So what we're seeing is that from a campus perspective, campus networks are alive and well, but they're just more distributed. And then, what happened this year, which is different from years past, is that the government, the USAC started sending out funding letters earlier than usual. But right now, the table is set as far as our cost structure. I am confident that Extreme will weather this challenge and emerge from this as a stronger and more cohesive company. The increase in our marketing productivity during COVID is only giving us confidence in our ability to grow and take share. And those are two kind of primary competitors that we run into. That's where we get new logos. So it's easier to attend. Status quo vendors are not offering this solution, but Extreme is uniquely positioned in this regard. We're seeing that starting to open back up again depending on where you are in the world. Our next question comes from the line of Ryan Meyers from Lake Street Capital. Some people are taking advantage of this environment where they might have empty schools or empty courthouses, like the example that I used, to actually undertake a network upgrade because it's a good time to upgrade your network. So we don't have any accelerated buying baked into our plan. And then lastly, I just want to clarify. Woo Jin Ho -- Bloomberg Intelligence -- Analyst. All in all, our sellers are off to a great start to fiscal '21. But currently, it was neutral in Q4, and we have that outlook for this quarter. And that means that going forward, our sells in and sells out are more closely correlated. Act 0.14 Est 0.127 Q2 2018 Extreme Networks, Inc. Earnings Call 02/06/2018 05:00 PM (EST) EXTR. Stock Advisor launched in February of 2002. This is where we've been playing. If I can just ask you about the verticals here where you're seeing strength in government and education that you mentioned, how should I think about the sustainability of this higher demand that you're seeing, given that you just mentioned that they are sometimes, particularly for the education sector, they're using the opportunity for students not being on the campus, etc. And the answer is yes. Thank you. And then in your prepared remarks, you had mentioned something along the lines of the potential for a shrinking corporate enterprise still being an opportunity for the campus switching market. Well, yes, there are So the answer is and we put on the slides where we have our sports and entertainment. And the they've come back. Please go ahead, sir. So services have been very strong in healthcare. In response to weaker demand owing to the macroeconomic impact of COVID-19, we'd promptly implemented a number of liquidity and cost control measures during Q3, including: tightening control on discretionary spending, hiring and working capital; drawing down $55 million of our $75 million revolving credit facility; implementing interest rate swap contracts on slightly more than half of the outstanding Term Loan A debt principle; securing a waiver of the covenants pertaining to our Term Loan A due 2024 through March 31, 2021, an extension from the previously negotiated July 31, 2020 time frame; and finally, accelerating actions the company was planning to take to improve R&D and sales productivity, along with cost reductions in supply chain and operations. And industry analysts are already calling that migration, but we think that what's going on here has been an accelerant. And we are the only company that offers public, private or on-prem deployments. It's been amended already, and we came to a successful conclusion last Friday with the unanimous approval from all of the banks in the lending group. Germany is getting back to work and is aided by strong stimulus package and easing of procurement requirements of public sector. And we had significant state and local government and education wins, including a multimillion-dollar network deployment at Jefferson County Public School system in Kentucky, the 29th largest system in the U.S., enabling digital learning tools and application for 169 schools. And by the way, I just wanted to say thank you very much for the slide deck with the key performance and vertical trends. So three-month LIBOR is at 25 basis points. So you don't need an IT person in a retail store, for example, to replace access point number 39 with a new access point, ship the old one back to get repaired. Okay. Great. If we generated $220 million in Q4 fiscal 2020, we would be at breakeven on a net income basis, on a non-GAAP basis. We call it hospitality is like 5% of revenue number. And we have been in a position for us to shrink our inventory with our distributors. And from a distributed point of view, you're going to have workers working from home or working from different locations. Now I will turn the call over to Extreme Networks' President and CEO Ed Meyercord. So that if you're administering a network, all of a sudden, you have a cloud platform that's incredibly easy to manage a distributed environment. So you've got edge all the way to the core where you have that management capability. In response to our customer needs, we've rolled out a rapid outdoor connectivity kit to help hospitals and other organizations swiftly extend secure wireless connectivity to pop-up sites in support of quarantine, testing and patient care. Key highlights during the quarter were completing the integration of Aerohive on April six and migrating all systems and processes to Extreme systems while operating remotely across most of our locations, executing on a new R&D model to drive feature and solution velocity that has been in the works since we reorganized engineering leadership at the end of Q1. Here are five of many milestones we achieved during the quarter: one, we had strong adoption of our cloud, 42% sequential growth in new