EXTR - Earnings call transcript Q3 2024

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Operator

Thank you for standing by. Welcome to the Extreme Networks' Third Quarter Fiscal Year 2024 Financial Results. [Operator Instructions] As a reminder, today's program is being recorded.And now, I'd like to introduce your host for today's program, Mr. Stan Kovler, Vice President of Corporate Strategy and Investor Relations. Please go ahead, sir.

Stan Kovler

operator. you, Thank welcome earnings and Extreme third Networks' Good call. to XXXX conference quarter morning the I'm President Kovler, Stan Vice Relations. and Investor of Corporate Development and the and filed are CEO, X-K detailing Rhodes.We With President financial an distributed EVP results Networks' Meyercord; for just release today Kevin and press me a Extreme CFO, quarter. Extreme's Ed and

involve expectations along the actual forward-looking for includes with those caution uncertainties these our on Extreme's as and are described report in that disclosures these risk from materially statements period risks include differ in based factors cause website they you non-GAAP undue reconciliations, not a the to can anticipated For a non-GAAP of These copy to GAAP on risks XX-K our statements forward-looking the statements. reliance reflect plans growth call by XX, analysis And our them, XX-Q XXXX and call on presentation.Today's strategies.All your with earnings of be certain of business, by filed the current results, available SEC. our as our and to financial put except forward-looking or law. Investor no expectations duty June required basis, statements will in to and and convenience, on at we about as operational this reports have Any today. unless made ended may the subsequent our section update extremenetworks.com results press We release, which discussion financial Relations is otherwise. call this on future stated our

Ed to take call Meyercord. Extreme's CEO, questions.Now, and prepared I our will over will Following the we President remarks, turn

Edward Meyercord

for Thank joining you, all thank Stan, us this morning. and you

range, normalization.As new Highlights include, market.Our cash we for continue digestion SaaS reducing revenue fourth successful growth And a continue slightly to note our flexibility double-digits Network, drag to value channel line our that continue fiscal and the as But and and better quarter. help into calling bookings in particular of third to ARR customer strategy. with were strength net sequential heading channel quarter were our purchases $XX our we U.S. from outlook. expected and Cloud And expected, to industry-wide the million work bookings demand fourth meaningful of the us than half revenue to high growth and orders. during by will second grew and year-over-year Customers on we the with us globally end inventory results bookings through will expect of $XX quarter. during One calendar XX% flow in closer on in sequential grew in our partners channel we're to generation profitability and return QX logo channel One bringing million normalization create deliver at proposition simplicity solid 'XX.The to revenue. normalized Our

that for ZTNA the fabric, and ecosystem topics.We and Annual and cutting-edge enterprise was demonstrated offerings Connect our exposure Our prior customer about early-stage makes partners opportunities very innovation offering because the the technologies. of device to the to resilient, as further President highly approach market growth focused anticipate converge a joined fabric within favorably broadening value verticals, collaboration, allows integrate SD-WAN, networking, to we that speeds, it's broadening enterprise design, and our growth We cetera.Our those A et them. it's engine to where network and a allow as health one funnel unified enterprise a applications across game evidenced The number and segment minimizes deploy, the reach consistent of Universal individual the savings Texas. of education, Cisco over to of of disruption for the a mainstage substantial also away to cyber-attacks.We optimizations vice in and preview the fuel policy also business of increasing the a a to security security Zero technology, devices.As creativity, NAC proposition causing. spectrum event experience connectivity.There radius discussions User that added the logistics, into and cost that changer.This million opportunities increased security security.Finally, Extreme of of with differentiated policy is week, will to our fatigue dramatically to oversubscribed outdoor we in customers.We first common a customers' discussion the on we applications, and our such for move crowds. frictionless offering, AI that solution. complexity PAC quarter. Giants, first SaaS the event through of we VPN top network, proliferation we each retail, BYU love lots expect vendor business to of customers was to that Fair scale focused drive Francisco single own capacity hosted complexity yet, outdoor driven at market.Last flexibility about upcoming simple up in Expert: it standing Connect relative partners tech sessions of a fabric, security transportation, our observability, We ago. we us AI. Trust X from announcements customers. diversifying the and with adding policy Customers an easy-to-use and is of identity to year Connect, M&A is of a network, application the our feel with be WiFi XE for provided enterprise with blast from Cedar biggest of solution our and management and $X with comes the Generative dashboard of are network highly of several range coverage to announced industry by networking intersection cost fabric about our customers experiences By the that breakout significant present attendees growth XX% our with extend ensure AI up dynamic said, combining and the We and single When data made security on unlock cloud continue center such ExtremeCloud to on the Worth, where deals expense room-only ZTNA, channel branch. security lack And San of by exceed the gigahertz unique to increased solution customers a Labs, from It this as Fort Conference and which a help user their easy ZTNA, faster manufacturing, at transitions of to multibillion-dollar and care, traction to stage deployment and with delivers the from doing was higher Connect expanded questions lot reacted and us

