SAN JOSE, Calif., Jan. 28, 2016 /PRNewswire/ -- Extreme
Networks, Inc. (Nasdaq: EXTR) today released financial results for
its fiscal second quarter ended December
31, 2015. Second quarter GAAP revenue was $139.3 million and non-GAAP revenue was
$139.7 million. GAAP net loss
for the second fiscal quarter was $7.2
million, or $0.07 per basic
share, and non-GAAP net income was $9.0
million, or $0.09 per diluted
share.
"We delivered another quarter of strong results across all
geographies reflecting the continued success of our go-to-market
strategy," stated Ed Meyercord,
President and CEO of Extreme Networks. "Revenue growth in the
US was driven by strength in education with the expected rebound in
E-Rate business, while EMEA generated strong results with
government and manufacturing customers," said Meyercord. "In
addition, our continued focus on controlling costs has delivered
significant operating and net income expansion year over
year."
"Now that we've laid the groundwork over the past two quarters,"
Meyercord continued, "we are concentrating our efforts on new
product introductions and executing our solutions-based selling
initiatives in our target vertical markets. With better
visibility into our pipeline and strong business momentum, we are
projecting year over year growth for the March quarter."
Recent Key Events:
- Unveiled First Flow-based 802.11ac Wave 2 Wireless
Solution. During the quarter, we expanded our wireless
portfolio with high-density 802.11ac Wave 2 access points (APs) to
address the network demands driven by mobility, smart devices and
the rapidly expanding wireless enabled Internet of Things.
- Enhanced Partner Program. To further empower and
reward our channel partners, we announced several enhancements to
the Extreme Partner Network (EPN) aimed at delivering increased
predictability, expanded training and solution-based incentive
programs. We also announced two new ExtremeWorks Managed Services
offerings to allow partners to take advantage of new consumption
models while evolving their businesses to be better positioned for
future opportunities.
- Integrations with VMware. To accelerate the
adoption of the Software-Defined Data Center (SDDC) for SMBs and
enterprises, we announced extended integration offerings with
VMware to deliver IT management and analytics solutions. As part of
the collaboration, our NetSight advanced network management system
is now integrated with the VMware vRealize® Suite.
- Key Customer Wins in Focus Markets. Extreme Networks
continued to showcase customer momentum across the global
education, healthcare, manufacturing, sports and entertainment, and
government markets. Notable Customer wins include the
Matanuska-Susitna Borough School District, Royal Bolton NHS Trust,
Instituto Nacional de Antropologia e Historia, Becker Stahl-Service
GmbH, SAK Holdings, Comision Reguladora de Energia,Twin Rivers
Unified School District. In addition, Extreme was awarded NRG
Stadium, Home of the Houston Texans and Super Bowl LI.
Fiscal Q2 2016
Financial Metrics:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
Change
|
GAAP Net
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product
|
|
$
|
105.4
|
|
|
$
|
112.5
|
|
|
$
|
(7.1)
|
|
(6)%
|
Service
|
|
|
34.0
|
|
|
|
34.7
|
|
|
|
(0.8)
|
|
(2)%
|
Total Net
Revenue
|
|
$
|
139.3
|
|
|
$
|
147.2
|
|
|
$
|
(7.9)
|
|
(5)%
|
Gross
Margin
|
|
|
50.4%
|
|
|
|
51.1%
|
|
|
|
(.7)%
|
|
(1)%
|
Operating
Loss
|
|
|
(3.8)%
|
|
|
|
(7.5)%
|
|
|
|
3.7%
|
|
(49)%
|
Net Loss
|
|
$
|
(7.2)
|
|
|
$
|
(13.1)
|
|
|
$
|
5.9
|
|
(45)%
|
Loss per basic
share
|
|
$
|
(0.07)
|
|
|
$
|
(0.13)
|
|
|
$
|
0.06
|
|
(46)%
|
Non-GAAP Net
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product
|
|
$
|
105.4
|
|
|
$
|
112.5
|
|
|
$
|
(7.1)
|
|
(6)%
|
Service
|
|
|
34.3
|
|
|
|
35.5
|
|
|
|
(1.2)
|
|
(3)%
|
Total Net
Revenue
|
|
$
|
139.7
|
|
|
$
|
148.0
|
|
|
$
|
(8.3)
|
|
(6)%
|
Gross
Margin
|
|
|
53.6%
|
|
|
|
54.6%
|
|
|
|
(1.0)%
|
|
(2)%
|
Operating
Margin
|
|
|
7.8%
|
|
|
|
4.5%
|
|
|
|
3.3%
|
|
72%
|
Net Income
|
|
$
|
9.0
|
|
|
$
|
4.7
|
|
|
$
|
4.3
|
|
91%
|
Earnings per diluted
share
|
|
$
|
0.09
|
|
|
$
|
0.05
|
|
|
$
|
0.04
|
|
71%
|
|
|
•
|
Cash and investments
ended the quarter at $85.9 million, as compared to $82.0 million
from the prior quarter.
