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  • 2 February 2010 14:21

Extreme Networks exceeds revenue guidance for quarter

Company reports 27 per cent sequential product revenue growth

SYDNEY, February 2, 2010 – Extreme Networks, Inc. (Nasdaq: EXTR) has announced financial results for its 2010 fiscal second quarter ended December 27, 2009. For the quarter, net revenue was $79.4 million, above the guidance for the quarter of $76 to $78 million.

This represents a sequential increase in revenue of roughly 20 percent compared to revenue of $66.3 million in the previous quarter and approximately a 9 percent decrease compared to revenue of $ 87.5 million in the second quarter of last year.

Second quarter non-GAAP operating income was $4.3 million or 5.4 percent of net revenue, compared to $2.6 million or 3.0 percent of net revenue in the second quarter of last year.

Additionally, non-GAAP net income was $4.8 million or $0.05 per diluted share, compared to non-GAAP net income of $3.5 million or $0.04 per diluted share in the second quarter of last year. Non-GAAP financial results exclude the impact of stock-based compensation and restructuring charges. A reconciliation of GAAP to non-GAAP financial measures is included in the accompanying financial tables.

“Operating under a simpler and more functional structure, we worked with our suppliers to resolve supply chain constraints and improved operational execution across the company,” said Bob L. Corey, CFO and acting President & CEO of Extreme Networks. “In early December, we announced our Data Center vision to help Customers migrate from the physical to the virtual to the cloud, all without forcing a technology or operating methodology on the Customer. In January, we announced the most current additions to our Data Center product line, the Black Diamond 8900 XL modules and the X480 stackable switches, both of which are expected to be available in Q3.”

For the second quarter, net revenue in North America was $27.5 million, revenue in EMEA was $37.8 million, and revenue in APAC was $14.1 million. That compares to revenue of $26.9 million in North America, $ 28.1 million in EMEA, and $11.4 million in APAC in the previous quarter.

Net loss on a GAAP basis for the second quarter was $1.4 million or $0.02 per diluted share, which included a restructuring charge of $4.1 million and a charge of approximately $2.0 million related to stock based compensation. The net loss this quarter of $1.4 million compares to net income of $2.5 million or $0.03 per diluted share in the second quarter of last year. Operating loss on a GAAP basis for the second quarter was $1.9 million, compared to operating income of $1.6 million for the second quarter of last year.

Non-GAAP Financial Measures Extreme Networks provides all financial information required in accordance with generally accepted accounting principles (GAAP). To supplement our consolidated financial statements presented in accordance with GAAP, we are also providing with this press release non-GAAP net income. In preparing our non-GAAP information, we have excluded, where applicable, the impact of restructuring charges (a non-recurring charge) and share-based compensation (a non-cash charge). Because of the non-recurring and/or non-cash nature of these charges, we believe that excluding them provides both management and investors with additional insight into our current operations, the trends affecting the Company and the Company’s marketplace performance. In particular, management finds it useful to exclude these charges in order to more readily correlate the Company’s operating activities with the Company’s ability to generate cash from operations. Accordingly, management uses these non-GAAP measures, along with the comparable GAAP information, in evaluating our historical performance and in planning our future business activities. Please note that our non-GAAP measures may be different than those used by other companies. The additional non-GAAP financial information we present should be considered in conjunction with, and not as a substitute for, our financial information presented in accordance with GAAP. We have provided a non-GAAP reconciliation of the Consolidated Statement of Operations for the periods presented in this release, which are adjusted to exclude restructuring charges and share-based compensation expense for these periods. These measures should only be used to evaluate the Company’s results of operations in conjunction with the corresponding GAAP measures for comparable financial information and understanding of the Company’s ongoing performance as a business. Extreme Networks uses both GAAP and non-GAAP measures to evaluate and manage its operations.

Extreme Networks, Inc. Extreme Networks provides converged Ethernet network infrastructure that support data, voice and video for enterprises and service providers. The company's network solutions feature high performance, high availability and scalable switching solutions that enable organizations to address real-world communications challenges and opportunities. Operating in more than 50 countries, Extreme Networks provides wired and wireless secure LANs, data center infrastructure and Service Provider Ethernet transport solutions that are complemented by global, 24x7 service and support. For more information, visit: http://www.extremenetworks.com

Extreme Networks is either a trademark or registered trademark of Extreme Networks, Inc. in the United States and/or other countries.

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This announcement contains forward-looking statements that involve risks and uncertainties, including statements regarding the Company’s financial performance and supply chain constraints. Actual results could differ materially from those projected in the forward-looking statements as a result of certain risk factors, including, but not limited to: a challenging macro-economic environment both in the United States and overseas; fluctuations in demand for the Company’s products and services; a highly competitive business environment for network switching equipment; its effectiveness in controlling expenses, the possibility that the Company might experience delays in the development of new technology and products; customer response to its new technology and products; the timing of any recovery in the global economy; risks related to pending or future litigation, and a dependency on third parties for certain components and for the manufacturing of the Company’s products. The Company undertakes no obligation to update the forward-looking information in this release. More information about potential factors that could affect the Company’s business and financial results is included in its filings with the Securities and Exchange Commission, including, without limitation, under the captions: “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Risk Factors,” which are on file with the Securities and Exchange Commission.”

For more information

David Frost PR Deadlines P/L, for Extreme Networks Phone; +61.2.4341 5021 Email: davidf@prdeadlines.com.au

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