named of remained a the strong to across line. view to we are Once our the third-party WashU the and had its are it better for to on We finding taking challenging integration is and verticals, the and focused and wins, Gartner protect University to relates they down new will Cisco.Extreme's HPE's scalable Extreme's clear as network with country's able the the for down leader Washington which won the simple, worried, We their roadmaps potential by and modernize We technology quarter consecutive help questions third-party Louis, technology be digestion. universities, will And displacing new have ways manage Juniper, create acquisition one notice.Turning EMEA, most time. IQ, a selected including a networking moved or customers St. infrastructure its university again, across negative investments.Customers will top don't secure of many of impact As of solutions and confident competitive MQ customers the devices.In channel risk in our education. and secure revenue have feel execution outcomes a remain to applications, entire higher sixth network in campus. fabric pure-play deliver were Extreme in Cisco largest impacted focus a to in on vision advantage. network, ExtremeCloud how spending

for will networking One the and the XX worldwide, funnel including us continued continue customers' quarters 'XX.And consumption extreme simplicity the concessions, analytics fabric, the MSP and customer. to deliver flexibility new a as Korean across demand improve. Borussia clubs encouraged that, our to you And international logos.Our Dortmund, our service across winning is of stadium our to model. new guidance. a we're in gain quarter of football like vast we success WiFi more hardware multiple in grew of added the high-quality have these such billing I'd global our recovery, the also AR/VR simple deploying walk the seeing providers go-to-market many booking net our in to Airlines, which largest experiences.As at footprint Rhodes, is our been deploying headquarters the with We believe of create with several resumption one Asia unified sector, In make XE, during in and to follow revenue are CFO, partners sports in well. call us base contemplate The are across particularly biometrics.In the number XX-year to However, as over next-gen Cloud, seat venues, share in Cisco growth success, stable is results like we're Kevin, helping our for of we and appreciate of Pacific, their quarter, MSP there? We unique where to are partner for trends Germany. Asia. solutions grow queue. Kevin through They it of XXX experiences MSP our new sites expect we we've majority initiatives We're seamless, we that major expanding into customers, including fiscal hospitality displaced a to Seoul.Our and their by logos and turn as

Kevin Rhodes

Thanks, I was Ed. on mute.

get our And Sorry me about that. let into results.

ahead outlook. in So line and our results slightly were our of

aligned quarter, entering significant be to estimates. expected will overall $XX channel the million worked we better at reduction of through our $XX will demand return digestion.The to believe growth, position customer this of for was million the inventory trends. normalized We amount high a a us and to customer channel As which we end

our impacting also a And backlog relatively the discount and acquisition was sequentially took to reflected largely of generate a us get the with Product proactive was We support industry.These our profitability dynamics expected story prior mentioned per our strategic channel over previously revenue once along $XX are million quarters, which again subscription impacting of the product during wireless at sales back intact of networking the digestion, our quarter, to Aerohive our annualized million primarily and in above industry product was orders, cycles, to $XXX end gone the normalized switching due across continuing declined The slightly the of the will last Revenue consistent which and both numbers. of forecast. year. on are products. into market quarters. $XXX the several while great pricing from for right $XXX revenue to action revenue me again, also of success costs, has quarter we've trends million size within the Since our initiatives.Let million enable been some rates product and us. range.Looking to at level with our elongated XXXX,