subscription bookings and 8.5% sequential growth in our managed devices to $1.1 million. I'll take a shot and then, Remi, I'll let you you can come in behind me. So are you seeing the full benefit of your cuts in the fourth quarter? Now that we're almost done with the entire product refresh. Networking infrastructure remains vital for our customers, and demand remains strong. In our end, what we're looking at is something what we talk about is a more distributed workplace and maybe a more flexible environment. Finally, we estimate that the net impact of tariff was a negative 210 basis points, up from 150 basis points last quarter as much of our inventory sold during the quarter was purchased under 15% List 4A tariffs prior to the mid-February reduction to 7.5% on wireless access points and optics. That's helpful. With me today are Extreme Networks' President and CEO, Ed Meyercord; and CFO, Remi Thomas. Total product revenue in Q3 was $136.5 million, and our total product book-to-bill ratio was approximately 1.2. And a lot of we obviously represent the networking space. This quarterly report represents an earnings surprise of 28.57%. And obviously, as we continue to build our funnel, hopefully, we can give a more encouraging message, but it makes a lot of sense. Nearly 17,000 healthcare administrators across 30 locations will deliver telehealth services and collect data from remote medical devices from ExtremeCloud IQ. And so any as far as any kind of concerns from a health perspective, they've been quite healthy. And I mentioned leveling the playing field. And so it places more challenges on a distributed edge. And we are committed to bringing effortless to the channel as well. Any sense of how you want us to think about that relative to -- obviously, a more constructive tone than what I think some people were expecting coming into the print. Is that is the best way to think about that, that's kind of where you want to position your business and you see demand coming back to that level at a minimum? So we've still seen strength in our government education business, which that's our largest vertical. And at this stage, production issues are a complete nonissue for us. See you at the top! Historical Aerohive Networks Information. Do the numbers hold clues to what lies ahead for the stock? We feel like with all of the stimulus package that's been introduced, we might see accelerated funding. Okay. Four, we restructured our R&D organization under our talented Chief Product Officer Nabil Bukhari and recently added CTO to his title, so he can focus on next-gen technology innovation, bolstering our thought leadership in the industry and strengthening our strategic customer relationships. So some of the cost benefits that we're getting on a temporary basis won't happen again in Q1. We caution you not to put undue reliance on these forward-looking statements as they involve risks and uncertainties that can cause actual results to differ materially from those anticipated by these statements as described in our risk factors in our 10-K report for the period ending June 30, 2019, filed with the SEC and in our more recent 8-K and 10-Q filings. And we talked about how we created a strategic motion in the field. Extreme Networks (EXTR) delivered earnings and revenue surprises of 28.57% and 0.47%, respectively, for the quarter ended September 2020. And all of this intelligence, we're capturing and we just came out with unlimited data. Thank you. Extreme is the only provider in the industry to offer cloud choice and unlimited data and the first to bring end-to-end fabric management into the cloud. Stock Advisor launched in February of 2002. In acquiring Aerohive in August, we took the next step in our strategy, and we are seeing the proof points of that with an inflection in the market of customers wanting to move to cloud-based networking. So it's putting more emphasis on external connections, securing applications out to the edge and distributed networks and then still being able to provide security and the quality of service out on the edge. And as far as tax is concerned, we typically guided that at around $2 million in the quarter or $8 million for the full year, and that's mostly state and local taxes and taxes in some of the countries that we operate outside the U.S., specifically, Ireland, which is our second tax principle. Act 0.16 Est 0.212 Q3 2018 Extreme Networks, Inc. Earnings Call 05/08/2018 04:30 PM (EDT) EXTR. And then, for investors, I encourage all of you to attend our upcoming Connect Conference, which is September 16 and 17. Your line is now open. At around $6 million a quarter or $24 million for the year as a whole. Fahad Najam -- Cowen and Company -- Analyst. So that's it. So we feel like it's going to be a gradual recovery. And outside the U.S., we won several multimillion-dollar deals with education systems in Germany and Japan, driven by ExtremeCloud IQ. So that's an impact that we factor in, in our cost of goods sold. Stan Kovler - Vice President of Corporate Strategy and Investor Relations I'll just give you at a high level, and I can only give you a range. And it's all about cloud, and it's all about the ease of deploying secure networks. As Ed noted, we're temporarily suspending our Q4 2020 outlook. So that means that you should be expecting our sales in and sales out revenue to be tightly correlated, i.e. read the report. So there's a I would say there's a lot of pent-up demand that would take place with retail, sports and entertainment, these kinds of customers that we have where they've paused or they've pushed out to the right, if you will, the opportunities. Thanks, everybody, who could join us on the call today. We also launched a new sales playbook platform that was built by sales, for sales and will empower every seller in our organization with very