Extreme Networks Inc 10-Q for FY2025 Q3
Extreme Networks Inc (EXTR)
About this 10-Q
Extreme Networks Inc filed this 10-Q on May 1, 2025, covering the quarter ended March 31, 2025 (FY2025 Q3).
Headline figures
Quarter ended March 31, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $284.51M
- up 34.8% from $211.04M a year earlier
- Net income
- $3.46M
- compared with a net loss of $64.43M a year earlier
- Diluted EPS
- $0.03
- compared with -$0.50 a year earlier
p262Tejo
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to ______
Commission file number
(Exact name of registrant as specified in its charter)
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[State or other jurisdiction of incorporation or organization] |
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[I.R.S. Employer Identification No.] |
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[Address of principal executive offices] |
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[Zip Code] |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Name of each exchange on which registered |
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Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§-232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of April 25, 2025, the registrant had
EXTREME NETWORKS, INC.
FORM 10-Q
QUARTERLY PERIOD ENDED
March 31, 2025
INDEX
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PAGE |
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Item 1. |
3 |
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Condensed Consolidated Balance Sheets as of March 31, 2025 and June 30, 2024 |
3 |
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4 |
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5 |
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Condensed Consolidated Statements of Cash Flows for the nine months ended March 31, 2025 and 2024 |
7 |
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8 |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
24 |
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Item 3. |
34 |
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Item 4. |
35 |
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Item 1. |
37 |
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Item 1A |
37 |
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Item 2. |
38 |
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Item 3. |
38 |
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Item 4. |
38 |
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Item 5. |
38 |
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Item 6. |
39 |
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2
PART I. CONDENSED CONSOLIDATED FINANCIAL INFORMATION
ITEM 1. Condensed Consolidated Financial Statements (Unaudited)
EXTREME NETWORKS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
(Unaudited)
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March 31, |
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June 30, |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Accounts receivable, net |
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Inventories |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment, net |
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Operating lease right-of-use assets, net |
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Goodwill |
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Intangible assets, net |
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Other assets |
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Total assets |
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$ |
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$ |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Accrued compensation and benefits |
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Accrued warranty |
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Current portion of deferred revenue |
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Current portion of long-term debt, net of unamortized debt issuance costs of $ |
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Current portion of operating lease liabilities |
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Other accrued liabilities |
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Total current liabilities |
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Deferred revenue, less current portion |
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Long-term debt, less current portion, net of unamortized debt issuance costs of $ |
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Operating lease liabilities, less current portion |
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Deferred income taxes |
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Other long-term liabilities |
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Stockholders’ equity: |
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Convertible preferred stock, $ |
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Common stock, $ |
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Additional paid-in-capital |
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Accumulated other comprehensive loss |
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Accumulated deficit |
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( |
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Treasury stock at cost, |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
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$ |
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$ |
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See accompanying notes to condensed consolidated financial statements.
3
EXTREME NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
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Three Months Ended |
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Nine Months Ended |
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March 31, |
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March 31, |
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March 31, |
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March 31, |
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Net revenues: |
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Product |
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$ |
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$ |
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$ |
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$ |
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Subscription and support |
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Total net revenues |
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Cost of revenues: |
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Product |
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Subscription and support |
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Total cost of revenues |
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Gross profit: |
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Product |
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Subscription and support |
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Total gross profit |
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Operating expenses: |
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Research and development |
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Sales and marketing |
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General and administrative |
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Restructuring and related (benefit) charges |
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( |
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Amortization of intangible assets |
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Total operating expenses |
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Operating income (loss) |
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( |
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Interest income |
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Interest expense |
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( |
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( |
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( |
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( |
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Other income (expense), net |
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( |
) |
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( |
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Income (loss) before income taxes |
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( |
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( |
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Provision for (benefit from) income taxes |
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( |
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Net income (loss) |
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$ |
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$ |
( |
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$ |
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$ |
( |
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Basic and diluted income (loss) per share: |
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Net income (loss) per share – basic |
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$ |
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$ |
( |
) |
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$ |
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$ |
( |
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Net income (loss) per share – diluted |
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$ |
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$ |
( |
) |
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$ |
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$ |
( |
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Shares used in per share calculation – basic |
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Shares used in per share calculation – diluted |
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See accompanying notes to condensed consolidated financial statements.
4
EXTREME NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands)
(Unaudited)
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Three Months Ended |
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Nine Months Ended |
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March 31, |
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March 31, |
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March 31, |
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March 31, |
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Net income (loss) |
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$ |
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$ |
( |
) |
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$ |
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$ |
( |
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Other comprehensive income (loss): |
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Net change in foreign currency translation adjustments |
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( |
) |
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( |
) |
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( |
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Other comprehensive income (loss): |
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( |
) |
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( |
) |
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( |
) |
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Total comprehensive income (loss) |
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$ |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
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See accompanying notes to condensed consolidated financial statements.
5
EXTREME NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands)
(Unaudited)
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Common Stock |
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Additional |
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Accumulated Other |
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Treasury Stock |
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Accumulated |
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Total Stockholders' |
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Shares |
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Amount |
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Paid-In-Capital |
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Comprehensive Loss |
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Shares |
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Amount |
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Deficit |
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Equity |
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Balance at December 31, 2023 |
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$ |
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$ |
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$ |
( |
) |
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( |
) |
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$ |
( |
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$ |
( |
) |
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$ |
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Net loss |
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— |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
Other comprehensive loss |
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— |
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— |
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— |
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( |
) |
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— |
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— |
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— |
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( |
) |
Issuance of common stock from equity incentive plans, net of tax withholdings |
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— |
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— |
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— |
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— |
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Share-based compensation |
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— |
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— |
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— |
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— |
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— |
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— |
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Balance at March 31, 2024 |
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$ |
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$ |
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$ |
( |
) |
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( |
) |
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$ |
( |
) |
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$ |
( |
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$ |
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Balance at June 30, 2023 |
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$ |
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$ |
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$ |
( |
) |
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( |
) |
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$ |
( |
) |
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$ |
( |
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$ |
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Net loss |
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— |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
Other comprehensive loss |
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— |
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— |
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— |
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( |
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— |
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— |
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— |
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( |
) |
Issuance of common stock from equity incentive plans, net of tax withholdings |
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( |
) |
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— |
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— |
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— |
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— |
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( |
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Repurchase of stock |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
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— |
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( |
) |
Share-based compensation |
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— |
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— |
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— |
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— |
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— |
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— |
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Balance at March 31, 2024 |
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$ |
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$ |
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$ |
( |
) |
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( |
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$ |
( |
) |
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$ |
( |
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$ |
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Balance at December 31, 2024 |
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$ |
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$ |
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$ |
( |
) |
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( |
) |
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$ |
( |
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$ |
( |
) |
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$ |
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Net income |
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— |
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— |
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— |
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— |
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— |
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— |
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Other comprehensive income |
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— |
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— |
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— |
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— |
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— |
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— |
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Issuance of common stock from equity incentive plans, net of tax withholdings |
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— |
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— |
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— |
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— |
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Repurchase of stock |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
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— |
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( |
) |
Share-based compensation |
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— |
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— |
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— |
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— |
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— |
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— |
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Balance at March 31, 2025 |
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$ |
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$ |
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$ |
( |
) |
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( |
) |
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$ |
( |
) |
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$ |
( |
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$ |
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Balance at June 30, 2024 |
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$ |
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$ |
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$ |
( |
) |
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( |
) |
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$ |
( |
) |
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$ |
( |
) |
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$ |
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Net income |
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— |
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— |
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— |
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— |
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— |
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— |
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Other comprehensive loss |
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— |
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— |
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— |
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( |
) |
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— |
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— |
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— |
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( |
) |
Issuance of common stock from equity incentive plans, net of tax withholdings |
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( |
) |
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— |
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— |
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— |
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— |
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( |
) |
||
Repurchase of stock |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
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— |
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( |
) |
Share-based compensation |
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— |
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— |
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|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Balance at March 31, 2025 |
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
|
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||
See accompanying notes to condensed consolidated financial statements.