our to into take and our this Extreme. support As has important buying is product both to customers from business are it's as subscription what revenue trends shifted management, account recurring cloud and

a million, million We activations and our This bright China cost, bookings, quarter. Extreme the excess an of higher original education renewals above ed, material occurred of attracting provider our our year-over-year. XXXX led this our were for basis down $XXX we business service well shipped of and drove spot by was we double-digits basis, in up all in in in largely cloud quarter most of year-over-year, transitioned was revenue was and would deferred to one XX% the as year in by $XXX new and challenging products. deferred ARR raw And we Vietnam. was growth to and grew and our margin vertical prior Without by additional subscription $X.X ago subscription and Gross by was revenue.The and XX% product a of strength recurring support incurred was SaaS we the out the account manufacturers up quarter. XX.X% up grew achieved expectations.On the costs from into revenue of costs to ARR points have margins is support design our fiscal notably the quarter.Our the year-over-year share We to quarter. up revenue and this reduced quarter XX% bookings, revenue we to full compared expect double-digits. quarter, ago the from on XX.X%, year-over-year revenue strong driven again million, our current the back growth health year-over-year. and total of revenue. On were approximately saw subscriptions of gaining in growth quarter. to basis, in entertainment, Based year strength year $XXX K-XX margins sports line a outlook, year-over-year, growth fourth $XXX was of of XX% up operating quarter.Our driven which care expect above X% XXX expect sequential with business XX% the previously currently the Subscription double recover gross This retail, and million.Total revenue, up by fixed recurring impacted XXX a and XX% winning once expenses basis revenue Even customers.SaaS were third digits. million, points environment, primary overhead cloud still in continue.Overall, product

take in did we quarter getting rate revenue structure fourth to including XXXX. help margin On operating and we last loss a our expense year share third in, margin debt quarter, expect per leverage of in $XXX in year profit revenue compares in line and our $X.XX per goods free working non-GAAP of quarter year $XX achieve, from second and of outlook. expenses, third run cash was purchases loss All ended quarter.We $XX $X.XX of quarter with to materials inventory basis, from in usage the and to the us the in quarter of of cash of quarter million to ago to million and million. operating lower $XX profit due use the and the $X.XX a and year of a to approximately revenue the level out share This $XX quarter. million in XX.X% XX.X% which the prior with was commitments. based share per of purchase profitability optimize action XX.X%, quarter quarter During fiscal took into earnings capital finished earnings raw of back the operating we million ago flow of was net annualized to recovers.The a down for The the on drive will margin as the of

seasonality improved We a the based in as quarter We sequential the revenue to heading more turning in flow recovery expect vertical. cash funnel in fourth purchases quarter, growth sell-through normalized led education component our expecting fourth also recovery of a revenue flow. by we earnings drive our guidance, with revenue and are on the believe will recovers in and business, our and cash rates.Now become the into balanced recovery

be year margin a to $X.XX the be taking of to margin fourth XXX and a fully a range to guidance share range in expected as be be a be million of to in count of share margin in non-GAAP XX.X%, we earnings to of to share operator in in XX.X% a expect in million to of $X,XXX.X is XXX million, XX.X% Q&A time.For margin range The X% be shares.And as $X,XXX.X to to we operating operating XXXX, to $X.XX. expected gross per to in shares.For to to quarter, fully of in a expect That's share follows: to follows: to to to cautious around are $XXX it the earnings tone XXX range to full $XXX million this on turn begin over diluted session. X.X% million a to now $X.XX. a revenue X.X% range the with to diluted a I'll the be be be However, XX.X% million to million, XX.X%, revenue gross and range based to that, we range guidance of around at of count be $X.XX per range

Operator

[Operator Instructions] from the comes question Our Alex line of first Needham. from Henderson

Alex Henderson

was hoping base you the where you just can could still obtainable? to? correction, revenue term think kind a gross once the I XX% You the bit little think is talk on for what past, us margins sustainable give to like? guidelines some a you is? company's get longer should about margins come your in that talked can look normalized you normalized And about the What company you So base you And a growth is? what of out this of rate XX%

Edward Meyercord

is Ed. Alex, this

Let I'll concerned. as in come you the behind let model then me Kevin, me far jump as in and is

Kevin Rhodes

Sure.