specific tools and training for their roles. And it would to your point about moving target, that will evolve as we enter in Q1 because we'll get the full benefit of some of the cost reduction actions that we're taking today. For a third consecutive year, Extreme Networks has been recognized as a Leader in the Gartner 2020 Magic Quadrant for Wired and Wireless LAN Access Infrastructure. Or does that $220 million breakeven level, does that apply to the first quarter because that's when you get the full benefit of the cuts? The $220 million breakeven, what assumption are you making on gross margins with that $220 million number? This has enabled us to lower our quarterly non-GAAP net income breakeven points to approximately $220 million in revenue as early as fiscal Q4 2020, all while further enhancing our financial flexibility. And then, second, I'll let you answer this question, and then I have another architectural question that I want to ask. It doesn't change the landscape at all for us. Our cash conversion cycle increased to 70 days from 59 days in Q3 and from 61 days in the year-ago quarter. Thank you for taking my question. We continue to book very large deals across the product portfolio, including healthcare, government, education, service provider, enterprise and other segments. We did in connection with the tariffs between U.S. and China, we did move production into Mexico. EPS of $0.13 misses by $-0.00 Revenue of $267.47M (5.85% Y/Y) misses by $-5.7M The following slide deck was published by Extreme Networks, Inc. in conjunction with their 2020 Q2 … First of all, we typically don't disclose revenue on a monthly basis. There were several deals that were pushed into Q4 from Q3, and we saw the same thing in Q4. Congrats on a good quarter. Advancing for Good 2020 Corporate Social Responsibility Report. Number two, regarding gross margins. Extreme Networks (EXTR) came out with quarterly earnings of $0.03 per share, beating the Zacks Consensus Estimate of a loss of $0.03 per share. And then, my last question has to do with gross margins. These changes will drive improved sales productivity, and we believe this customer-centric approach will also create more run rate business and stable business for Extreme and our partners as well. Remi, do you want to comment? OK. And then, lastly, has the pandemic made much of a difference from a competitive dynamics perspective? Obviously, you guys would be driving to a different conclusion. And do you think something that would have been a two- to three-year type of strategy pull in a lot sooner? That's a good number. No. It's primarily access points today, Erik. Okay. Extreme Empower is already in production with the select group of distributors are very positive. We're not seeing anything that what I would describe as a normal competitive behavior. Alex, what I can share is that we haven't seen unusual behavior from them. The one observation that I would make is in the smaller deals and what we would call run rate business. As customers take a more holistic view of a unified work-from-home wired and wireless environment, the type of networking approach extreme can offer managed from either the cloud or on-premise will proliferate. And it's put our healthcare customers under pressure when non-essential or non-necessary procedures have been delayed or postponed in response to COVID. That, too, has been growing, and demand has been strong. In April alone, we added over 20,000 new devices or management, and daily traffic has grown 50% in our management application since the pandemic began and 60% since last quarter, reducing opex with a strategic realignment of both our R&D and our go-to-market organizations and in order to lower our net income breakeven point to $220 million in revenue. Market data powered by FactSet and Web Financial Group. Obviously, we're hoping that as we see the recovery, we can do better than that. It's unprecedented what we are seeing. I was looking at the expectations on the street. And I would say, nothing unusual or nothing out of the ordinary as far as the competitive landscape from that standpoint. With $196 million of cash on hand at the end of Q3, we're well funded and have ample liquidity to work through these challenging times. Just a couple of environment or sales environment questions. I mean, we've -- it's a very predictable transaction and HPE -- it was a smart move for HPE to buy them. So the second-related question is, do you foresee an opportunity for extreme in terms of developing applications that kind of help enterprises in four social distancing rules, right? Q1 GAAP operating expenses are expected to be in the range of $131.1 to $135.1 million and non-GAAP opex in the range of $120.6 million to $124.6 million. Can you help us understand either from a mix standpoint or a revenue standpoint what it would take for us to be at 60% plus type of gross margins? And networks are becoming more and more about data. I think everyone is responding to the new normal. And so from our standpoint, we have a much simpler licensing platform, and we think we're going to be able to make it easier for people to move to our cloud than the Meraki cloud. Great. The strong quarter-over-quarter recovery in our bottom line was a result of higher revenue and a material reduction in our costs and expenses. Our sales teams are stepping up in a big way. The whole exercise took less than an hour. The company had revenue of $215.50 million during the quarter, compared to analysts' expectations of $212.68 million. And then we do see some savings as well in G&A, but much, much lower. This compares to earnings of $0.06 per share a year ago. The comment about the universal products being available and taking orders for it. Our next question comes from the line of Dave Kang from B. Riley. We're more relevant now than