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Extreme Networks Reports Second Quarter Fiscal Year 2021 Financial Results

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SAN JOSE, Calif., Feb. 9, 2021 /PRNewswire/ -- Extreme Networks, Inc. ("Extreme") (NASDAQ:EXTR) today released financial results for its second fiscal quarter ended December 31, 2020, which follows Extreme's preliminary results reported on January 27, 2021. The company has finalized its quarter-end procedures and is reporting its final Q2 financial results.

Fiscal Second Quarter Results: 

  • Revenue $242.1 million, down 9% year-over-year and up 3% quarter-over-quarter
  • GAAP EPS $(0.02), up from ($0.20) in Q2 last year
  • Non-GAAP EPS $0.13, up from $0.11 in Q2 last year
  • GAAP gross margin 57.9% compared to 55.6% in Q2 last year
  • Non-GAAP gross margin 61.0% compared to 60.0% in Q2 last year
  • GAAP operating margin 2.4% compared to (5.7)% in Q2 last year
  • Non-GAAP operating margin 10.2%, compared to 9.0% in Q2 last year
  • Net cash provided by operating activities of $38.0 million
  • Free Cash Flow of $33.0 million

"Our Q2 results reflect the strength of Extreme's financial and business performance, despite the challenging operating environment. We reiterate our previously issued Q3 business outlook. We expect double-digit year-over-year revenue growth and margin expansion due to increased demand in the marketplace for our differentiated solutions in the second half of FY21," stated Ed Meyercord, President and CEO of Extreme.

"Our final Q2 results are highlighted by 3% sequential revenue growth and record non-GAAP gross margins, driven by a third consecutive quarter of improvement in product gross margin. We achieved double-digit operating margin two quarters ahead of our prior expectations, with a 10.2% non-GAAP operating margin, and generated over $30 in million cash flow," stated Remi Thomas, CFO of Extreme.

Fiscal Q2 2021 Financial Metrics:

(in millions, except percentages and per share information)




Q2 FY'21



Q2 FY'20



Change


GAAP Results of Operations

















Product


$

165.8



$

190.5



$

(24.7)




(13)

%

Service and subscription



76.3




77.0




(0.7)




(1)

%

Total net revenue


$

242.1



$

267.5



$

(25.4)




(9)

%

Gross margin



57.9

%



55.6

%


230 bps



-


Operating margin



2.4

%



(5.7)

%


806 bps



-


Net loss


$

(3.1)



$

(23.5)



$

20.4




87

%

Net loss per diluted share


$

(0.02)



$

(0.20)



$

0.18




90

%

Non-GAAP Results of Operations

















Product


$

165.8



$

190.5



$

(24.7)




(13)

%

Service and subscription



76.3




77.0




(0.7)




(1)

%

Total net revenue


$

242.1



$

267.5



$

(25.4)




(9)

%

Gross margin



61.0

%



60.0

%


100 bps



-


Operating margin



10.2

%



9.0

%


120 bps



-


Net income


$

16.0



$

13.1



$

2.9




22

%

Net income per diluted share


$

0.13



$

0.11



$

0.02




18

%

  • Q2 ending cash balance was $184.0 million, a decrease of $9.1 million from the end of Q1. This was primarily driven by cash usage of $42.5 million for financing activities, primarily due to full repayment of our revolving credit facility and principal payments on our term loan, along with $5.0 million for capital expenditures, partially offset by operating cash flow generation of $38.0 million.
  • Q2 accounts receivable balance was $128.2 million, with days sales outstanding of 49, an increase of 1 day from Q1 and a decrease of 6 days from Q2 last year. 
  • Q2 ending inventory was $49.8 million, a decrease of $6.0 million from Q1 and a decrease of $29.9 million from Q2 last year. The year-over-year and quarter-over-quarter decreases in inventory largely reflects improved demand planning, SKU rationalization and higher inventory turnover.
  • Q2 ending gross debt* was $356.3 million, a decrease of $39.8 million from the prior quarter. The decrease reflects the principal debt payment of approximately $4.8 million and payments of $35.0 million on the revolving credit facility. The $19.0 million decrease from Q2 last year resulted primarily from principal debt payments. Net debt* of $172.3 million decreased by $30.6 million from $202.9 million in Q1.
  • Since publishing its preliminary Q2 results on January 27, 2021, the Company has now finalized the estimate of its distributor rebate accrual and recorded an immaterial adjustment, which is incorporated in its Q2 reported financial results. This had no effect on quarterly cash flows.