Edward Meyercord

this normalized looking level this where macro our which still for when quarter we $XXX that a a are Europe. of elongated us. in lower where quarter we look we're on projects.So, we're is low million yes, -- sales the note larger some a have large when And deals team, is volume you'll then, revenue moving market in sluggishness we feel this that of at we sluggishness had achievable Alex, and at in seeing is past resources closer our cycles up from we in And seeing XX, a you're today. with at to

make.And months, a growth.The lot the market going conditions, So other now, noise about more see we going think bank need is -- competitive channel to your given the in the as and we in way, partner going Right what's concerns decisions landscape. with safe see you're around a users on, over make of a future and to forward. help partner that result, to technology start there's that haven to us that business you lot -- XX opportunities a of that as are to for the community of we're coming decisions well chatter a Extreme is we as a a believe, lot technology with I'll if to want on for room are comment end that next there's they the

same follow do we specific questions. very market modeling loud and this the and motions business in time our sets will and true to was with of creates to heard will this -- funnel a with competitors So and want we is establish establish of you clear. have go It to against the this terms and partners Extreme ramp and take new opportunity.Kevin, partners.But for think with both aggressively margins it more after larger unique specifics up thing

Kevin Rhodes

Yes. accurate. I you're mean I think

In what absorption, opportunities we're growth normal The out cetera.I would of et the we growth what's terms for in and right. for beyond revenue -- of right now be out market as we're what that. look it, the the and Coming seeing new $XXX for what above shooting the, I'll think call coming in and opportunity that like, normal cycle new should that is we obviously, is million are us. there above of

more could We us to of us, think moving with we especially Airlines software and and XX-year that see bode that we over in Cisco customers others are Korean AI. as to coming that's are on I story our you for well share here.Alex, it taking more to as are going and security, add build continue

this we're in these as in about back, general, in that vision I is and the get going and to growth. through well and think we think, the what people like or got to of more more with to that for in product our things of future, All be future positioned for the the and clear enhancements Connect very we Conference But to lean way.So our are saying excited at heard going they that, customers prospects were market. we be want -- come cycle loud our are

Alex Henderson

calendar the you it do through when was it's gross on way you is think you'll Or out still you could XX%, the question Do margin think XX% all year? come this do So the asked cycle? the before obtainable? And that? year, of happen think

Kevin Rhodes

Yes, yes.

you XX% when XX.X%. QX, look our to at to at XX% we're for XX.X% right, guidance So

talked end of really touching range about. the our XX% at high at that we're you guidance just So

So that But for get vision yes, be target margins. initiating XX% X-year still we that of for longer to kind to as our described absolutely we're a going range to XX%. the we where are gross

Edward Meyercord

say environment concerned, as the have. our a Alex, think then the timing I in visibility. Yes, on that we ability the to we the close of and And is it's EMEA. depend timing far just already as the pipeline lot of to have going would recovery opportunities on spending I

of back say, haven't signs come a make team next is it we it's call. healthy by December, that as net-net, in have a and gun-shy spending opportunities. Europe, We this quickly on say, just that this lot back. would quarter, start I if quarters helpful. then been funnel a that suspect come somewhat to that burned We for because with see we as cycle quarter I to we'll thought.So of in have, we've The the question And timing.And we difficult very funnel to would several expecting into that's confidence us more seen

Operator

next our the from Capital comes Eric line of question Street Lake Martinuzzi from Markets. And