6
EXTREME NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
|
|
Nine Months Ended |
|
|||||
|
|
March 31, |
|
|
March 31, |
|
||
Cash flows from operating activities: |
|
|
|
|
|
|
||
Net income (loss) |
|
$ |
|
|
$ |
( |
) |
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
|
|
|
|
|
|
||
Depreciation |
|
|
|
|
|
|
||
Amortization of intangible assets |
|
|
|
|
|
|
||
Reduction in carrying amount of right-of-use asset |
|
|
|
|
|
|
||
Provision for credit losses |
|
|
|
|
|
|
||
Share-based compensation |
|
|
|
|
|
|
||
Deferred income taxes |
|
|
( |
) |
|
|
( |
) |
Provision for excess and obsolete inventory(1) |
|
|
|
|
|
|
||
Non-cash interest expense |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
( |
) |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
||
Accounts receivable, net |
|
|
( |
) |
|
|
|
|
Inventories(1) |
|
|
|
|
|
( |
) |
|
Prepaid expenses and other assets |
|
|
( |
) |
|
|
( |
) |
Accounts payable |
|
|
( |
) |
|
|
( |
) |
Accrued compensation and benefits |
|
|
|
|
|
( |
) |
|
Operating lease liabilities |
|
|
( |
) |
|
|
( |
) |
Deferred revenue |
|
|
|
|
|
|
||
Other current and long-term liabilities |
|
|
( |
) |
|
|
|
|
Net cash provided by operating activities |
|
|
|
|
|
|
||
Cash flows from investing activities: |
|
|
|
|
|
|
||
Capital expenditures |
|
|
( |
) |
|
|
( |
) |
Net cash used in investing activities |
|
|
( |
) |
|
|
( |
) |
Cash flows from financing activities: |
|
|
|
|
|
|
||
Net payments on revolving facility |
|
|
— |
|
|
|
( |
) |
Payments on debt obligations |
|
|
( |
) |
|
|
( |
) |
Payments on debt financing costs |
|
|
( |
) |
|
|
— |
|
Repurchase of common stock |
|
|
( |
) |
|
|
( |
) |
Payments for tax withholdings, net of proceeds from issuance of common stock |
|
|
( |
) |
|
|
( |
) |
Net cash used in financing activities |
|
|
( |
) |
|
|
( |
) |
Foreign currency effect on cash and cash equivalents |
|
|
( |
) |
|
|
( |
) |
Net increase (decrease) in cash and cash equivalents |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
||
Cash and cash equivalents at beginning of period |
|
|
|
|
|
|
||
Cash and cash equivalents at end of period |
|
$ |
|
|
$ |
|
||
(1)
See accompanying notes to the condensed consolidated financial statements.
7
EXTREME NETWORKS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Extreme Networks, Inc., together with its subsidiaries (collectively referred to as “Extreme” or the “Company”), is a leader in providing software-driven networking solutions for enterprise customers. The Company conducts its sales and marketing activities on a worldwide basis through distributors, resellers, and the Company’s field sales organization. Extreme was incorporated in California in 1996 and reincorporated in Delaware in 1999.
The unaudited condensed consolidated financial statements of Extreme included herein have been prepared under the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted under such rules and regulations. The condensed consolidated balance sheet at June 30, 2024 was derived from audited financial statements as of that date but does not include all disclosures required by generally accepted accounting principles for complete financial statements. These interim financial statements and notes should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2024.
The unaudited condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments that, in the opinion of management, are necessary for a fair presentation of the results of operations and cash flows for the interim periods presented and the financial condition of Extreme at March 31, 2025. The results of operations for the three and nine months ended March 31, 2025 are not necessarily indicative of the results that may be expected for fiscal 2025 or any future periods.
Fiscal Year
The Company uses a fiscal calendar year ending on June 30. All references herein to “fiscal 2025” represent the fiscal year ending June 30, 2025. All references herein to “fiscal 2024” represent the fiscal year ended June 30, 2024.
Principles of Consolidation
The unaudited condensed consolidated financial statements include the accounts of Extreme and its wholly owned subsidiaries. All inter-company accounts and transactions have been eliminated.
The Company predominantly uses the United States Dollar as its functional currency. The functional currency for certain of its foreign subsidiaries is the local currency. For those subsidiaries that operate in a local functional currency environment, all assets and liabilities are translated to United States Dollars at current month end rates of exchange and revenues, and expenses are translated using the monthly average rate.
Accounting Estimates
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates.
For a description of significant accounting policies, see Note 2, Summary of Significant Accounting Policies, to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2024. There have been no material changes to the Company’s significant accounting policies since the filing of the Annual Report on Form 10-K.
Recently Adopted Accounting Pronouncements
There were no recently adopted accounting standards which would have a material effect on the Company's condensed consolidated financial statements and accompanying disclosures.
8
Recently Issued Accounting Pronouncements Not Yet Adopted
In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses to improve disclosures about public business entities’ expenses and to provide more detailed information around the types of expenses included in commonly presented expense captions. Additionally, in January 2025 the FASB issued ASU 2025-01 to clarify the effective date of ASU 2024-03. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods for fiscal years beginning after December 15, 2027, and can be applied on a prospective basis or on a retrospective basis to all periods presented. Early adoption is permitted. The Company is currently evaluating the impact of adopting ASU 2024-03 and ASU 2025-01 on its consolidated financial statements and related disclosures.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740), Improvements to Income Tax Disclosures to enhance income tax disclosures primarily through changes in the rate reconciliation and income taxes paid information. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024 on a prospective basis. Early adoption is permitted. The Company is currently evaluating the impact of adopting ASU 2023-09 on its consolidated financial statements and related disclosures.
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses and information used to assess segment performance. All disclosure requirements of ASU 2023-07 are required for entities with a single reportable segment. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods for fiscal years beginning after December 15, 2024, and should be applied on a retrospective basis to all periods presented. Early adoption is permitted. The Company is currently evaluating the impact of adopting ASU 2023-07 on its consolidated financial statements and related disclosures.
The Company accounts for revenues in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers. The Company derives the majority of its revenues from sales of its networking equipment, with the remaining revenues generated from sales of subscription and support, which primarily includes software subscriptions delivered as software as a service (“SaaS”) and additional revenues from maintenance contracts, professional services and training for its products. The Company sells its products, SaaS and maintenance contracts to customers and partners in
Revenue Recognition
Performance Obligations. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in ASC 606. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied.
The Company’s performance obligations are satisfied at a point in time or over time as the customer receives and consumes the benefits provided. Substantially all of the Company’s product sales revenues are recognized at a point in time. Substantially all of the Company’s subscription and support revenues are recognized over time. For revenues recognized over time, the Company primarily uses an input measure, days elapsed, to measure progress.
As of March 31, 2025, the Company had $
Contract Balances. The timing of revenue recognition, billings and cash collections results in billed accounts receivable and deferred revenue in the condensed consolidated balance sheets. Services provided under renewable SaaS subscription and support arrangements of the Company are billed in accordance with agreed-upon contractual terms, which are either billed fully at the inception of contract or at periodic intervals (e.g., quarterly or annually). The Company generally receives payments from its customers in advance of services being provided, resulting in deferred revenues. These liabilities are reported on the condensed consolidated balance sheets on a contract-by-contract basis at the end of each reporting period.