Extreme uses the non-GAAP free cash flow metric as a measure of operating performance. Free cash flow represents GAAP net cash provided by operating activities, less purchases of property, plant and equipment.  Extreme considers free cash flow to be useful information for management and investors regarding the amount of cash generated by the business after the purchases of property, plant and equipment, which can then be used to, among other things, invest in Extreme's business, make strategic acquisitions, and strengthen the balance sheet. A limitation of the utility of this non-GAAP free cash flow metric 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. The following table shows non-GAAP free cash flow calculation (in thousands):

Free Cash Flow

Three Months Ended



Six Months Ended



December 31,

2020



December 31,

2019



December 31,

2020



December 31,

2019


Cash flow provided by operations

$

38,026



$

22,112



$

62,771



$

21,911


Less: PP&E CapEx spending


(5,016)




(4,198)




(8,039)




(9,438)


Total free cash flow

$

33,010



$

17,914



$

54,732



$

12,473


*Gross debt is defined as long-term and current portion of long-term debt as shown on the balance sheet plus unamortized debt issuance costs. Net debt is defined as gross debt minus cash, as shown in the table below (in millions):

Gross debt



Cash



Net debt


$

356.3



$

184.0



$

172.3













Business Outlook:

Extreme reiterates the Q3 business outlook initially provided on January 27, 2021. This business outlook is based on current expectations. The following statements are forward-looking, and actual results could differ materially based on various factors, including market conditions and the factors set forth under "Forward-Looking Statements" below.

For its third quarter of fiscal 2021, ending March 31, 2021, the Company is targeting:

 (in millions, except percentages and per share information)

Low-End



High-End


FQ3'21 Guidance – GAAP








Total Net Revenue

$

240.0



$

250.0


Gross Margin


58.4

%



59.5

%

Operating Expenses

$

137.6



$

139.6


Operating Margin


1.1

%



3.7

%

Net Income (loss)

$

(5.5)



$

1.1


Net Income (loss) per diluted share

$

(0.04)



$

0.01


Shares outstanding used in calculating GAAP EPS

124.7



126.6


FQ3'21 Guidance – Non - GAAP








Total Net Revenue

$

240.0



$

250.0


Gross Margin


61.5

%



62.5

%

Operating Expenses

$

126.0



$

128.0


Operating Margin


9.0

%



11.3

%

Net Income

$

13.5



$

20.1


Income per diluted share

$

0.11



$

0.16


Shares outstanding used in calculating non-GAAP EPS


126.6




126.6


The following table shows the GAAP to non-GAAP reconciliation for Q3 FY'21 guidance:


Gross Margin

Rate



Operating

Margin Rate



Earnings per

Share


GAAP

58.4% - 59.5%



1.1% - 3.7%



$(0.04) - $0.01


Estimated adjustments for:












Amortization of product intangibles

2.4%



2.4%



0.05


Share-based compensation

0.3%



4.1%



0.08


Restructuring



0.3%



0.01


Amortization of non-product intangibles

0.3%



0.9%



0.02


Non-GAAP

61.5% - 62.5%



9.0% - 11.3%



$0.11- $0.16














The total of percentage rate changes may not equal the total change in all cases due to rounding.

About Extreme:

Extreme Networks, Inc. (EXTR) creates effortless networking experiences that enable all of us to advance. We push the boundaries of technology leveraging the powers of machine learning, artificial intelligence, analytics, and automation. Over 50,000 customers globally trust our end-to-end, cloud-driven networking solutions and rely on our top-rated services and support to accelerate their digital transformation efforts and deliver progress like never before. For more information, visit Extreme's website or follow us on Twitter, LinkedIn, and Facebook.

Extreme Networks, and the Extreme Networks logo, are trademarks of Extreme Networks, Inc. or its subsidiaries in the United States and/or other countries.   Other trademarks shown herein are the property of their respective owners.