|
•
|
Accounts receivable
balance ending Q2 was $73.1 million, with days sales outstanding
(DSO) of 48.
|
•
|
Inventory ending Q2
was $56.6 million, a decrease of $5.1 million from the prior
quarter.
|
Business Outlook:
For its third quarter of fiscal 2016 ending March 31, 2016, the Company is targeting GAAP
revenue in a range of $117.6 million to
$127.6 million with non-GAAP revenue in a range of
$118.0 million to $128.0 million.
GAAP gross margin is targeted between 49.9% and 51.2% and non-GAAP
gross margin targeted between 53.5% and 54.5%. Operating expenses
are targeted to be between $69.5 million and
$72.0 million on a GAAP basis and $62.0 million to $64.5 million on a non-GAAP
basis. GAAP net loss is targeted to be between $9.0 million to $13.0 million, or $0.09 to $0.13 per
share. Non-GAAP earnings are targeted in a range of a net
loss of $1.0 million to net income of
$3.0 million, or a loss of
$0.01 to net income of $0.03 per diluted share. The GAAP and non-GAAP
net income (loss) targets are based on an estimated 103 million and
106 million average outstanding shares, respectively. Targeted
non-GAAP earnings exclude expenses related to stock-based
compensation expense, the amortization of acquired intangibles,
acquisition and integration related expenses, restructuring
expenses, litigation expenses, overhead adjustments and the
purchase accounting adjustment related to deferred service
revenue.
Conference Call:
Extreme Networks will host a conference call at 8:00 a.m. Eastern (5:00
a.m. Pacific) today to review the second fiscal quarter
results and third fiscal quarter 2016 business outlook, including
significant factors and assumptions underlying the targets noted
above. The conference call will be available to the public through
a live audio web broadcast via the Internet at
http://investor.extremenetworks.com and a replay of the call will
be available on the website through October
28, 2016. The conference call may also be
heard by dialing 1-877-303-9826 (international callers dial
1-224-357-2194). Supplemental financial information to be discussed
during the conference call will be posted in the Investor Relations
section of the Company's website www.extremenetworks.com including
the non-GAAP reconciliation attached to this press release. The
encore recording can be accessed by dialing (855) 859-2056 /or
international 1 (404) 537-3406; Conference ID #:21560759.
About Extreme Networks:
Extreme Networks, Inc. (EXTR) delivers software-driven
networking solutions that help IT departments everywhere deliver
the ultimate business outcome: stronger connections with customers,
partners and employees. Wired to wireless, desktop to datacenter,
we go to extreme measures for our 20,000-plus customers in more
than 80 countries, delivering 100% insourced support to
organizations large and small, including some of the world's
leading names in business, education, government, healthcare,
manufacturing and hospitality. Founded in 1996, Extreme is
headquartered in San Jose,
California. For more information, visit Extreme's website or
call 1-888-257-3000.
Extreme Networks and the Extreme Networks logo,
ExtremeWireless, ExtremeControl and ExtremeAnalytics are either
trademarks or registered trademarks of Extreme Networks,
Inc. in the United States and/or other
countries.
Non-GAAP Financial Measures:
Extreme Networks provides all financial information required in
accordance with generally accepted accounting principles (GAAP).
The Company is providing with this press release non-GAAP revenue,
non-GAAP gross margins, non-GAAP operating expenses, and non-GAAP
income (loss) per share. In preparing non-GAAP information, the
Company has excluded, where applicable, the impact of acquisition
and integration costs, purchase accounting adjustments,
amortization of acquired intangibles, restructuring charges,
litigation expenses, share-based compensation and overhead
adjustments. The Company believes that excluding these items
provides both management and investors with additional insight into
its current operations, the trends affecting the Company, the
Company's marketplace performance, and the Company's ability to
generate cash from operations. Please note that the Company's
non-GAAP measures may be different than those used by other
companies. The additional non-GAAP financial information the
Company presents should be considered in conjunction with, and not
as a substitute for, the Company's GAAP financial
information. The Company has provided a non-GAAP
reconciliation of the results for the periods presented in this
release, which are adjusted to exclude certain items as
indicated. 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.