9
Revenue recognized for the three months ended March 31, 2025 and 2024 that was included in the deferred revenue balance at the beginning of each period was $
Contract Costs. The Company recognizes the of obtaining contracts as an expense when incurred if the amortization period of the assets that the Company otherwise would have recognized is one year or less. Management expects that commission fees paid to sales representatives as a result of obtaining subscription and support contracts and contract renewals are recoverable and therefore the Company’s condensed consolidated balance sheets included capitalized balances in the amount of $
Estimated Variable Consideration. There were no material changes in the current period to the estimated variable consideration for performance obligations, which were satisfied or partially satisfied during previous periods.
Revenues by Geography
The Company operates in three geographic regions: Americas, EMEA (Europe, Middle East and Africa) and APAC (Asia Pacific).
|
Three Months Ended |
|
Nine Months Ended |
|
||||||||||||
|
|
March 31, |
|
|
March 31, |
|
|
March 31, |
|
|
March 31, |
|
||||
Americas: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
United States |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Other |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Americas |
|
|
|
|
|
|
|
|
|
|
|
|
||||
EMEA |
|
|
|
|
|
|
|
|
|
|
|
|
||||
APAC |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total net revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Geographic Concentrations
For the three and nine months ended March 31, 2025, the Company generated
Customer Concentrations
The Company performs ongoing credit evaluations of its customers and generally does not require collateral in exchange for credit.
The following table sets forth customers accounting for 10% or more of the Company’s net revenues for the periods indicated below:
|
|
Three Months Ended |
|
Nine Months Ended |
||||
|
|
March 31, |
|
March 31, |
|
March 31, |
|
March 31, |
Jenne, Inc. |
|
|
|
|
||||
TD Synnex Corporation |
|
|
|
|
||||
Westcon Group, Inc. |
|
|
|
|
||||
ScanSource, Inc. |
|
* |
|
|
* |
|
* |
|
* Less than 10% of net revenue |
|
|
|
|
|
|
|
|
10
The following table sets forth major customers accounting for 10% or more of the Company’s net accounts receivable balance:
|
|
|
||
|
|
March 31, |
|
June 30, |
Jenne, Inc. |
|
|
||
TD Synnex Corporation |
|
|
* |
|
ScanSource, Inc. |
|
* |
|
|
* Less than 10% of accounts receivable |
|
|
|
|
Cash and Cash Equivalents
The Company considers highly liquid investments with maturities of three months or less at the date of purchase to be cash equivalents.
The following table summarizes the Company's cash and cash equivalents (in thousands):
|
|
March 31, |
|
|
June 30, |
|
||
Cash |
|
$ |
|
|
$ |
|
||
Cash equivalents |
|
|
|
|
|
|
||
Total cash and cash equivalents |
|
$ |
|
|
$ |
|
||
Inventories
Inventories are stated at the lower of cost, or net realizable value. Extreme uses a standard cost methodology to determine the cost basis for its inventories. Cost is computed using standard cost, which approximates actual cost, on a first-in, first-out basis. The Company adjusts the carrying value of its inventory when conditions exist that suggest that inventory may be in excess of anticipated demand or is obsolete based upon assumptions about future demand. At the point of loss recognition, a new, lower-cost basis for that inventory is established, and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis. Any previously written down or obsolete inventory subsequently sold has not had a material impact on gross margin for any of the periods presented.
The following table summarizes the Company's inventory by category (in thousands):
|
|
March 31, |
|
|
June 30, |
|
||
Finished goods |
|
$ |
|
|
$ |
|
||
Raw materials |
|
|
|
|
|
|
||
Total inventories |
|
$ |
|
|
$ |
|
||
Property and Equipment, Net
The following table summarizes the Company's property and equipment, net by category (in thousands):
|
|
March 31, |
|
|
June 30, |
|
||
Computers and equipment |
|
$ |
|
|
$ |
|
||
Software |
|
|
|
|
|
|
||
Office equipment, furniture and fixtures |
|
|
|
|
|
|
||
Leasehold improvements |
|
|
|
|
|
|
||
Total property and equipment |
|
|
|
|
|
|
||
Less: accumulated depreciation and amortization |
|
|
( |
) |
|
|
( |
) |
Property and equipment, net |
|
$ |
|
|
$ |
|
||
11
Deferred Revenue
Guarantees and Product Warranties
The majority of the Company’s hardware products are shipped with either a
The following table summarizes the activity related to the Company’s product warranty liability during the following periods (in thousands):
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
March 31, |
|
|
March 31, |
|
|
March 31, |
|
|
March 31, |
|
||||
Balance at beginning of period |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
New warranties issued |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Warranty expenditures |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Balance at end of period |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
To facilitate sales of its products in the normal course of business, the Company indemnifies its resellers and end-user customers with respect to certain matters. The Company has agreed to hold the customer harmless against losses arising from intellectual property infringement or other claims made against certain parties. These agreements may limit the time within which an indemnification claim can be made and the amount of the claim. It is not possible to estimate the maximum potential amount under these indemnification agreements due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. Historically, payments made by the Company under these agreements have not had a material impact on its operating results or financial position.
Concentrations
The Company may be subject to concentration of credit risk as a result of certain financial instruments consisting of accounts receivable. See Note 3, Revenues, for the Company’s accounts receivable concentration. The Company does not invest an amount exceeding
A three-tier fair value hierarchy is utilized to prioritize the inputs used in measuring fair value. The hierarchy gives the highest priority to quoted prices in active markets (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels are defined as follows:
12
The following table presents the Company’s fair value hierarchy for its financial assets and liabilities measured at fair value on a recurring basis (in thousands):
March 31, 2025 |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Certificates of deposit |
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
||
Foreign currency derivatives |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Total assets measured at fair value |
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign currency derivatives |
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
||
Total liabilities measured at fair value |
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
||
June 30, 2024 |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Certificates of deposit |
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
||
Foreign currency derivatives |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Total assets measured at fair value |
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign currency derivatives |
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
||
Total liabilities measured at fair value |
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
||
Level 1 Assets and Liabilities:
The Company’s financial instruments consist of cash, accounts receivable, accounts payable, and accrued liabilities. The Company states accounts receivable, accounts payable, and accrued liabilities at their carrying value, which approximates fair value due to the short time to the expected receipt or payment.
Level 2 Assets and Liabilities:
The Company's level 2 assets consist of certificates of deposit and derivative instruments. Certificates of deposit do not have regular market pricing and are considered Level 2. The fair value of derivative instruments under the Company’s foreign exchange forward contracts are estimated based on valuations provided by alternative pricing sources supported by observable inputs, which is considered Level 2.
As of March 31, 2025 and June 30, 2024, the Company had investment in certificates of deposit of $
As of March 31, 2025 and June 30, 2024, the Company had foreign exchange forward contracts that were not designated as hedging instruments with notional principal amounts of $
The fair value of borrowings under the Amended Credit Agreement (as defined in Note 7) is estimated based on valuations provided by alternative pricing sources supported by observable inputs which is considered Level 2. Since the interest rate is variable in the Amended Credit Agreement, the fair value approximates the face amount of the Company’s indebtedness of $
Level 3 Assets and Liabilities:
Certain of the Company’s assets, including intangible assets and goodwill, are measured at fair value on a non-recurring basis if impairment is indicated.