Non-GAAP Financial Measures:

Extreme provides all financial information required in accordance with U.S. generally accepted accounting principles ("GAAP"). The Company is providing with this press release non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating margin, non-GAAP operating income, non-GAAP net income, non-GAAP net income per diluted share, and non-GAAP free cash flow. In preparing non-GAAP information, the Company has excluded, where applicable, the impact of share-based compensation, acquisition and integration costs, acquired inventory adjustments, amortization of acquired intangibles, inventory valuation adjustment, and restructuring charges.  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 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 uses both GAAP and non-GAAP measures to evaluate and manage its operations.

Forward Looking Statements:

Statements in this press release, including statements regarding those concerning the company's business outlook, future financial and operating results, and certain preliminary  financial results for the three months ended December 31, 2020 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. There are several important factors that could cause actual events to differ materially from those suggested or indicated by such forward-looking statements. These include, among others, the potential impact of any adjustment to the company's distributor rebate accrual (and issues arising therefrom), changes resulting from the completion of the quarter-end review process, the company's failure to achieve targeted revenues and forecasted demand from end customers; a highly competitive business environment for network switching equipment and cloud management of network devices; the company's effectiveness in controlling expenses; the possibility that the company might experience delays in the development or introduction of new technology and products; customer response to the company's new technology and products; risks related to pending or future litigation; macroeconomic and political and geopolitical factors, a dependency on third parties for certain components and for the manufacturing of the company's products; and the impacts of COVID-19, and any worsening of the global business and economic environment as a result, on the company's business.

More information about potential factors that could affect the Company's business and financial results are described in "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Risk Factors" included in the Company's Annual Report on Form 10-K for the year ended June 30, 2020, Quarterly Report on Form 10-Q for the quarter ended September 30, 2020, and other documents of the Company on file with the Securities and Exchange Commission (available at www.sec.gov).  As a result of these risks and others, actual results could vary significantly from those anticipated in this press release, and the company's financial condition and results of operations could be materially adversely affected. Except as required under the U.S. federal securities laws and the rules and regulations of the U.S. Securities and Exchange Commission, Extreme 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, except per share amounts)

(Unaudited)




December 31,

2020



June 30,

2020


ASSETS









Current assets:









Cash


$

183,969



$

193,872


Accounts receivable, net of allowance for doubtful accounts of $1,335 and $1,212, respectively



128,242




122,727


Inventories



49,830




62,589


Prepaid expenses and other current assets



41,257




35,019


Total current assets



403,298




414,207


Property and equipment, net



55,974




58,813


Operating lease right-of-use assets, net



45,087




51,274


Intangible assets, net



51,748




68,394


Goodwill



331,159




331,159


Other assets



58,571




55,241


Total assets


$

945,837



$

979,088


LIABILITIES AND STOCKHOLDERS' EQUITY









Current liabilities:









Current portion of long-term debt, net of unamortized debt issuance costs of $2,463 and $2,484, respectively


$

18,912



$

16,516


Accounts payable



53,677




48,439


Accrued compensation and benefits



62,212




50,884


Accrued warranty



13,073




14,035


Current portion, operating lease liabilities



19,226




19,196


Current portion, deferred revenue



198,291




190,226


Other accrued liabilities



56,851




58,525


Total current liabilities



422,242




397,821


Deferred revenue, less current portion



110,844




100,961


Long-term debt, less current portion, net of unamortized debt issuance costs of $5,934 and $7,165, respectively



328,941




394,585


Operating lease liabilities, less current portion



42,059




50,238


Deferred income taxes



2,650




2,334


Other long-term liabilities



21,176




27,751


Commitments and contingencies







Stockholders' equity:









Convertible preferred stock, $0.001 par value, issuable in series, 2,000

shares authorized; none issued







Common stock, $0.001 par value, 750,000 shares authorized; 130,180 and 127,114 shares issued, respectively; 123,583 and 120,517 shares outstanding, respectively



130




127


Additional paid-in-capital



1,055,719




1,035,041


Accumulated other comprehensive loss



(2,670)




(6,378)


Accumulated deficit



(992,141)




(980,279)


Treasury stock at cost: 6,597 and 6,597 shares, respectively



(43,113)




(43,113)


Total stockholders' equity



17,925




5,398


Total liabilities and stockholders' equity


$

945,837



$

979,088


 

EXTREME NETWORKS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

 (Unaudited)




