

we're about of been high. adoption has that. platforms our excited And incredibly then universal So the

popular been of by year. we expect of adoption. in XX% the most the would It's end seller So our terms the

our product have platforms most universal the successful So been releases.

our higher we've that than say has been in other other of I'll universal quality history. is The had the any product significantly thing

as a it's product. So to relates support, operational very been it popular

Dave Kang

mentioned of believe a kind demand kind I correctly, uptake next some happens. situation? I orders uptick about once quantify Can that about that? the should or new So remember I of So something you're of because expecting in we talking If an you expect year? you guess

Ed Meyercord

part it's our I'd helpful. of say it's solution. Well,

because that If you market you universal the the to features choice market flexible hardware you of then cloud cloud personalities the solutions hardware fabric bring. in with most in when unique the wireless, the and that end-to-end, And can our SD-WAN technology, that recall, enterprise run hardware we're we combine our solution. our you different across wired, are management of terms combine wireless space is and in LAN universal differentiated the better build in able with the

contributor a yeah, side. flexibility. on creates it lot it choice. that's And provides So It of demand a and simplicity provides the absolutely

When universal in linear we look growth at equation. that into in our margin, factored platforms we of gross the adoption this

to margin gross you don't anything add that I want if from perspective. to Cristina, know a

Cristina Tate

just built into No, reiterate you what said. outlook. It's our

Dave Kang

should revenue question My is, to XX%? XX% to CAGR we subscription be still expect last

Cristina Tate

long our confirming we're Yes, term Yep. guidance.

Operator

for Paul moment the with Silverstein our next come that of Cowen. will One question. And from line

Paul Silverstein

sounds is sounds It government? strong got I've It is how much the like specific based. the like describing to strength comments. and of broad extremely ask, But from to demand your you're education that was

Ed Meyercord

Paul, doing large dollar partner of number our even E-Rate a channel the deals are that, we a we driving where, community. say that share partner in soft E-Rate vertical, up in have plus that had market. an I with kind we is and adoption, example in gave which And in climate, well million of incredibly very an I'd education.

this quite for Schools, larger realizing frankly, and million solution. winning win they I wins win. $X.X deals County quarter, that We with larger deals, more big we the and Extreme, is and community the get example, channel differentiated Palm Beach getting have out also have think we're a into We're can

this it What's and of interesting retail. retail verticals, it some education, actually and wins down we to sports The quarter, the XX%, normally, math, in down. to ticked up XX%. We in talk verticals and XX% our of larger was about state/local in was is that because even success government then the

in The there. held other verticals kind of

small on we big larger talk standpoint, revenue term long for the from our our And the large that's winning points share take of and, a target. part and remains us it is why it has We're overall, opportunities. larger So And bookings impact crumbs we our about opportunity to opportunities. and seeing are share which gains strong. story,

Paul Silverstein

I'm at, to of describing revenue. about exclusively When Just to XX% clear, book, public your It's to clear, that your throughout or your be to the education base. vertical look order be the at XX% you question and that's I make funnel, customer broad not that's get sector just based. want is trying revenue, just you're sure… your been primarily strength to

Ed Meyercord

correct. statement. That's a correct That's

And the make other I'm trying partner point to there's that is penetration.

One things new about, that we plus partner Verizon's have deal relationship of the business. portfolio, Extreme, Verizon, we Comcast new with of of lot this in a enterprise like with with large pretty million as working partner We talked sellers. Fair, Well, is directly we're company, they and $X a certified new. do Cedar a we're a won their now Comcast.

So another bringing channel Extreme they're about partner, to and we're is And solution excited and large this market. opening up. our

So partners with the with now, these same of what product. larger some we portfolio are growth have opportunities new

is So from it based. broad standpoint, that

of verticals. see And to growth. would enterprise happen this really our across we expect all overall growth see then littered will We

Operator

One our question. line That next moment Street for come Eric Martinuzzi from Lake Capital. the of with will

Eric Martinuzzi

see Extreme I R&D evolutionary some are we can dollars spending portfolio? the of pointing here where of Are you the enhancements Or we these of weeks, guys is understand the products? you're R&D have breadth Yeah, a expansion in in just where at? coming up the know existing product headed couple those with to up. kind Connect

Ed Meyercord

development and the is adding We're features into we've lot our and platforms our a our over control platforms, Historically, solution, can existing our we'll effectively we security in product, which and platforms, NAC be investing cloudifying is doing of kinds that we're that investing further universal in access wireless the cloud. we're obviously that of the developing had and cloud network. offerings. what completion orchestrate a of in and of lot A

we a it's thing new In you And but is services. services solutions developing other simple partners packaging to us think complicated. to solutions it that a managed have on The the licensing products managed effectively for cloud space, and our services that packaging that's commercially with really is simplicity bringing provide marketplace. lot we differentiator we channel services that's our this very are of simplicity, real portfolio. interest hear have we're And the about framework we're a existing managed we're complicated. we're that our And talk the doing complete market our rise, in and and in generated a taking

So, And effectively, take a this an expect area managed share. doing be what we'll is supporting we is where we're service. to

that yeah, out Connect. coming at So, be will

what do And finally, No enterprise than then able in edge a where, choice. as to to are really is to cloud, be kind Connect, of companies offer what with versus we and that versus can cloud provide wrestling around there's the going anyone of cloud developing data or more we're lot edge provide to a to this. flexibility and be of platform, networking choice choice reveal will cloud. versus public our conversation way cloud We're about the at has There it's private because goes with center supplier the customer campus. industry able kind of stays on