As of March 31, 2025 and June 30, 2024, the Company did
13
Intangible Assets
The following tables summarize the components of gross and net intangible assets (in thousands, except years):
|
|
Weighted Average |
|
|
|
|
|
|
|
|
|
|||
|
|
Remaining Amortization |
|
Gross Carrying |
|
|
Accumulated |
|
|
Net Carrying |
|
|||
|
|
Period |
|
Amount |
|
|
Amortization |
|
|
Amount |
|
|||
March 31, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|||
Developed technology |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Customer relationships |
|
|
|
|
|
|
|
|
|
|
||||
Trade names |
|
|
|
|
|
|
|
|
|
|
||||
License agreements |
|
|
|
|
|
|
|
|
|
|
||||
Total intangible assets, net* |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|||
* The carrying amount of foreign intangible assets are affected by foreign currency translation |
|
|
|
|
||||||||||
|
|
Weighted Average |
|
|
|
|
|
|
|
|
|
|||
|
|
Remaining Amortization |
|
Gross Carrying |
|
|
Accumulated |
|
|
Net Carrying |
|
|||
|
|
Period |
|
Amount |
|
|
Amortization |
|
|
Amount |
|
|||
June 30, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|||
Developed technology |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Customer relationships |
|
|
|
|
|
|
|
|
|
|
||||
Trade names |
|
|
|
|
|
|
|
|
|
|
||||
License agreements |
|
|
|
|
|
|
|
|
|
|
||||
Total intangible assets, net* |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|||
* The carrying amount of foreign intangible assets are affected by foreign currency translation |
|
|
|
|
||||||||||
The following table summarizes the amortization expense of intangible assets for the periods presented (in thousands):
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
March 31, |
|
|
March 31, |
|
|
March 31, |
|
|
March 31, |
|
||||
Amortization of intangible assets in “” |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Amortization of intangible assets in “Total operating expenses” |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total amortization expense |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The amortization expense that is recognized in “Total cost of revenues” primarily consists of amortization related to developed technology and license agreements.
The estimated future amortization expense to be recorded for each of the respective future fiscal years is as follows (in thousands):
|
|
Amount |
|
|
For the fiscal year ending June 30: |
|
|
|
|
2025 (the remainder of fiscal 2025) |
|
$ |
|
|
2026 |
|
|
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
2029 |
|
|
|
|
Total |
|
$ |
|
|
Goodwill
The Company had goodwill in the amount of $
14
The Company’s debt is comprised of the following (in thousands):
|
|
March 31, |
|
|
June 30, |
|
||
Current portion of long-term debt: |
|
|
|
|
|
|
||
Term Loan |
|
$ |
|
|
$ |
|
||
Less: unamortized debt issuance costs |
|
|
( |
) |
|
|
( |
) |
Current portion of long-term debt |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Long-term debt, less current portion: |
|
|
|
|
|
|
||
Term Loan |
|
$ |
|
|
$ |
|
||
Less: unamortized debt issuance costs |
|
|
( |
) |
|
|
( |
) |
Total long-term debt, less current portion |
|
|
|
|
|
|
||
Total debt |
|
$ |
|
|
$ |
|
||
On August 9, 2019, the Company entered into an Amended and Restated Credit Agreement (the “2019 Credit Agreement”), by and among the Company, as borrower, several banks and other financial institutions as Lenders, BMO Harris Bank N.A., as an issuing lender and swingline lender, Silicon Valley Bank, as an Issuing Lender, and Bank of Montreal, as administrative agent and collateral agent for the Lenders which was subsequently amended during fiscal 2023.
On June 22, 2023, the Company entered into a Second Amended and Restated Credit Agreement (the “2023 Credit Agreement”), by and among the Company, as borrower, BMO Harris Bank, N.A., as an issuing lender and swingline lender, Bank of America, N.A., JPMorgan Chase Bank, N.A., PNC Bank, National Association, and Wells Fargo Bank, National Association, as issuing lenders, the financial institutions or entities party thereto as lenders, and Bank of Montreal, as administrative agent and collateral agent, which amended and restated the 2019 Credit Agreement. The 2023 Credit Agreement provides for i) a $
Borrowings under the 2023 Credit Agreement bear interest, and at the Company’s election, the initial term loan may be made as either a base rate loan or a Secured Overnight Funding Rate (“SOFR”) loan. The applicable margin for base rate loans ranges from
The 2023 Credit Agreement requires the Company to maintain certain minimum financial ratios at the end of each fiscal quarter. The 2023 Credit Agreement also includes covenants and restrictions that limit, among other things, the Company’s ability to incur additional indebtedness, create liens upon any of its property, merge, consolidate or sell all or substantially all of its assets. The 2023 Credit Agreement also includes customary events of default which may result in acceleration of the outstanding balance.
On August 14, 2024, the Company entered into an Amendment Number One to the 2023 Credit Agreement (the 2023 Credit Agreement as amended by that certain Amendment Number One, the “Amended Credit Agreement”). Under the Amended Credit Agreement, the Company modified the definition of the consolidated EBITDA for the purposes of evaluating compliance with financial covenants under the 2023 Credit Agreement. The amended definition of consolidated EBITDA modifies the amount and type of add-backs that are allowable to better align with the Company's operations and activities. Further, the Amended Credit Agreement provides a waiver for the Company's compliance with the consolidated interest charge coverage ratio for each of the quarters ended June 30, 2024, September 30, 2024, and December 31, 2024.
As of March 31, 2025, the Company was in compliance with all the terms and financial covenants of the Amended Credit Agreement.
Financing costs incurred in connection with obtaining long-term financing are deferred and amortized over the term of the related indebtedness or credit agreement. Amortization of deferred financing costs is included in “Interest expense” in the accompanying condensed consolidated statements of operations was $
As of March 31, 2025, the Company did
15
The Company had $
Purchase Commitments
The Company currently has arrangements with contract manufacturers and suppliers for the manufacture of its products. Those arrangements allow the contract manufacturers to procure long lead-time component inventory based upon a rolling production forecast provided by the Company. The Company is obligated to purchase long lead-time component inventory that its contract manufacturer procures in accordance with the forecast, unless the Company gives notice of order cancellation outside of applicable component lead-times. As of March 31, 2025, the Company had commitments to purchase $
Legal Proceedings
The Company may from time to time be party to litigation arising in the course of its business, including, without limitation, allegations relating to commercial transactions, business relationships, or intellectual property rights. Such claims, even if not meritorious, could result in the expenditure of significant financial and managerial resources. Litigation in general, and intellectual property litigation in particular, can be expensive and disruptive to normal business operations. Moreover, the results of legal proceedings are difficult to predict.
In accordance with applicable accounting guidance, the Company records accruals for certain of its outstanding legal proceedings, investigations or claims when it is probable that a liability will be incurred, and the amount of loss can be reasonably estimated. The Company evaluates, at least on a quarterly basis, developments in legal proceedings, investigations or claims that could affect the amount of any accrual, as well as any developments that would result in a loss contingency to become both probable and reasonably estimable. When a loss contingency is not both probable and reasonably estimable, the Company does not record a loss accrual. However, if the loss (or an additional loss in excess of any prior accrual) is at least reasonably possible and material, then the Company would disclose an estimate of the possible loss or range of loss, if such estimate can be made, or disclose that an estimate cannot be made. The assessment of whether a loss is probable or a reasonable possibility, and whether the loss or a range of loss is estimable, involves a series of complex judgments about future events. Even if a loss is reasonably possible, the Company may not be able to estimate a range of possible loss, particularly where (i) the damages sought are substantial or indeterminate, (ii) the proceedings are in the early stages, or (iii) the matters involve novel or unsettled legal theories or a large number of parties. In such cases, there is considerable uncertainty regarding the ultimate resolution of such matters, including the amount of any possible loss, fine or penalty. However, an adverse resolution of one or more of such matters could have a material adverse effect on the Company's results of operations in a particular quarter or fiscal year. As of March 31, 2025, the total estimated litigation expense accrual included in the “Other accrued liabilities” in the condensed consolidated balance sheets was $
SNMP Research, Inc. and SNMP Research International, Inc. v. Broadcom Inc., Brocade Communications Systems LLC, and Extreme Networks, Inc.