Three Months Ended



Six Months Ended




December 31,

2020



December 31,

2019



December 31,

2020



December 31,

2019


Net revenues:

















Product


$

165,845



$

190,492



$

327,241



$

375,626


Service and subscription



76,283




76,980




150,689




147,352


Total net revenues



242,128




267,472




477,930




522,978


Cost of revenues:

















Product



74,005




91,387




147,400




182,778


Service and subscription



27,931




27,414




55,320




54,286


Total cost of revenues



101,936




118,801




202,720




237,064


Gross profit:

















Product



91,840




99,105




179,841




192,848


Service and subscription



48,352




49,566




95,369




93,066


Total gross profit



140,192




148,671




275,210




285,914


Operating expenses:

















Research and development



49,186




55,380




98,710




114,496


Sales and marketing



66,732




75,436




131,057




146,793


General and administrative



16,360




15,098




32,821




30,080


Acquisition and integration costs






8,994




1,975




24,919


Restructuring and related charges, net of reversals



695




6,622




1,696




12,759


Amortization of intangibles



1,506




2,377




3,298




4,307


Total operating expenses



134,479




163,907




269,557




333,354


Operating income (loss)



5,713




(15,236)




5,653




(47,440)


Interest income



82




477




200




1,144


Interest expense



(6,068)




(6,234)




(12,731)




(11,398)


Other expense, net



(954)




(748)




(1,841)




(190)


Income (loss) before income taxes



(1,227)




(21,741)




(8,719)




(57,884)


Provision for income taxes



1,823




1,797




3,143




3,392


Net loss


$

(3,050)



$

(23,538)



$

(11,862)



$

(61,276)


Basic and diluted loss per share:

















Net loss per share - basic and diluted


$

(0.02)



$

(0.20)



$

(0.10)



$

(0.51)



















Shares used in per share calculation - basic and diluted



123,264




119,555




122,485




119,891


 

EXTREME NETWORKS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)




Six Months Ended




December 31,

2020



December 31,

2019


Cash flows from operating activities:









Net loss


$

(11,862)



$

(61,276)


Adjustments to reconcile net loss to net cash provided by operating activities:









Depreciation



12,471




14,251


Amortization of intangible assets



16,646




17,772


Reduction in carrying amount of right-of-use asset



8,072




8,477


Provision for doubtful accounts



143




626


Share-based compensation



18,397




19,792


Deferred income taxes



628




801


Non-cash restructuring and impairment charges



-




7,622


Non-cash interest expense



2,171




1,982


Other



3,195




735


Changes in operating assets and liabilities, net of acquisitions:









Accounts receivable



(5,658)




25,751


Inventories



6,340




3,157


Prepaid expenses and other assets



(3,740)




(274)


Accounts payable



4,913




(9,070)


Accrued compensation and benefits



10,984




(3,036)


Operating lease liabilities



(10,116)




(9,051)


Deferred revenue



17,949




6,181


Other current and long-term liabilities



(7,762)




(2,529)


Net cash provided by operating activities



62,771




21,911


Cash flows from investing activities:









Capital expenditures



(8,039)




(9,438)


Business acquisitions, net of cash acquired






(219,458)


Maturities and sales of investments






45,249


Net cash used in investing activities



(8,039)




(183,647)


Cash flows from financing activities:









Borrowings under Term Loan






199,500


Payments on debt obligations



(64,500)




(24,950)


Loan fees on borrowings






(10,514)


Equity forward contract






(4,821)


Repurchase of common stock






(25,179)


Proceeds from issuance of common stock, net of tax withholding



2,284




2,906


Payment of contingent consideration obligations



(1,021)




(2,206)


Deferred payments on an acquisition



(2,000)




(2,000)


Net cash (used in) provided by financing activities



(65,237)




132,736











Foreign currency effect on cash



602




(193)











Net decrease in cash



(9,903)




(29,193)











Cash at beginning of period



193,872




169,607


Cash at end of period


$

183,969



$

140,414


 

Extreme Networks, Inc.
Non-GAAP Measures of Financial Performance

To supplement the Company's consolidated financial statements presented in accordance with U.S. generally accepted accounting principles, ("GAAP"), Extreme uses non-GAAP measures of certain components of financial performance.  These non-GAAP measures include non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating margin, non-GAAP operating income, non-GAAP net income, non-GAAP earnings per diluted share and non-GAAP 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 also presents its target for non-GAAP operating expenses, which is operating expenses less share-based compensation expense, restructuring charges and amortization of acquired intangibles.