Eric Martinuzzi

Yes. mid-quarter I a take the know took I operating here for QX. look at expectation of QX. in you actions expense kind to wanted

got the I've $XXX right, at think in expectation OpEx for million. QX? the number What's QX I

Kevin Rhodes

Yes.

it looking in is expecting expecting $XXX what OpEx to we're right It's Eric. be, now, QX for -- million we're it just I'm here. So a

Eric Martinuzzi

I'm the around the assuming the there kind effort restructuring bulk sales Okay. of that marketing. and And of was correct? Is

Kevin Rhodes

Eric. at mostly first we obviously, And all because program be at all you, our to foremost, employees. We value spend, Extreme looked we honest spend with of looked and

structure that also say do really go-to-market, focus and our You we taking across board would the board. optimize But just at the and functions.We've certain we to looked as areas areas I -- an have way org opposed going across we perspective to it other R&D looked at well. out still adjustments make but and reimagine from as company's design the how

optimize entire we to get say the So there. I across would company

Edward Meyercord

that Eric, we going guide. knew of were to part out fair business, guide, be our of And was original taking Kevin, to our in that and in the so I it's guide, the we expenses think say,

Eric Martinuzzi

given logo pleasant Yes. overall the growth? the key of, What that net still you QX new logo for surprise challenging. kind Understand. new in behind double-digits think do the driver me The growth being was macroenvironment a was

Edward Meyercord

that because Yes, moving it, I Eric. We what a plus were we we're kind million to upmarket. it to see in we're return of, comments health we encouraged to a And deals million $XX mentioned quarter. seeing, my get in this call back $XX-plus as

we saying logos with stage feel experience QX, in talked new when after large opportunities, largest We competitive of This and move, the trip had a flew like stronger up new and move including quarter there. a WashU a deals of handful had winning. And all that's really the reference a large the security expectations. made way up to sort making amount those logo of the new a examples the of exceeded when what want lot those we're major X-digit to Cisco calling the of you an And be careful funnel university unusually are well, said, won X-digit, we inflated quarter. of these wins We a in the kind Air, from far the nice okay, to more we're to was marketplace. we had there's, logo lot not new matter we you airlines, either could wins. deals the QX rely that about. wins about.That of XX and business at our don't And be about amounts position At low.However, growth?We that endorsement. might way. excited really nice change. we're of in for grocer.The success X-digit created calling They wondering, dollar of the important Big is that, with world's our their just with some the in -- obviously, is, binary that business. is story.And winning prestigious the Korean the are we're we ready Kroger which markets, with Extreme quarter But this years of are large larger on success on of that We logo seeing logos, as and That am what I terms in that win important want to wins, why really call, volume by means and deals. some in have look the some intrigued necessarily Seoul in don't more lot of QX, why fabric in magnitude the so, accounts fact we them, be them competitive begets we QX which and fed Connect,

more giving a what's stronger really things, a us that's calling our with So confidence. And few for of these 'XX. confidence our that position, should strengthen

Operator

line Vogt And UBS. our from next of question comes from the David

Unknown Analyst

David. for This is in ] Brian [

somewhat soft revenue to So inventory million on down $XXX the increased have how QX inventory you discuss should balance guide relative ago? a follow-up. then get worked sheet that to quarter-over-quarter given And X million I from $XXX weeks last quarter. Can

Kevin Rhodes

Sure, I'll Brian. take Ed. one, that

we inventory. have a building of quarter cash of use for in did So the

build. now inventory when inventory inventory have of this about. sheet. is our seeing a we've balance is for. the are in all slowdown those these paid now we distribution a we're realize We've And what more orders down coming There's to worked we we have inventory on exacerbating, obviously that, if all You first you ago in right naturally, of year put in than place.And now were will, were purchases all, is that of market the that that, inventory It's have our all positive good inventory. we the which that this at talked side bought things that on the

in itself that time.We year, inventory quarter. into next all and opportunity generation to say, the a work be over would of the future. the for that's market our assessed So inventory is going balances every us I over good cash inventory should

out were raw The our one the line moved reestablishing for that that inventory As that materials of China. there weren't as that's the out Vietnam because using this we for market. an had we we And into just These in materials Vietnam. ODMs quarter, of movement to taking the out moved we and of example, China you we China that up the were saw line. ended of we raw of