Forward Looking Statements:
Statements in this release, including those concerning the
Company's business prospects, future financial and operating
results, and overall future prospects are forward-looking
statements within the meaning of the "safe harbor" provisions of
the Private Securities Litigation Reform Act of 1995. These
forward-looking statements speak only as of the date of this
release. Actual results or events could differ materially from
those anticipated in those forward-looking statements as a result
of certain factors, including: failure to achieve targeted revenues
and forecast demand from end customers, increased price
competition, ongoing uncertainty in global economic
conditions, infrastructure development or customer demand,
collectability of receivables, the ability to meet current
financial covenants, dependencies on third parties to
manufacture our products, delays in development and
commercialization of products under development, and ongoing
litigation.
More information about potential factors that could affect the
Company's business and financial results is included in the
Company's 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". Except as required under the
U.S. federal securities laws and the rules and regulations of
the U.S. Securities and Exchange Commission, Extreme
Networks disclaims any obligation to update any
forward-looking statements after the date of this release, whether
as a result of new information, future events, developments,
changes in assumptions or otherwise.
EXTREME NETWORKS,
INC.
CONDENSED
CONSOLIDATED BALANCE SHEETS (In
thousands) (Unaudited)
|
|
|
|
|
|
|
|
|
|
December 31,
2015
|
|
|
June 30,
2015
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
85,865
|
|
|
$
|
76,225
|
|
Accounts receivable,
net of allowances of $6,464 at December 31, 2015 and $2,396 at June
30, 2015
|
|
|
73,110
|
|
|
|
92,737
|
|
Inventories
|
|
|
56,601
|
|
|
|
58,014
|
|
Deferred income
taxes
|
|
|
705
|
|
|
|
760
|
|
Prepaid expenses and
other current assets
|
|
|
9,925
|
|
|
|
10,258
|
|
Total current
assets
|
|
|
226,206
|
|
|
|
237,994
|
|
Property and
equipment, net
|
|
|
32,948
|
|
|
|
39,862
|
|
Intangible assets,
net
|
|
|
35,138
|
|
|
|
52,132
|
|
Goodwill
|
|
|
70,877
|
|
|
|
70,877
|
|
Other
assets
|
|
|
27,618
|
|
|
|
27,795
|
|
Total
assets
|
|
$
|
392,787
|
|
|
$
|
428,660
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Current portion of
long-term debt
|
|
$
|
14,625
|
|
|
$
|
11,375
|
|
Accounts
payable
|
|
|
25,536
|
|
|
|
40,135
|
|
Accrued compensation
and benefits
|
|
|
28,995
|
|
|
|
25,195
|
|
Accrued
warranty
|
|
|
10,415
|
|
|
|
8,676
|
|
Deferred revenue,
net
|
|
|
75,548
|
|
|
|
76,551
|
|
Deferred distributors
revenue, net of cost of sales to distributors
|
|
|
31,677
|
|
|
|
40,875
|
|
Other accrued
liabilities
|
|
|
29,968
|
|
|
|
32,623
|
|
Total current
liabilities
|
|
|
216,764
|
|
|
|
235,430
|
|
Deferred revenue,
less current portion
|
|
|
21,505
|
|
|
|
23,231
|
|
Long-term debt, less
current portion
|
|
|
47,375
|
|
|
|
55,500
|
|
Deferred income
taxes
|
|
|
3,471
|
|
|
|
2,979
|
|
Other long-term
liabilities
|
|
|
8,536
|
|
|
|
7,285
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
|
Stockholders'
equity
|
|
|
95,136
|
|
|
|
104,235
|
|
Total liabilities and
stockholders' equity
|
|
$
|
392,787
|
|
|
$
|
428,660
|
|
EXTREME NETWORKS,
INC.