we've ever been because of how we can provide superior solutions to the other players that are out there in the cloud space. Extreme Networks had a negative return on equity of 59.45% and a … We are living in unprecedented times, and I want to thank our customers and partners for their resilience and support. And your we think that this is something that will be an accelerant to migration to cloud. Is that to say that the existing debt arrangement is no longer being amended? It's been truly amazing to see how our customers teams across all our industry verticals, facing unprecedented challenges, are responding with creative and innovative solutions to deliver enterprise applications end users with secure and high-quality connections across new distributed networks. This enables customers to migrate to new cloud-managed switching and WiFi, agnostic of the existing networking or wireless equipment they already have installed. Retail, transportation, logistics there, it's been somewhat mixed for us. Obviously, grocers, these kinds of retailers are still strong. But we do expect but certainly, the nonrecurrence of that $4.5 million excess in obsolete inventory writedown to help us. So you can go back and you can look, as soon as you get on our cloud, you have the entire network captured, everything that happened in that network captured. Hi, good afternoon. Non-GAAP earnings per share was a loss of $0.14, impacted by the revenue shortfall as well as a non-GAAP gross margin of 56.7%, low relative to our recent performance, only partially offset by tight control of operating expenses. With that, I will now turn it over to the operator to begin the question-and-answer session. So that's kind of an overlay of our different verticals and where we're playing from a customer perspective. We have -- when you go into our cloud, we can actually follow a device. And your next question comes from the line of Eric Martinuzzi with Lake Street. We're all about effortless and making it easy. And then, our switches are coming out in the November time frame. Okay. The U.K. is somewhat behind the curve. ET Prepared … Is that driving some of your customers to -- and particularly, if I look outside the two verticals that are strong, if I look at a general kind of overall enterprise spending, is that driving customers to give you more visibility in terms of their pipeline than you would have ideally at this time, maybe last year? Our customers are experiencing a shift in use cases. We're seeing and we are being included in new opportunities, and we have the ability to up level and differentiate ourselves given our cloud and given us focus now on networking as a strategic asset and understanding -- a platform to understand what's going on in your enterprise from data. A large medical center is unveiling a state-of-the-art 1.5 million square foot 17-story hospital with 500 private patient rooms and 47 operating suites. Okay. Great. And so from a demand perspective, that hasn't changed. Great, thank you for taking my question. Ed, how much of the purchasing delays from last quarter reflect on this quarter's result? Free cash flow was $2 million, down from $17.9 million in Q2 and $12.7 million in the year ago quarter. Or is that too much extrapolation of the book-to-bill number? Extreme Networks (EXTR) delivered earnings and revenue surprises of 200.00% and 1.21%, respectively, for the quarter ended June 2020. Cumulative Growth of a $10,000 Investment in Stock Advisor, Extreme Networks (EXTR) Q4 2020 Earnings Call Transcript @themotleyfool #stocks $EXTR, Extreme Networks (EXTR) Q1 2021 Earnings Call Transcript, Here's What Made Extreme Networks Stock Pop Today, Why Extreme Networks Dropped 15% in February, Why 5G Could Be Crucial for Extreme Networks, Copyright, Trademark and Patent Information. That curve is really if we assume that as Ed mentioned, we're not seeing any major change in competitive behavior from our competitors. OK, thanks, Gigi. It's been a challenging time for all of us as individuals, as organizations, as we adapt to the COVID-19 environment, and we figure out and navigate the future of work and what the new normal is going to look like. So we have a branch solution. In realigning our go-to-market organization, we have taken down silos, and we are fostering teamwork in the field where all commission salespeople will have a targeted number and a common goal. This is the power of ExtremeCloud IQ. And what are you seeing on that front? We haven't seen a specific competitive response by any of our competitors in the networking, solely focused on the networking space. We're the only one that offers it. So the other question I wanted to address was just below the line. I would say, as far as our competitive landscape, we continue we go head-to-head with Cisco and HPE. So this is something that is giving us opportunities. This resulted in an operating margin of 5.2% versus an operating margin loss of 5.1% in Q3 and up from an operating margin of 4.9% in the year-ago quarter. Finally, we're now participating in both the Japanese and German versions of E-Rate type program for schools and are making good progress. So is that to say that your June quarter should not be adversely affected by the supply chain? So we see ourselves between $115 million to $120 million. If you heard my comments, some of the stats that I mentioned around marketing. Remi, do you want to add anything to that? Following Q3, our trends in Northern Asia appear back on track in regions such as Korea and Japan. Yes. I would just I would add one point to that, which is we've run a variety of different scenarios. Now it's not July 31. So our breakeven in Q4 is $220 million on a net income basis, non-GAAP, and that's not necessarily that we aim to be at $220 million.
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