On October 26, 2020, SNMP Research, Inc. and SNMP Research International, Inc. (collectively, “SNMP”) filed a lawsuit against the Company in the Eastern District of Tennessee for copyright infringement, alleging that the Company was not properly licensed to use its software. SNMP is seeking actual damages and profits attributed to the infringement, as well as equitable relief. On March 2, 2023, SNMP filed an amended complaint adding claims against Extreme on additional products for copyright infringement, breach of contract, and fraud. On January 3, 2025, both parties filed motions for summary judgment seeking to resolve various claims in the case. Those motions are currently pending before the Court. The trial is set for August 5, 2025.
Mala Technologies Ltd. v. Extreme Networks GmbH, Extreme Networks Ireland Ops Ltd., and Extreme Networks, Inc.
On April 15, 2021, Mala Technologies Ltd. (“Mala”) filed a patent infringement lawsuit against the Company and its Irish and German subsidiaries in the District Court in Dusseldorf, Germany. The lawsuit alleges indirect infringement of the German portion of a patent (“EP ‘498”) based on the offer and sale in Germany of certain network switches equipped with the ExtremeXOS operating system. Mala is seeking injunctive relief, accounting, and an unspecified declaration of liability for damages and costs of the lawsuit. On December 20, 2022, the trial court ruled that the Company did not infringe the EP ‘498 patent and dismissed Mala’s complaint entirely. Mala has filed an appeal. On December 9, 2024, the Higher Regional Court stayed the matter until the nullity action has been finally decided.
The Company filed a nullity complaint against EP ‘498 with the German Federal Patent Court on September 24, 2021. The German Federal Patent Court issued a decision finding that the patent was invalid on November 20, 2024. Mala appealed the decision on March 3, 2025, and the Company will defend the appeal.
Steamfitters Local 449 Pension & Retirement Security Funds v. Extreme Networks, Inc., et al.
16
On August 13, 2024, a putative securities class action (the “Class Action”) was filed in the United States District Court for the Northern District of California captioned Steamfitters Local 449 Pension & Retirement Security Funds v. Extreme Networks, Inc., et al., Case No. 5:24-cv-05102-TLT, naming the Company and certain of its current and former executive officers as defendants. The lawsuit is purportedly brought on behalf of purchasers of Extreme Networks securities between July 27, 2022 and January 30, 2024 (the “Class Period”). The complaint alleges claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, based on allegedly false and misleading statements about the Company's business and prospects during the Class Period. The lawsuit seeks unspecified damages. On December 30, 2024, the Court selected Oklahoma Firefighters Pension and Retirement System, Oklahoma Police Pension and Retirement System, Oakland County Voluntary Employees’ Beneficiary Association, Oakland County Employees’ Retirement System as the lead plaintiffs. The Company filed a Motion to Dismiss the amended complaint on April 15, 2025. Trial has been scheduled for March 29, 2027.
On February 27, 2025, a shareholder derivative case was filed in the United States District Court for the Northern District of California captioned Turner v. Brown et al., Case No. 3:25-cv-02101. On March 6, 2025, a shareholder derivative case was filed in the United States District Court for the Northern District of California captioned Hemani v. Meyercord et al., Case No. 3:25-cv-02318-AGT. On March 25, 2025, a shareholder derivative case was filed in the United States District Court for the Eastern District of North Carolina captioned Miller v. Meyercord et al., Case No. 5:25-cv-00161. Each of these cases (collectively, the “Derivative Cases”) names current and former officers, directors, and employees of the Company as defendants, and seeks recovery on behalf of the Company based on substantially the same allegations as the Class Action. The plaintiffs in the Derivative Cases have agreed in principle to stay the matters pending resolution of the Class Action.
Indemnification Obligations
Subject to certain limitations, the Company may be obligated to indemnify its current and former directors, officers, and employees. These obligations arise under the terms of its certificate of incorporation, its bylaws, applicable contracts, and applicable law. The obligation to indemnify, where applicable, generally means that the Company is required to pay or reimburse, and in certain circumstances the Company has paid or reimbursed, the individuals’ reasonable legal expenses and possible damages and other liabilities incurred in connection with certain legal matters. The Company also procures Directors and Officers liability insurance to help cover its defense and/or indemnification costs, although its ability to recover such costs through insurance is uncertain. While it is not possible to estimate the maximum potential amount that could be owed under these governing documents and agreements due to the Company’s limited history with prior indemnification claims, indemnification (including defense) costs could, in the future, have a material adverse effect on the Company’s consolidated financial position, results of operations and cash flows.
Equity Incentive Plan
The Compensation Committee of the Board unanimously approved an amendment to the Extreme Networks, Inc. Amended and Restated 2013 Equity Incentive Plan (the “2013 Plan”) on September 14, 2024 to increase the maximum number of available shares by
Common Stock Repurchases
On May 18, 2022, the Company announced that the Board had authorized management to repurchase up to $
During the three and nine months ended March 31, 2025 the Company repurchased a total of
As a provision of the Inflation Reduction Act enacted in the U.S., the Company is subject to an excise tax on corporate stock repurchases, which is assessed as
17
Shares Reserved for Issuance
The Company had the following reserved shares of common stock for future issuance as of the dates noted (in thousands):
|
|
March 31, |
|
|
June 30, |
|
||
2013 Equity Incentive Plan shares available for grant |
|
|
|
|
|
|
||
Employee stock options and awards outstanding |
|
|
|
|
|
|
||
2014 Employee Stock Purchase Plan |
|
|
|
|
|
|
||
Total shares reserved for issuance |
|
|
|
|
|
|
||
Share-based Compensation Expense
Share-based compensation expense recognized in the condensed consolidated financial statements by line-item caption is as follows (in thousands):
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
March 31, |
|
|
March 31, |
|
|
March 31, |
|
|
March 31, |
|
||||
Cost of product revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Cost of subscription and support revenues |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Research and development |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Sales and marketing |
|
|
|
|
|
|
|
|
|
|
|
|
||||
General and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total share-based compensation expense |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Stock Options
The following table summarizes stock option activity for the nine months ended March 31, 2025 (in thousands, except per share amount and contractual term):
|
|
Number of Shares |
|
|
Weighted-Average Exercise Price Per Share |
|
|
Weighted-Average Remaining Contractual Term (years) |
|
|
Aggregate Intrinsic Value |
|
||||
Options outstanding at June 30, 2024 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Granted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Exercised |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Canceled |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Options outstanding at March 31, 2025 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Vested and expected to vest at March 31, 2025 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Exercisable at March 31, 2025 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
The fair value of each stock option grant under the 2013 Plan is estimated on the date of grant using the Black-Scholes-Merton option valuation model. The expected term of options granted is derived from historical data on employee exercise and post-vesting employment termination behavior. The risk-free interest rate is based upon the estimated life of the option and the U.S. Treasury yield curve in effect at the time of grant. Expected volatility is based on the historical volatility on the Company’s stock. There were
Stock Awards
Stock awards may be granted under the 2013 Plan on terms approved by the Compensation Committee of the Board. Stock awards generally provide for the issuance of restricted stock units (“RSUs”) including performance-condition or market-condition RSUs which vest over a fixed period of time or based upon the satisfaction of certain performance criteria or market conditions. The Company recognizes compensation expense on the stock awards over the vesting period based on the awards’ fair value as of the date of grant. The Company does not estimate forfeitures, but accounts for them as incurred.
18
The following table summarizes stock award activity for the nine months ended March 31, 2025 (in thousands, except grant date fair value):
|
|
Number of Shares |
|
|
Weighted- Average Grant Date Fair Value |
|
|
Aggregate Fair Value |
|
|||
Non-vested stock awards outstanding at June 30, 2024 |
|
|
|
|
$ |
|
|
|
|
|||
Granted |
|
|
|
|
|
|
|
|
|
|||
Released |
|
|
( |
) |
|
|
|
|
|
|
||
Canceled |
|
|
( |
) |
|
|
|
|
|
|
||
Non-vested stock awards outstanding at March 31, 2025 |
|
|
|
|
$ |
|
|
$ |
|
|||
Stock awards expected to vest at March 31, 2025 |
|
|
|
|
$ |
|
|
$ |
|
|||
Market Condition Awards
During the nine months ended March 31, 2025 and 2024, the Compensation Committee of the Board granted
The TSR MSUs vest based on the Company’s TSR relative to the TSR of the Russell 2000 Index (“Index”).