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands,
except per share amounts) (Unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
Six Months
Ended
|
|
|
|
December 31,
2015
|
|
|
December 31,
2014
|
|
|
December 31,
2015
|
|
|
December 31,
2014
|
|
Net
revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product
|
|
$
|
105,355
|
|
|
$
|
112,501
|
|
|
$
|
196,736
|
|
|
$
|
215,173
|
|
Service
|
|
|
33,950
|
|
|
|
34,707
|
|
|
|
67,150
|
|
|
|
68,309
|
|
Total net
revenues
|
|
|
139,305
|
|
|
|
147,208
|
|
|
|
263,886
|
|
|
|
283,482
|
|
Cost of
revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product
|
|
|
57,103
|
|
|
|
60,496
|
|
|
|
104,037
|
|
|
|
114,521
|
|
Service
|
|
|
11,927
|
|
|
|
11,550
|
|
|
|
24,456
|
|
|
|
23,272
|
|
Total cost of
revenues
|
|
|
69,030
|
|
|
|
72,046
|
|
|
|
128,493
|
|
|
|
137,793
|
|
Gross
profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product
|
|
|
48,252
|
|
|
|
52,005
|
|
|
|
92,699
|
|
|
|
100,652
|
|
Service
|
|
|
22,023
|
|
|
|
23,157
|
|
|
|
42,694
|
|
|
|
45,037
|
|
Total gross
profit
|
|
|
70,275
|
|
|
|
75,162
|
|
|
|
135,393
|
|
|
|
145,689
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and
development
|
|
|
20,716
|
|
|
|
24,000
|
|
|
|
40,984
|
|
|
|
47,347
|
|
Sales and
marketing
|
|
|
37,058
|
|
|
|
43,971
|
|
|
|
73,120
|
|
|
|
88,750
|
|
General and
administrative
|
|
|
9,775
|
|
|
|
10,306
|
|
|
|
18,951
|
|
|
|
21,380
|
|
Acquisition and
integration costs
|
|
|
807
|
|
|
|
3,500
|
|
|
|
1,145
|
|
|
|
7,558
|
|
Restructuring charge,
net of reversals
|
|
|
3,031
|
|
|
|
—
|
|
|
|
8,634
|
|
|
|
—
|
|
Amortization of
intangibles
|
|
|
4,251
|
|
|
|
4,467
|
|
|
|
8,718
|
|
|
|
8,934
|
|
Total operating
expenses
|
|
|
75,638
|
|
|
|
86,244
|
|
|
|
151,552
|
|
|
|
173,969
|
|
Operating
loss
|
|
|
(5,363)
|
|
|
|
(11,082)
|
|
|
|
(16,159)
|
|
|
|
(28,280)
|
|
Interest
income
|
|
|
29
|
|
|
|
196
|
|
|
|
56
|
|
|
|
342
|
|
Interest
expense
|
|
|
(809)
|
|
|
|
(825)
|
|
|
|
(1,635)
|
|
|
|
(1,661)
|
|
Other income
(expense), net
|
|
|
112
|
|
|
|
(64)
|
|
|
|
1,079
|
|
|
|
(498)
|
|
Loss before income
taxes
|
|
|
(6,031)
|
|
|
|
(11,775)
|
|
|
|
(16,659)
|
|
|
|
(30,097)
|
|
Provision for income
taxes
|
|
|
1,203
|
|
|
|
1,330
|
|
|
|
2,101
|
|
|
|
2,338
|
|
Net loss
|
|
$
|
(7,234)
|
|
|
$
|
(13,105)
|
|
|
$
|
(18,760)
|
|
|
$
|
(32,435)
|
|
Basic and diluted net
loss per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share -
basic
|
|
$
|
(0.07)
|
|
|
$
|
(0.13)
|
|
|
$
|
(0.18)
|
|
|
$
|
(0.33)
|
|
Net loss per share -
diluted
|
|
$
|
(0.07)
|
|
|
$
|
(0.13)
|
|
|
$
|
(0.18)
|
|
|
$
|
(0.33)
|
|
Shares used in per
share calculation - basic
|
|
|
102,369
|
|
|
|
98,677
|
|
|
|
101,677
|
|
|
|
97,996
|
|
Shares used in per
share calculation - diluted
|
|
|
102,369
|
|
|
|
98,677
|
|
|
|
101,677
|
|
|
|
97,996
|
|
EXTREME NETWORKS,
INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
|
|
|
|
|
|
|
Six Months
Ended
|
|
|
|
December 31,
2015
|
|
|
December 31,
2014
|
|
Net cash provided
by operating activities
|
|
$
|
13,967
|
|
|
$
|
41,453
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
|
|
(1,409)
|
|
|
|
(3,962)
|
|
Proceeds from
maturities of investments and marketable securities
|
|
|
-
|
|
|
|
3,000
|
|
Proceeds from sales of
investments and marketable securities
|
|
|
-
|
|
|
|
9,051
|
|
Purchases of
intangible assets
|
|
|
-
|
|
|
|
(419)
|
|
Net cash (used in)
provided by investing activities
|
|
|
(1,409)
|
|
|
|
7,670
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
|
Borrowings under
Revolving Facility
|
|
|
15,000
|
|
|
|
24,000
|
|
Repayment of
debt
|
|
|
(19,875)
|
|
|
|
(56,438)
|
|
Proceeds from issuance
of common stock
|
|
|
2,330
|
|
|
|
1,722
|
|
Net cash used in
financing activities
|
|
|
(2,545)
|
|
|
|
(30,716)
|
|
|
|
|
|
|
|
|
|
|
Foreign currency
effect on cash
|
|
|
(373)
|
|
|
|
(2,625)
|
|
|
|
|
|
|
|
|
|
|
Net increase in
cash and cash equivalents
|
|
|
9,640
|
|
|
|
15,782
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents at beginning of period
|
|
|
76,225
|
|
|
|
73,190
|
|
Cash and cash
equivalents at end of period
|
|
$
|
85,865
|
|
|
$
|
88,972
|
|
Extreme Networks, Inc.