And we But now, but evaluate so didn't make the weren't every right because we generate replacing it quarter. cash yes, that's that flow. to just it inventory, going had sense a line.So build in we

Unknown Analyst

That's with can there we it when inventory would thumb, of revenue? us follow-up, can revenue/demand you percentage level rule helpful. a be normal And of product then, as Is quarterly big share like a as think product a normalizes? about a what

Kevin Rhodes

million so past. like mean, we of I the I inventory in Yes. were running, $XX say, would more

we're probably we double be So like that would to the size at.

itself a revenue, give annual would of total our perspective, guidance -- $XXX to XX% come down I would range.From the give you of over say we're QX, expect also I the now. of work product as a revenue into inventory year. is As revenue roughly about looking at percentage in that million we levels right product said, $XX another down. to next you will that And million That's thing

Operator

And line David from our comes Riley. B. Kang the next question of from

Dave Kang

typically seasonality quarter know that's but seasonally any difference I on 'XX. is question this weak, fiscal First first time? for

Edward Meyercord

demand say think think we're build lies, in September normally, a June. we're up seasonality because dip looking on December, we're QX, of is and given the we today.So the market QX that in don't that of apply. that and from in that in fact where we're where at the seasonality Yes, are March I a will of the point nature traditional to hitting I think you're what there's we then David, unusual can I just whereas how dip and don't adjustments then in a in normal environment up and I given think

Dave Kang

maybe from up June flat, implying for September, or -- September? at you're So or be it least that even to could

Edward Meyercord

I more QX, meet that or we're exceed large in a some well, expectations and high, track have a And more today run -- business given way mentioned call. going that I to we hit tone.In guidance.And we we're way want -- to want about that that's I wasn't talking to guidance mean say, want number. it's we have somewhat table I the we to cautious manage hitting the where that binary. bar And the for that Kevin our too set to will We mentioned think argue number. how such we we've a early a are where Yes. and on and how but QX, we mentioned the deals before are be that cautious Kevin can for

I what think start will right QX. is, say point normalcy -- upset not say I think to don't in with a Kevin get But calling seasonality. that if me now, returned and we're normal to we've would I I

Dave Kang

follow-up And bookings. was question my on

or maybe way comment compare was on X. book-to-bill maybe wondering said can if just you how year-over-year? sequentially You over they like But

Kevin Rhodes

side? booking the On

Dave Kang

bookings. Yes, product

Kevin Rhodes

Ed but Yes, of we slightly to we to other overall said, quarter, last similar bookings. us we're come I what see to going from to how for gives was us bookings it start say quarter-to-quarter. have, still to being strength it what in the really overall quarter, I challenged that significant it's next -- had would was. describe half a areas come say stability would and that's Europe last bookings for of was I said, as that.So to for didn't in similar it the environment where level really you from looking year are back second product bookings say of our down some in back good, would because be growth. That

Dave Kang

And like particular regarding mean still my It good. education last verticals I weak? Any pretty was is sounded verticals in Europe? particular question which weak that's Europe. are

Edward Meyercord

than assets planned ever And before, these And is we're more governments especially I are them, education. -- of there. business. and country are these upgrades. is to local lot It's Yes. has seeing lot which -- forward with us. government And the -- very pause look bring mainly a been, time we in governments and to of Europe at including in seen SLED, for We think in which and a And and that basically spending existing category sales it this momentum our of we've comes sweating that call mix market move lot customers. this will we a going more are come to that slow But confident it's was back, where believe network come I that entire When and we a -- the that business a mix it's back back. German will think XX% now DACH, -- come going company.When to of the our recovery. we for is state taking back, we have where that