Level |
Relative TSR |
Shares Vested |
Below Threshold |
||
Threshold |
||
Target |
||
Maximum |
The grant date fair value of each MSU was determined using the Monte Carlo simulation model. The weighted-average grant-date fair value of the TSR MSUs granted during the nine months ended March 31, 2025 was $
The stock price target MSUs vest upon the achievement of a certain stock price target over the defined performance period. The stock price target shall be deemed as achieved if the average closing stock price over any 30 consecutive trading days during the period from grant date through the third anniversary of the grant date equals or exceeds the price target of $
19
The grant date fair value of these stock price target MSUs was determined using the Monte Carlo simulation model. The weighted-average grant-date fair value of these stock price target MSUs granted during the nine months ended March 31, 2024 was $
On February 15, 2024 the Company modified certain terms and conditions of the stock price target MSU's for certain employees. Under the modified agreement, the stock price target over the initial and fourth year performance periods were revised to $
Employee Stock Purchase Plan
The fair value of each share purchase option under the ESPP is estimated on the date of grant using the Black-Scholes-Merton option valuation model with the weighted average assumptions noted in the following table. The expected term of the ESPP represents the term of the offering period of each option. The risk-free interest rate is based on the estimated life and on the U.S. Treasury yield curve in effect at the time of grant. Expected volatility is based on the historical volatility on the Company’s common stock.
There were
|
|
Employee Stock Purchase Plan |
|
|
Employee Stock Purchase Plan |
|
||||||||||
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
March 31, |
|
|
March 31, |
|
|
March 31, |
|
|
March 31, |
|
||||
Expected term |
|
|
|
|
|
|
|
|
||||||||
Risk-free interest rate |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
||||
Volatility |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
||||
Dividend yield |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
||||
The weighted-average grant-date fair value of shares under the ESPP during the three months ended March 31, 2025 and 2024 was $
The Company operates in
See Note 3, Revenues, for the Company’s revenues by geographic region.
The Company’s long-lived assets are attributed to the geographic regions as follows (in thousands):
|
|
March 31, |
|
|
June 30, |
|
||
Americas |
|
$ |
|
|
$ |
|
||
EMEA |
|
|
|
|
|
|
||
APAC |
|
|
|
|
|
|
||
Total long-lived assets |
|
$ |
|
|
$ |
|
||
Foreign Exchange Forward Contracts
The Company uses derivative financial instruments to manage exposures to foreign currency risk that may or may not be designated as hedging instruments. The Company’s objective for holding derivatives is to use the most effective methods to minimize
20
the impact of these exposures. The Company does not enter into derivatives for speculative or trading purposes. The Company enters into foreign exchange forward contracts to attempt to mitigate the effect of gains and losses generated by foreign currency transactions related to certain operating expenses and re-measurement of certain assets and liabilities denominated in foreign currencies.
For foreign exchange forward contracts not designated as hedging instruments, the fair value of the Company’s derivatives in a gain position are recorded in “Prepaid expenses and other current assets” and derivatives in a loss position are recorded in “Other accrued liabilities” in the accompanying condensed consolidated balance sheets. Changes in the fair value of derivatives are recorded in “Other income (expense), net” in the accompanying condensed consolidated statements of operations. As of March 31, 2025 and June 30, 2024, foreign exchange forward contracts not designated as hedging instruments had a total notional principal amount of $
There were
The Company recorded restructuring benefit of $
During the third quarter of fiscal 2024, the Company executed a global reduction-in-force plan targeted towards the reorganization of the Company's research and development and sales and marketing functions to align the Company's workforce with its strategic priorities and to focus on specific geographies and industry segments with higher growth opportunities (the “Q3 2024 Plan”). During the three and nine months ended March 31, 2025, the Company recorded restructuring benefit of $
During the second quarter of fiscal 2024, the Company executed a global reduction-in-force plan to rebalance its workforce to create greater efficiency and improve execution, in alignment with the Company's business and strategic priorities, while reducing its ongoing operating expenses to address reduced revenue and macro-economic conditions (the “Q2 2024 Plan”). During the three and nine months ended March 31, 2025, the Company recorded restructuring benefit of $
Through March 31, 2025, the Company has incurred $
During the third quarter of fiscal 2023, the Company initiated a restructuring plan to transform its business infrastructure and reduce its facilities footprint and the facilities related charges (the “2023 Plan”). As part of this project, the Company moved engineering labs from its San Jose, California location to its Salem, New Hampshire location. This move is expected to help reduce the cost of operating the Company's labs. During the nine months ended March 31, 2025, the Company recorded restructuring charges of $
During the first quarter of fiscal 2024, the Company initiated a reduction-in-force plan to rebalance the workforce to create greater efficiency and improve execution in alignment with the Company's business and strategic priorities (the “Q1 2024 Plan”). It consisted
21
primarily of workforce reduction to drive productivity in research and development, sales and marketing and provide efficiency across operations and general and administrative functions. During the nine months ended March 31, 2024, the Company incurred charges of $
Restructuring liabilities are recorded in “Other accrued liabilities” in the accompanying condensed consolidated balance sheets. As of March 31, 2025 and 2024, the restructuring liability was $
The following table summarizes the activity related to the Company’s during the following periods (in thousands):
|
|
Three Months Ended |
|
Nine Months Ended |
|
||||||||||
|
|
March 31, |
|
|
March 31, |
|
March 31, |
|
|
March 31, |
|
||||
Balance at beginning of period |
|
$ |
|
|
$ |
|
$ |
|
|
$ |
|
||||
Period charges |
|
|
|
|
|
|
|
|
|
|
|
||||
Period reversals |
|
|
( |
) |
|
|
( |
) |
|
( |
) |
|
|
( |
) |
Period payments |
|
|
( |
) |
|
|
( |
) |
|
( |
) |
|
|
( |
) |
Balance at end of period |
|
$ |
|
|
$ |
|
$ |
|
|
$ |
|
||||
For the three months ended March 31, 2025 and 2024, the Company recorded an income tax provision of $
The income tax provisions for the three and nine months ended March 31, 2025 and 2024, consisted of (1) taxes on the income of the Company’s foreign subsidiaries, (2) state taxes in jurisdictions where the Company has no remaining state net operating losses (“NOLs”), (3) foreign withholding taxes, and (4) tax expense associated with the establishment of a U.S. deferred tax liability for amortizable goodwill resulting from the acquisition of Enterasys Networks, Inc., the wireless local area network business from Zebra Technologies Corporation, the Campus Fabric Business from Avaya and the Data Center Business from Brocade. In addition, the income tax provision for each of the three and nine months ended March 31, 2025, includes US Federal income tax expense of $
The Company has provided a full valuation allowance against all of its U.S. federal and state deferred tax assets as well as a portion of the deferred tax assets in Ireland. Significant judgment is required in determining any valuation allowance recorded against deferred tax assets. In assessing the need for a valuation allowance, the Company considers all available positive and negative evidence to determine whether it is “more likely than not” that deferred tax assets are recoverable including past operating results, estimates of future taxable income, changes to enacted tax laws, and the feasibility of tax planning strategies; such assessment is required on a jurisdiction-by-jurisdiction basis. The Company's inconsistent earnings in recent periods, including historical losses, tax attributes expiring unutilized in recent years and the cyclical nature of the Company's business provides sufficient negative evidence that require a full valuation allowance against its U.S. federal and state net deferred tax assets as well as a portion of the deferred tax assets in Ireland. These valuation allowances will be evaluated periodically and can be reversed partially or in whole if business results and the economic environment have sufficiently improved to support realization of some or all of the Company's deferred tax assets. In the event the Company changes its determination as to the amount of deferred tax assets that can be realized, it will adjust its valuation allowance with a corresponding impact to the provision for income taxes in the period in which such determination is made.