Non-GAAP
Measures of Financial Performance
To supplement the Company's consolidated financial statements
presented in accordance with generally accepted accounting
principles, ("GAAP"), Extreme Networks uses non-GAAP measures of
certain components of financial performance. These non-GAAP
measures include non-GAAP net income, non-GAAP earnings per diluted
share, non-GAAP gross margin, non-GAAP operating expenses and free
cash flow.
Reconciliation to the nearest GAAP measure of all historical
non-GAAP measures included in this press release can be found in
the tables included with this press release. In this press
release, Extreme Networks also presents its target for non-GAAP
expenses, which is expenses less stock based compensation expense,
acquisition and integration costs, purchase accounting adjustments,
amortization of intangibles, restructuring expenses and overhead
adjustments.
Non-GAAP measures presented in this press release are not in
accordance with or alternative measures prepared in accordance with
GAAP and may be different from non-GAAP measures used by other
companies. In addition, these non-GAAP measures are not based
on any comprehensive set of accounting rules or principles.
Non-GAAP measures have limitations in that they do not reflect all
of the amounts associated with Extreme Networks' results of
operations as determined in accordance with GAAP. These
non-GAAP measures should only be used to evaluate Extreme Networks'
results of operations in conjunction with the corresponding GAAP
measures.
Extreme Networks believes that these non-GAAP measures when
shown in conjunction with the corresponding GAAP measures enhance
investors' and management's overall understanding of the Company's
current financial performance and the Company's prospects for the
future, including cash flows available to pursue opportunities to
enhance shareholder value. In addition, because Extreme
Networks has historically reported certain non-GAAP results to
investors, the Company believes that the inclusion of non-GAAP
measures provides consistency in the Company's financial
reporting.
For its internal planning process, and as discussed further
below, Extreme Networks' management uses financial statements that
do not include stock-based compensation expense, acquisition and
integration costs, purchase accounting adjustments, amortization
of intangibles, restructuring expenses, litigation expenses
and overhead adjustments. Extreme Networks' management also
uses non-GAAP measures, in addition to the corresponding GAAP
measures, in reviewing the Company's financial results.
As described above, Extreme Networks excludes the following
items from one or more of its non-GAAP measures when
applicable.
Stock based compensation expense. This expense consists
of expenses for stock options, restricted stock and employee stock
purchases through its ESPP. Extreme Networks excludes stock
based compensation expenses from its non-GAAP measures primarily
because they are non-cash expenses that the Company does not
believe are reflective of ongoing cash requirement related to
operating results. Extreme Networks expects to incur stock-based
compensation expenses in future periods.
Acquisition and integration costs. Acquisition and
integration costs primarily consist of legal and professional fees,
severance costs, and other expenses related to the acquisition and
integration of Enterasys Inc. Extreme Networks excludes these
expenses since they result from an event that is outside the
ordinary course of continuing operations.
Amortization of intangibles. Amortization of
intangibles includes the monthly amortization expense of acquired
intangible assets such as developed technology, customer
relationships, trademarks and order backlog. The amortization
of the developed technology intangible is recorded in product cost
of goods sold, while the amortization for the other intangibles are
recorded in operating expenses. Extreme Networks excludes
these non-cash expenses since they result from an intangible asset
and for which the period expense does not impact the operations of
the business.