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's results of operations as determined in accordance with GAAP.  These non-GAAP measures should only be used to evaluate Extreme's results of operations in conjunction with the corresponding GAAP measures.

Extreme believes 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 stockholder value.  In addition, because Extreme has historically reported certain non-GAAP results to investors, the Company believes 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's management uses financial statements that do not include share-based compensation expense, acquired inventory adjustments, acquisition and integration costs, amortization of acquired intangibles, inventory valuation adjustments, and restructuring charges.  Extreme's management also uses non-GAAP measures, in addition to the corresponding GAAP measures, in reviewing the Company's financial results.

As described above, Extreme excludes the following items from one or more of its non-GAAP measures when applicable.

Share-based compensation. Consists of associated expenses for stock options, restricted stock awards and the Company's Employee Stock Purchase Plan.  Extreme excludes share-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 its operating results. Extreme expects to incur share-based compensation expenses in future periods.

Acquired inventory adjustments. Purchase accounting adjustments relating to the mark up of acquired inventory to fair value less disposal costs.

Acquisition and integration costs. Acquisition and integration costs consist of specified compensation charges, software charges, legal and professional fees related to the acquisition of Aerohive.  Extreme excludes these expenses since they result from an event that is outside the ordinary course of continuing operations.

Amortization of acquired intangibles. Amortization of acquired intangibles includes the monthly amortization expense of intangible assets such as developed technology, customer relationships, trademarks and order backlog.  The amortization of the developed technology and order backlog are recorded in cost of goods sold, while the amortization for the other intangibles are recorded in operating expenses.  Extreme excludes these expenses since they result from an intangible asset and for which the period expense does not impact the operations of the business and are non-cash in nature.

Inventory valuation adjustments. Adjustments relating to the mark down of inventory due to duplication of products lines with acquisition of Aerohive net of recoveries on the sale of inventory marked down in previous quarters.

Restructuring charges. Restructuring charges primarily consist of severance costs for employees which have no benefit to continuing operations and impairment of right-of-use assets, long-lived assets and other charges related to excess facilities. Extreme excludes restructuring expenses since they result from events that occur outside of the ordinary course of continuing operations.

Income Taxes. Beginning with our first quarter of fiscal 2021, we are changing how we calculate our non-GAAP provision for income taxes in accordance with the SEC guidance on non-GAAP Financial Measures Compliance and Disclosure Interpretation.   Previously, the non-GAAP tax provision consisted of current and deferred income tax expense on a GAAP basis as if our carryforward net operating losses were sufficient to offset our non-GAAP adjustments.   Beginning with our first quarter of fiscal 2021, we have assumed our U.S. federal and state net operating losses would have been fully consumed by the historical non-GAAP financial adjustments, eliminating the need for a full valuation allowance against our U.S. deferred tax assets which consequently, enables our use of research and development tax credits which were previously not utilizable.  The non-GAAP tax provision will now consist of current and deferred income tax expense commensurate with the non-GAAP measure of profitability using our blended U.S. statutory tax rate of 24.2%.  We have adjusted the fiscal 2020 non-GAAP tax provision to reflect the 2020 non-GAAP operating results to be comparable with fiscal 2021 results.  As a result of this change, non-GAAP net income for the second quarter of fiscal 2020 changed from $0.13 per diluted share as previously reported to $0.11 per diluted share.

This change will not affect our non-GAAP income before income taxes, actual cash tax payments or cash flows, but will result in a higher or lower non-GAAP provision for income taxes depending on the level and jurisdictional mix of pre-tax income and available U.S. research and development tax credits.  As of June 30, 2020, we had U.S. federal net operating loss carryforwards of $310 million and state net operating loss carryforwards of $181 million.  We do not expect to pay substantial taxes on a GAAP basis in the U.S. for the foreseeable future due to our net operating loss carryforward balances.  Over the near term, most of our cash taxes will continue to be mainly driven by the tax expense of our foreign subsidiaries which amounts have not historically been significant, with the exception of the Company's Irish operating company which has fully utilized available net operating loss carryforwards as of the second quarter of fiscal 2021.  We also believe our long-term effective GAAP tax rate will be lower than the U.S. statutory rate based upon our established tax structure.