The Company had $
The Company’s policy is to accrue interest and penalties related to the underpayment of income taxes as a component of tax expense in the accompanying condensed consolidated statements of operations.
22
In general, the Company’s U.S. federal income tax returns are subject to examination by tax authorities for fiscal years 2004 forward due to NOLs and the Company’s state income tax returns are subject to examination for fiscal years 2005 and forward due to NOLs.
Basic net income (loss) per share is calculated by dividing net income (loss) by the weighted-average number of shares of common stock outstanding during the period. Diluted net income (loss) per share is calculated by dividing net income (loss) by the weighted-average number of shares of common stock used in the basic net income (loss) per share calculation plus the dilutive effect of shares subject to repurchase, options and unvested RSUs.
The following table presents the calculation of net income (loss) per share of basic and diluted (in thousands, except per share data):
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
March 31, |
|
|
March 31, |
|
|
March 31, |
|
|
March 31, |
|
||||
Net income (loss) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
||
Weighted-average shares used in per share calculation – basic |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Options to purchase common stock |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Restricted stock units |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Employee Stock Purchase Plan shares |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted-average shares used in per share calculation – diluted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income (loss) per share – basic and diluted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income (loss) per share – basic |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
||
Net income (loss) per share – diluted |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
||
The following securities were excluded from the computation of net income (loss) per diluted share of common stock for the periods presented as their effect would have been anti-dilutive (in thousands):
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
March 31, |
|
|
March 31, |
|
|
March 31, |
|
|
March 31, |
|
||||
Options to purchase common stock |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Restricted stock units |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Employee Stock Purchase Plan shares |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total shares excluded |
|
|
|
|
|
|
|
|
|
|
|
|
||||
23
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This Quarterly Report on Form 10-Q for the third quarter ended March 31, 2025 (this “Report”) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including in particular, our expectations regarding market demands, customer requirements and the general economic environment, future results of operations, and other statements that include words such as “may,” “will,” “should,” “expect,” “plan,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue” and similar expressions. These forward-looking statements involve risks and uncertainties. We caution investors that actual results may differ materially from those projected in the forward-looking statements as a result of certain risk factors identified in the section entitled “Risk Factors” in this Report, our Annual Report on Form 10-K for the fiscal year ended June 30, 2024, and other filings we have made with the Securities and Exchange Commission. These risk factors include, but are not limited to: adverse general economic conditions; fluctuations in demand for our products and services; a highly competitive business environment for network switching equipment; our effectiveness in controlling expenses; the possibility that we might experience delays in the development or introduction of new technology and products; customer response to our new technology and products; fluctuations in the global economy, including as a result of political, social, economic, and regulatory factors, currency fluctuations, and tariff and trade policies; geopolitical tensions and conflicts; risks related to pending or future litigation and a dependency on third parties for certain components and for the manufacturing of our products.
Business Overview
The following discussion is based upon our unaudited condensed consolidated financial statements included elsewhere in this Report. In the course of operating our business, we routinely make decisions as to the timing of the payment of invoices, the collection of receivables, the manufacturing and shipment of products, the fulfillment of orders, the purchase of supplies, and the building of inventory and service parts, among other matters. Each of these decisions has some impact on the financial results for any given period. In making these decisions, we consider various factors, including contractual obligations, customer satisfaction, competition, internal and external financial targets and expectations, and financial planning objectives. For further information about our critical accounting policies and estimates, see the “Critical Accounting Policies and Estimates” section included in this “Management's Discussion and Analysis of Financial Condition and Results of Operations.”
Extreme Networks, Inc. (“Extreme” or “Company”) is a leading provider of cloud networking with integrated security and Artificial Intelligence (“AI”) solutions along with industry leading services and support. Extreme designs, develops, and manufactures wired, wireless, and software-defined wide area-network (“SD-WAN”) infrastructure equipment, software and cloud-based network management solutions and security and AI software solutions. The Company’s Platform ONETM solution, announced in December 2024, is a technology platform that reduces the complexity for enterprises by seamlessly integrating networking, security and AI solutions into a single platform. AI-powered automation includes conversational, interactive and autonomous AI agents—to assist, advise and accelerate the productivity of networking, security and business teams—reducing the time to complete complex tasks.
Our global footprint provides service to some of the world’s leading names in business, hospitality, retail, transportation and logistics, education, government, healthcare, manufacturing and service providers. We derive all our revenues from the sale of our networking equipment, software subscriptions, and related maintenance contracts.
Industry Background
Enterprises across every industry are going through unprecedented changes, such as digital transformation initiatives, migrating their workloads to cloud-based environments, modernizing applications, finding new ways to leverage generative AI (“GenAI”) technology, and adapting to a distributed workforce. To accomplish this, they are adopting new Information Technology (“IT”) delivery models and applications that require fundamental network alterations and enhancements spanning from the access edge to the data center. As networks become more complex and more distributed in nature, we believe IT teams in every industry will need more control and better insights than ever before to deliver secure, distributed connectivity and comprehensive centralized visibility. Networking is mission critical and touches all elements of how services are delivered to customers, employees, students, and patients. Managing networks from a single platform that integrates AI networking and security is critical to help reduce complexity and minimize the time it takes to complete tasks.
As the edge of the network continues to expand, our customers are managing more endpoints which comes with a host of challenges. This continued expansion creates issues such as a higher risk of cyberattacks and a need for more bandwidth as a result of an increase in applications running across the network.
Network complexity manifests itself in the form of more endpoints to manage, more applications to monitor, and more services that rely on the network for service delivery and enablement. When performance suffers, and the tug on internal systems and IT staff becomes more intense, technology is often being overworked. Resolving network problems expeditiously and identifying their root cause can improve organizational productivity and result in higher performance of operations.
24
We believe that the network has never been more vital than it is today. As administrators grapple with more data, coming from more places, more connected devices, and more Software-as-a-Service (“SaaS”) based applications, the cloud is fundamental to managing and maintaining a modern network. Traditional network offerings are not well-suited to fulfill enterprise expectations for rapid delivery of new services, more flexible business models, real-time response, and massive scalability. We expect Platform ONE’s new capabilities to deliver significant productivity gains for IT teams by streamlining network design, deployment, management, and commercial operations.
As enterprises continue to migrate increasing numbers of applications and services to either private clouds or public clouds offered by third parties and to adopt new IT delivery models and applications, they are required to make fundamental network alterations and enhancements spanning from device access points (“APs”) to the network core. In either case, the network infrastructure must adapt to this new dynamic environment. Intelligence and automation are key if enterprises are to derive maximum benefit from their cloud deployments. With automation applications becoming increasingly critical in manufacturing, warehousing, logistics, healthcare and other key industries, we believe this will continue to create demand for networking technology to serve as a foundation to run these services.
Service providers are investing in network enhancements with platforms and applications that deliver data insights, provide flexibility, and can quickly respond to new user demands and 5G use cases.
We believe Extreme will continue to benefit from the use of its technology to manage distributed campus network architecture centrally from the cloud. Extreme has blended a dynamic network fabric architecture that delivers simplicity for moves and changes at the edge of the network together with corporate-wide role-based policy. This enables customers to migrate to new cloud-managed switching, Wi-Fi, and SD-WAN, agnostic of the existing switching or wireless equipment they already have installed. In the end, we expect these customers to see lower operating and capital expenditures, lower subscription costs, lower overall cost of ownership, and more flexibility, along with a more resilient network.