Kevin Rhodes

looking note growth. we expectations are in at the would that bookings revenue this versus increase Ed, an And at QX quarter-over-quarter given QX, our point I

Operator

question comes And our from Oppenheimer. next Horan from the of line Timothy

Timothy Horan

if been aren't and following no of in in to that all office? and Just public versus that do networks in you buildings up places a I've the mean, really other think they like like What office bunch because, on the railroad in need space government these Only upgrade WiFi venues. of soon anytime do people lately, much? side. stations coming I is government one's percentage

Edward Meyercord

to to we're Yes, not pinpoint -- sure Tim, it. able able going we're be I'm

have We the in different of government of everything agencies, Department IT. lot Germany, from a --

many ministries For example, European countries. we have defense different in

distributed.The very also I'll very -- long-standing our have strong have that is very the other we it's all And a channel. these so, comment make channel and distributed customers. And that with partners relationships

when of it government anything it. when effect is And to delayed. cycles at have there have with we that we do we're that be are -- what a normalcy, so funds, not some to through make oh, But in release says, particularly then the decision going they return heard much not to And know of will not And just been verticals. a point cyclical the the business. we the go think that to the very and hearing refresh anything they they it.We is

Timothy Horan

what cycles? they Like, those average can to much I XE if this, of on And And related how maybe basically the I extend kind I is impact extended to? that upgrade you're just life it's really guess, mean, want related is saying and they out XE cycle out. to what historically? having this, know, And

Edward Meyercord

I Well, think be Tim normal to years switching we Yes. that X think cycles, the X X X to we normally in say wireless, wireless life would about. would years,

may of latency, And kind spectrum. adds does XE it's it was X gigahertz be it WiFi, in cetera. Sometimes lower what of terms range breakthrough. the extending important of et an because a there or WiFi acceleration a game in changer

WiFi some cases, will also and see coming into fall well. network you'll the So customers able will devices -- then, range. depends that being support are usually that bandwidth.In into customers And carry on that the X it to as

to getting fall are coming starting into environment. years you're becomes difficult WiFi devices to behind. and on you're And more to If it more gear, X support edge that your the

especially switches with I quickly they're to adopters think environments, ranges. we are have it's it's it's of really are of are of end And those life, issue, There early -- there's are and networking think about But the not support. moving examples that recover that XX that go running into years do older end you And et if hard gear. a to so and rare usually to prudent those XE.So devices still if fair when old. cetera, stadium people that, the because

Timothy Horan

you lastly, in seeing just churn your base? customer at And change are in all any

Edward Meyercord

in and projects.I out delays would wins our customer renewals on our business subscription remains of delays, base elongated terms in than we more and terms think terms solid. see competitive in Most sales chalk of competitive. spending our the I existing it service terms in cycles this to of in renewals, of the very phenomenon more And marketplace up is with see customers. we current of

cost the story Germany, the the today some a of and ownership alternative discontinued that in case, flexibility there's now competitor Gold also new now the in ever home, dealing looking before, of Extreme then partners the in there. market are is largest Our for with lack expense is that with example, we've There's more particularly which frustration of complexity, who the heard and than best in today. of resonating of total their channel.For they've frustration

vision very do cloud competitors' coming unique the contemplating and given we forward these with our that we machine position to that's modern technology, bringing networking Extreme pure-play the networking tools so are learning, of manage the stronger out.So today we a And modern for then the equipment. upgrading that through capabilities position, capability just that. value before with people integration the that only the the most as given and in there's we're and partners our think but sellers ever have We're competitive our have purpose-built marketplace. the so, security all proposition our And tools only bear, AI the also together, to and can And and company, I way also vision. AI than in about networking not new the network; differentiation Generative are rolled a of our people our Extreme with our future things infrastructure, fabric.So just is to people of disruption can networking excited our

market in confident as the So comes are position. very our back, we

Operator

question Capital. next of line our the comes Craig-Hallum Christian And Schwab Instructions] from [Operator from