EXTREME NETWORKS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

GAAP TO NON-GAAP RECONCILIATION

(In thousands, except percentages and per share amounts)

(Unaudited)


Revenues

Three Months Ended



Six Months Ended



December 31,

2020



December 31,

2019



December 31,

2020



December 31,

2019


Revenues - GAAP

$

242,128



$

267,472



$

477,930



$

522,978



Non-GAAP Gross Margin

Three Months Ended



Six Months Ended



December 31,

2020



December 31,

2019



December 31,

2020



December 31,

2019


Gross profit - GAAP

$

140,192



$

148,671



$

275,210



$

285,914


Gross margin - GAAP percentage


57.9

%



55.6

%



57.6

%



54.7

%

Adjustments:
















Share-based compensation expense


753




907




1,383




1,504


Acquired inventory adjustments





3,434







7,303


Acquisition and integration costs





1,734




10




1,884


Amortization of intangibles


6,633




6,867




13,266




13,259


Inventory valuation adjustments





(1,169)







3,677


Total adjustments to GAAP gross profit

$

7,386



$

11,773



$

14,659



$

27,627


Gross profit - non-GAAP

$

147,578



$

160,444



$

289,869



$

313,541


Gross margin - non-GAAP percentage


61.0

%



60.0

%



60.7

%



60.0

%


Non-GAAP Operating Income

Three Months Ended



Six Months Ended



December 31,

2020



December 31,

2019



December 31,

2020



December 31,

2019


GAAP operating income (loss)

$

5,713



$

(15,236)



$

5,653



$

(47,440)


GAAP operating income (loss) percentage


2.4

%



(5.7)

%



1.2

%



(9.1)

%

Adjustments:
















Share-based compensation expense, cost of revenues


753




907




1,383




1,504


Share-based compensation expense, R&D


2,694




3,260




4,966




5,695


Share-based compensation expense, S&M


3,239




3,511




5,886




7,230


Share-based compensation expense, G&A


3,409




2,801




6,162




4,884


Inventory valuation adjustments





(1,169)







3,677


Acquisition and integration costs





10,728




1,985




26,803


Restructuring charges, net of reversals


695




6,622




1,696




12,759


Acquired inventory adjustments





3,434







7,303


Amortization of intangibles


8,139




9,244




16,564




17,566


Total adjustments to GAAP operating income (loss)

$

18,929



$

39,338



$

38,642



$

87,421


Non-GAAP operating income

$

24,642



$

24,102



$

44,295



$

39,981


Non-GAAP operating income percentage


10.2

%



9.0

%



9.3

%



7.6

%


Non-GAAP Net Income

Three Months Ended



Six Months Ended



December 31,

2020



December 31,

2019



December 31,

2020



December 31,

2019


GAAP net loss

$

(3,050)



$

(23,538)



$

(11,862)



$

(61,276)


Adjustments:
















Share-based compensation expense


10,095




10,479




18,397




19,313


Inventory valuation adjustments





(1,169)







3,677


Acquisition and integration costs





10,728




1,985




26,803


Restructuring charge, net of reversal


695




6,622




1,696




12,759


Acquired inventory adjustments





3,434







7,303


Amortization of intangibles


8,139




9,244




16,564




17,566


Tax effect of non-GAAP adjustments


107




(2,669)




165




(4,104)


Total adjustments to GAAP net loss

$

19,036



$

36,669



$

38,807



$

83,317


Non-GAAP net income

$

15,986



$

13,131



$

26,945



$

22,041


















Earnings per share
















Non-GAAP net income per share-diluted

$

0.13



$

0.11



$

0.22



$

0.18


















Shares used in net income per share-diluted:
















GAAP Shares used in per share calculation - basic


123,264




119,555




122,485




119,891


Potentially dilutive equity awards


2,463




3,632




1,681




3,555


Non-GAAP diluted shares used in per share calculation


125,727




123,187




124,166




123,446


 

 

Cision View original content to download multimedia:http://www.prnewswire.com/news-releases/extreme-networks-reports-second-quarter-fiscal-year-2021-financial-results-301225338.html

SOURCE Extreme Networks, Inc.

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