Purchase accounting adjustments relating to deferred
revenue. Purchase accounting adjustments relating to
deferred revenue consists of adjustments to the carrying value of
deferred revenue. We have recorded adjustments to the assumed
deferred revenue to reflect only a fulfillment margin and thereby
excluding the profit margin and revenue which would have been
incurred had Extreme Networks entered into the service contract
post-acquisition.
Restructuring expenses. Restructuring expenses primarily
consists of cash severance and termination benefits. Extreme
Networks excludes restructuring expenses since they result from
events that often occur outside of the ordinary course of
continuing operations. Extreme Networks expects to incur
restructuring expenses in future periods.
Litigation expenses. Litigation expenses consist of legal
and professional fees and expenses related to our on-going ligation
matter as a result of a securities laws class action lawsuit.
Overhead adjustments. Overhead adjustment relate to
service inventory overhead capitalization.
In addition to the non-GAAP measures discussed above, Extreme
Networks uses free cash flow as a measure of operating
performance. Free cash flow represents operating cash flows
less net purchase of property and equipment on a GAAP basis.
Extreme Networks considers free cash flows to be a liquidity
measure that provides useful information to management and
investors about the amount of cash generated by the business after
the purchases of property and equipment, which can then be used to,
among other things, invest in Extreme Networks business, make
strategic acquisitions, and strengthen the balance sheet. A
limitation of the utility of free cash flows as a measure of
financial performance is that it does not represent the total
increase or decrease in the Company's cash balance for the
period.
EXTREME NETWORKS,
INC.
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
GAAP TO NON-GAAP
RECONCILIATION
(In thousands,
except per share amounts)
(Unaudited)
|
|
|
|
|
|
Non-GAAP
Revenue
|
Three Months
Ended
|
|
|
Six Months
Ended
|
|
December 31,
2015
|
|
|
December 31,
2014
|
|
|
December 31,
2015
|
|
|
December 31,
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue - GAAP
Basis
|
$
|
139,305
|
|
|
$
|
147,208
|
|
|
$
|
263,886
|
|
|
$
|
283,482
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase
accounting adjustment
|
|
377
|
|
|
$
|
766
|
|
|
|
754
|
|
|
$
|
1,533
|
Revenue - Non-GAAP
Basis
|
$
|
139,682
|
|
|
$
|
147,974
|
|
|
$
|
264,640
|
|
|
$
|
285,015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Gross
Margin
|
Three Months
Ended
|
|
|
Six Months
Ended
|
|
December 31,
2015
|
|
|
December 31,
2014
|
|
|
December 31,
2015
|
|
|
December 31,
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit - GAAP
Basis
|
$
|
70,275
|
|
|
$
|
75,162
|
|
|
$
|
135,393
|
|
|
$
|
145,689
|
Gross margin - GAAP
Basis percentage
|
|
50.4%
|
|
|
|
51.1%
|
|
|
|
51.3%
|
|
|
|
51.4%
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
based compensation expense
|
|
554
|
|
|
|
574
|
|
|
|
1,216
|
|
|
|
1,121
|
Purchase
accounting adjustments
|
|
377
|
|
|
|
766
|
|
|
|
754
|
|
|
|
1,533
|
Amortization of intangibles
|
|
3,708
|
|
|
|
4,292
|
|
|
|
8,000
|
|
|
|
8,583
|
Service
inventory overhead capitalization
|
|
-
|
|
|
|
-
|
|
|
|
(1,493)
|
|
|
|
-
|
Gross profit -
Non-GAAP Basis
|
$
|
74,914
|
|
|
$
|
80,794
|
|
|
$
|
143,870
|
|
|
$
|
156,926
|
Gross margin -
Non-GAAP Basis percentage
|
|
53.6%
|
|