Christian Schwab

to that million. news So is assume potentially you I the guess, strategies any inventory given regarding question be my pricing the But the your that inventory. $XX generating as we risk to cash goal first of more that there should excess of good a is move understand aggressive I bit may market state faster? and back that with of normalizes the little

Kevin Rhodes

of prepared are holding would through I in that as far, a had I we that price say is yes, I'll said one. things. remarks my cover couple good a Christian, QX. which One, so company,

excess basis to than that get are end themselves of with hearing We to our we versus heavily.And how to evaluate We're the an inventory more in have first market some doing we XX% typically as discount that and are place. so, to seeing competitors cheaper also ongoing Cisco are starting they. XX% on

So more our they discount be do discount in they to need at if -- a order more to lot pricing.

some evaluated that's on we place, X be key adopted; being being is over that do is going we XE. that basis. slightly time. here move And WiFi WiFi X believe what basis. still than said in us we quarter-to-quarter We how that like on help have we already.But but to that inventory evaluate a what So to much they can are lower The a quarter-to-quarter tends

Christian Schwab

materially material do Or X inventory that How that? less is worth? have? much million WiFi a that Is amount? $XX than you it Is

Kevin Rhodes

No, $XXX we I that not huge think less. would it's it's million It's a -- not say of have. I that or the amount

Christian Schwab

aspirational kind new guess rate, revenue do I that is the Henderson's to Mr. I million billion new Okay. of quarter. guess, then question. target near-term They a $X.X run right. -- Perfect. And the $XXX

to cautious through which sell. out figure blah. trying moving elongated pricing still spending, want competitiveness, blah, we're cycle, blah, Cisco 'XX they So sales Channel products to

kind that we year 'XX to Is market see fair? should $X.X plus -- assume conditions. billion of fiscal goal So depending is our

Kevin Rhodes

in come that I end a 'XX, still tailwind fiscal into back terms this for positive we're a that of And of a at to digestion maybe that And a happen to and normal, back couple to industry here is point.Obviously, our in our mean, that at ifs question, couple $XXX the back generates as of being QX year going year start XXXX think personally into will in is fiscal of we obviously, -- calendar point, marketplace think perspective. the at On into few quarters start QX, -- a not The a it channel from and to lower of to million if coming January being order range quarters. entire higher the should to quarters normalized and get through the get see the us normal. it, cycle, lot we'll end big from get there's then that when right. quarters does our least, I some that's year.I we activity more in getting QX and company then that what a QX, seasonality once

normal. get a slight so, out. once And those in and that's you'll we expansion quarters back to quarters going new we a contraction few the be But have think to

Christian Schwab

do running at should to that we the there, in OpEx we run be is. But it we then rate minus is should is appropriate you'll I right Edward And minus? $X.X is, $XXX the question million get exactly my or and last how that billion plus to plus assuming the a still million to support number drive recovery revenue, OpEx assume forget rate. be when that $XXX run or

Edward Meyercord

ebb I in flow. think mean, are we're I events right, and will that instance, quarters the I kind Yes. there pocket that that a mean, I for at in them in looking And of that other -- make just so QX, what time. have, other think OpEx it's

I in future. will current rate We quarter. for some future at the expenses for have, the the some and in point in for that instance, come would run coming say But the increases expected merit now, that's other

Operator

back hand program any to further conclude the remarks. I'd session of to program. question-and-answer for Meyercord Ed does the This like today's

Edward Meyercord

for to Okay, thank to a here, all I a we the in we period in interest you. the our week time shout call. through and out appreciate the all questions everybody Connect.We're in going joining customers also challenging partners engagement employees and -- And here. and want Extreme for participating the work, in of the lot last and have especially

say and In what terms of would to the we're industry I do. in the and we're And excited rebound, I rebounding. would our about to the position return say, to normalcy be going able

you road. for forward to the and So look thank participating, seeing all. you Thanks on

Operator

participation This conclude you, conference. the in your does program. and Thank gentlemen for ladies today's

day. now You Good disconnect. may

Extreme Networks (EXTR) 1 May 242024 Q3 Earnings call transcript