Extreme networks differentiation further around will And in enterprise Extreme. resides so, there for data I be and reveal will edge be where that think a cloud

a solutions. large with interest areas partners So of quite these in. we're for market, particularly lot there's And these the investing that frankly, are kinds in of

Operator

One for with moment next Park our question. West Greg Mesniaeff come will from Capital. line of That the

Greg Mesniaeff

question offerings. I you your security regarding network have for a

now? so, into of subscription-based, on security of doing are you the kind move right services, be upstream offering? turf security of you products encroach vendors working can And with deliberately rather, services, gen of in – sort to going continue you the cloud-based or network some network to what you're As next that

Ed Meyercord

to layers pretty a elements. analogy of the the There's complicated. our of industry different People in lot is different make all Security describe the the layers. of onion

can network. our that out in area wide that SD-WAN security and a level big One we our fabric in, fabric built our our the then today we of in and inherent and that's idea that marketplace the with security truly across set just security that technology inherent the network extend solution is the has is differentiators have of solution in brings the unique

provide which top So can savings. with one the likely to brings security of as that effectively of the an things and is over opposed do a lot solution, we that inherent again, simplicity

we Kroger Remember, that solutions leading air out offer. that's our security like of one of critical have this winning is is something defense, and networks. or is an also Wi-Fi distributed in element And something the also that's marketplace. which Obviously, these a the

technology policy I earlier, And we accessing network and into is And network management are built And have and element be taking will which will and referenced inherent this. very once is network security access control proven and the around will and control again, mature the we who what we're an access differentiated. access identity that be security. and cloudifying

will to attract a into in a compete security marketplace. think we single a that we believe single the we disruptive these simplifying of elements in be within will interest license be So and position by lot solution a

Operator

One moment from for come of Christian our the that will And Schwab next line with question. Craig-Hallum.

Christian Schwab

we what backlog we looked look distributor to percentage left us be distributors the orders As the which can $XXX still? you backlog of discussed roughly orders, deferred due or at adjustments customer is down that's to in million revenue tell

Ed Meyercord

We're lead a about little the backlog times What behavior Xx. overall down. them we've came said lead faster. more expecting is to Obviously, to tied it's come down times, is and that distributor

sort do that out through is really of we revenue into fiscal outlook what And growth. our Really reinforce get to XXXX, don't to of out want backlog. we're there. doing So want dissecting which our we is

into everyone. trying that where revenue baked And we're we so, our focus guide. to that's And

Christian Schwab

are assuming how you the based are guys for backlog question my be growing you that that you at serve shipped look explain…? look that rate Is timeframe? the three your in percentage what industry rate you catch-up maybe planning then, couldn't over you second at, you to or much And over that how is, I do from is at doing guess two-and-a-half, years, then orders market what gain the next it your verticals could scenario be you COVID? growth during share growth expect What guys

Ed Meyercord

obviously a gains. We also factor then have to backlog We're in industry. we're at looking And share the factoring run-off.

release the the in risk on the chain have you overall we as did just-in-time distributors we issues, When overall a lot the put back say would go more future backlog, past see mentioned with to to it at us mid-single in was of model. I before, they the kind their that, a business. digit So of on our expecting industry, growth much very we're because industry. And I if than this order of in pre-supply look obviously,

number. So this is million $XXX where $XX we million at landed that to

model, So should point as kind think backlog million fiscal ending your QX of our million you of the to $XXX about $XX XXXX. in in

that's see that. So we where

mentioned large up a resellers, in size, E-Rate have gains. those was of a market, the literally In then, kind with case, share opportunities. soft of reseller kinds know we're mentioned you And resellers of report, of we we small create those down. that big one I our And because points in outlook earlier your share their where XX%.

So will. these of And us of are kinds growth if things gives can you size. that relative at our we the do it because Extreme a advantage,

when when Comcast, quite growth open opportunities a you large. you frankly, mentioned, up I when the Some up we and open some other haven't larger larger of open Verizon, opportunities partners, up these for where, you a managed door growth the quite up open we services of are these partners played

So, of a on top over market share growth is of the XX% point market.

Extreme for it to of mid-teens the that share that number. take a market and So lot to outgrow gains doesn't to us for then get

Operator

over further I'm Ed Mr. time. at the you. would in no questions showing CEO, turn Thank this Extreme queue And to to like the call now Networks I Meyercord. back

Ed Meyercord

Obviously, now. the about I records. in employees, the for excited a say everyone, had winning to we because at joined want and joining right be a everyone been in calls momentum to out We And thanks, of to never Extreme better the time Extreme. shout these Thanks, we performance. there And the Sherrie. of lot our have differentiation fun there's and community, lot partner marketplace. to it's we're call. be that competitive a the on quarter The is

So shout out to those teams.

holding the We're a and then leverage top the on investors in guide both And very gross strong the then to participation line your and continued line for line. and company. in bottom margin margin expansion, growth of with terms down also operating in interest

the your quite So, and we in we're confident to quarters interest come. appreciate Extreme about

have day. everyone. great a thanks, And So

Operator

today's participating. Thank you program. concludes This for all

disconnect. now You may

Extreme Networks (EXTR) 26 Apr 232023 Q3 Earnings call transcript