|
|
54.6%
|
|
|
|
54.4%
|
|
|
|
55.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Operating
Income
|
Three Months
Ended
|
|
|
Six Months
Ended
|
|
December 31,
2015
|
|
|
December 31,
2014
|
|
|
December 31,
2015
|
|
|
December 31,
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP operating
loss
|
$
|
(5,363)
|
|
|
$
|
(11,082)
|
|
|
$
|
(16,159)
|
|
|
$
|
(28,280)
|
GAAP operating loss
percentage
|
|
(3.8)%
|
|
|
|
(7.5)%
|
|
|
|
(6.1)%
|
|
|
|
(10.0)%
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
based compensation expense
|
|
3,945
|
|
|
|
4,750
|
|
|
|
8,616
|
|
|
|
9,563
|
Acquisition and integration costs
|
|
807
|
|
|
|
3,500
|
|
|
|
1,145
|
|
|
|
7,558
|
Restructuring
charge,net
of reversal
|
|
3,031
|
|
|
|
-
|
|
|
|
8,634
|
|
|
|
-
|
Amortization of intangibles
|
|
7,959
|
|
|
|
8,759
|
|
|
|
16,718
|
|
|
|
17,517
|
Purchase
accounting adjustments
|
|
377
|
|
|
|
766
|
|
|
|
754
|
|
|
|
1,533
|
Litigation
|
|
79
|
|
|
|
-
|
|
|
|
79
|
|
|
|
-
|
Service
inventory overhead capitalization
|
|
-
|
|
|
|
-
|
|
|
|
(1,493)
|
|
|
|
-
|
Total adjustments to
GAAP operating loss
|
$
|
16,198
|
|
|
$
|
17,775
|
|
|
$
|
34,453
|
|
|
$
|
36,171
|
Non-GAAP operating
income
|
$
|
10,835
|
|
|
$
|
6,693
|
|
|
$
|
18,294
|
|
|
$
|
7,891
|
Non-GAAP operating
income percentage
|
|
7.8%
|
|
|
|
4.5%
|
|
|
|
6.9%
|
|
|
|
2.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Net
Income
|
Three Months
Ended
|
|
|
Six Months
Ended
|
|
|
December 31,
2015
|
|
|
December 31,
2014
|
|
|
December 31,
2015
|
|
|
December 31,
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net
loss
|
$
|
(7,234)
|
|
|
$
|
(13,105)
|
|
|
$
|
(18,760)
|
|
|
$
|
(32,435)
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
based compensation expense
|
|
3,945
|
|
|
|
4,750
|
|
|
|
8,616
|
|
|
|
9,563
|
|
Acquisition and integration costs
|
|
807
|
|
|
|
3,500
|
|
|
|
1,145
|
|
|
|
7,558
|
|
Restructuring charge, net of reversal
|
|
3,031
|
|
|
|
-
|
|
|
|
8,634
|
|
|
|
-
|
|
Amortization of intangibles
|
|
7,959
|
|
|
|
8,759
|
|
|
|
16,718
|
|
|
|
17,517
|
|
Purchase
accounting adjustments
|
|
377
|
|
|
|
766
|
|
|
|
754
|
|
|
|
1,533
|
|
Litigation
|
|
79
|
|
|
|
-
|
|
|
|
79
|
|
|
|
-
|
|
Service
inventory overhead capitalization
|
|
-
|
|
|
|
-
|
|
|
|
(1,493)
|
|
|
|
-
|
|
Total adjustments to
GAAP net loss
|
$
|
16,198
|
|
|
$
|
17,775
|
|
|
$
|
34,453
|
|
|
$
|
36,171
|
|
Non-GAAP net
income
|
$
|
8,964
|
|
|
$
|
4,670
|
|
|
$
|
15,693
|
|
|
$
|
3,736
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP diluted net
income per share
|
$
|
0.09
|
|
|
$
|
0.05
|
|
|
$
|
0.15
|
|
|
$
|
0.04
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in
diluted net income per share calculation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP shares
used
|
|
105,087
|
|
|
|
100,788
|
|
|
|
103,997
|
|
|
|
100,606
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash
Flow
|
Three Months
Ended
|
|
|
Six Months
Ended
|
|
|
December 31,
2015
|
|
|
December 31,
2014
|
|
|
December 31,
2015
|
|
|
December 31,
2014
|
|
Cash flow used in
operations
|
$
|
7,441
|
|
|
$
|
39,822
|
|
|
$
|
13,967
|
|
|
$
|
41,453
|
|
Add: PP&E CapEx
spending
|
|
(776)
|
|
|
$
|
(1,178)
|
|
|
|
(1,409)
|
|
|
|
(3,962)
|
|
Total free cash
flow
|
$
|
6,665
|
|
|
$
|
38,644
|
|
|
$
|
12,558
|
|
|
$
|
37,491
|
|
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To view the original version on PR Newswire,
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SOURCE Extreme Networks, Inc.