We estimate the total addressable market for our Enterprise Networking solutions consisting of cloud networking, wireless local area networks (“WLAN”), data center networking, ethernet switching, campus local area networks (“LAN”), SD-WAN solutions and management, automation, and elements of the Secure Access Services Edge (“SASE”) market to be over $47 billion, and growing at approximately 13% annually over the next five years based on data from the 650 Group, Gartner, IDC, and Dell'Oro. This comprises over $36 billion for networking and infrastructure spanning enterprise and service provider (largely 5G) applications, and $11 billion for networking cloud and security software, which is expected to grow to $31 billion by 2028.
The Extreme Strategy
We are driven to help our customers find new ways to deliver better outcomes. Extreme empowers organizations with new ways to simply and securely connect with Extreme's intelligent technology platform to help move their organizations forward.
Extreme Platform ONE will reduce complexity for enterprises by seamlessly integrating networking, security and AI solutions. The platform’s AI-powered automation includes conversational, interactive and autonomous AI agents, to assist, advise and accelerate the productivity of networking, security and business teams—reducing the time to complete complex tasks. Extreme Platform ONE is also designed to offer the industry's simplest licensing.
Key elements of Extreme’s strategy and differentiation include:
25
26
27
Results of Operations
During the third quarter of fiscal 2025, we achieved the following results:
During the first nine months of fiscal 2025, we reflected the following results:
28
Net Revenues
The following table presents net product and subscription and support revenues for the periods presented (in thousands, except percentages):
|
|
Three Months Ended |
|
Nine Months Ended |
|
||||||||||||
|
|
March 31, |
|
March 31, |
|
$ |
|
% |
|
March 31, |
|
March 31, |
|
$ |
|
% |
|
Net revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product |
|
$178,060 |
|
$106,442 |
|
$71,618 |
|
67.3 % |
|
$512,605 |
|
$546,536 |
|
$(33,931) |
|
(6.2)% |
|
Percentage of net revenues |
|
62.6% |
|
50.4% |
|
|
|
|
|
61.5% |
|
63.5% |
|
|
|
|
|
Subscription and support |
|
106,445 |
|
104,594 |
|
1,851 |
|
1.8 % |
|
320,459 |
|
314,014 |
|
6,445 |
|
2.1 % |
|
Percentage of net revenues |
|
37.4% |
|
49.6% |
|
|
|
|
|
38.5% |
|
36.5% |
|
|
|
|
|
Total net revenues |
|
$284,505 |
|
$211,036 |
|
$73,469 |
|
34.8 % |
|
$833,064 |
|
$860,550 |
|
$(27,486) |
|
(3.2)% |
|
We generate product revenues primarily from sales of our networking equipment. We derive subscription and support revenues primarily from sales of our subscription and support offerings which include SaaS offerings, maintenance contracts, professional services and training for our products.
Product revenues increased $71.6 million or 67.3% for the three months ended March 31, 2025 as compared to the corresponding period in fiscal 2024. The increase in product revenues was primarily driven by higher shipments than in the corresponding period in fiscal 2024 which was impacted by elongated sales cycles to end customers and lower channel sell-through caused by macroeconomic conditions. Product revenues decreased $33.9 million or 6.2% for the nine months ended March 31, 2025 as compared to the corresponding period in fiscal 2024. The decrease in product revenues was primarily driven by higher shipments in the corresponding period in fiscal 2024 due to the release of product backlog resulting from the easing of supply chain constraints.
Subscription and support revenues increased $1.9 million or 1.8% for the three months ended March 31, 2025 as compared to the corresponding period in fiscal 2024. Subscription and support revenues increased $6.4 million or 2.1% for the nine months ended March 31, 2025 as compared to the corresponding period in fiscal 2024. The increases in subscription and support revenues were primarily due to higher subscription revenue.
The following table presents the product and subscription and support gross profit and the respective gross profit percentages for the periods presented (in thousands, except percentages):
|
|
Three Months Ended |
|
Nine Months Ended |
|
||||||||||||
|
|
March 31, |
|
March 31, |
|
$ |
|
% |
|
March 31, |
|
March 31, |
|
$ |
|
% |
|
Gross profit: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product |
|
$102,001 |
|
$45,605 |
|
$56,396 |
|
123.7 % |
|
$294,540 |
|
$295,670 |
|
$(1,130) |
|
(0.4)% |
|
Percentage of product revenues |
|
57.3% |
|
42.8% |
|
|
|
|
|
57.5% |
|
54.1% |
|
|
|
|
|
Subscription and support |
|
73,408 |
|
74,296 |
|
(888) |
|
(1.2)% |
|
225,499 |
|
220,537 |
|
4,962 |
|
2.2 % |
|
Percentage of subscription and support revenues |
|
69.0% |
|
71.0% |
|
|
|
|
|
70.4% |
|
70.2% |
|
|
|
|
|
Total gross profit |
|
$175,409 |
|
$119,901 |
|
$55,508 |
|
46.3 % |
|
$520,039 |
|
$516,207 |
|
$3,832 |
|
0.7 % |
|
Percentage of net revenues |
|
61.7% |
|
56.8% |
|
|
|
|
|
62.4% |
|
60.0% |
|
|
|
|
|
Product gross profit increased $56.4 million or 123.7% for the three months ended March 31, 2025 as compared to the corresponding period in fiscal 2024. The increase in product gross profit was primarily due to higher product revenues and lower reserves for excess and obsolete inventories, partially offset by higher overhead and distribution costs.
Product gross profit decreased $1.1 million or 0.4% for the nine months ended March 31, 2025 as compared to the corresponding period in fiscal 2024. The decrease in product gross profit was primarily due to lower product revenues and increased overhead costs, partially offset by lower reserves for excess and obsolete inventory.
Subscription and support gross profit decreased $0.9 million or 1.2% for the three months ended March 31, 2025 as compared to the corresponding period in fiscal 2024. The decrease in subscription and support gross profit was primarily due to higher subscription hosting costs.
Subscription and support gross profit increased $5.0 million or 2.2% for the nine months ended March 31, 2025 as compared to the corresponding period in fiscal 2024. The increase in subscription and support gross profit was primarily due to increased subscription revenues, partially offset by higher subscription hosting costs.
29
Operating Expenses
The following table presents operating expenses for the periods presented (in thousands, except percentages):
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
|
March 31, |
|
March 31, |
|
$ |
|
% |
|
March 31, |
|
March 31, |
|
$ |
|
% |
Research and development |
$55,656 |
|
$54,517 |
|
$1,139 |
|
2.1 % |
|
$164,990 |
|
$165,366 |
|
$(376) |
|
(0.2)% |
Sales and marketing |
79,773 |
|
87,708 |
|
(7,935) |
|
(9.0)% |
|
241,123 |
|
264,782 |
|
(23,659) |
|
(8.9)% |
General and administrative |
29,537 |
|
25,213 |
|
4,324 |
|
17.1 % |
|
92,202 |
|
74,470 |
|
17,732 |
|
23.8 % |
Restructuring and related (benefit) charges |
(441) |
|
14,421 |
|
(14,862) |
|
(103.1)% |
|
1,871 |
|
26,312 |
|
(24,441) |
|
(92.9)% |
Amortization of intangible assets |
507 |
|
511 |
|
(4) |
|
(0.8)% |
|
1,528 |
|
1,531 |
|
(3) |
|
(0.2)% |
Total operating expenses |
$165,032 |
|
$182,370 |
|
$(17,338) |
|
(9.5)% |
|
$501,714 |
|
$532,461 |
|
$(30,747) |
|
(5.8)% |
Research and Development Expenses
Research and development expenses consist primarily of personnel costs (which consist of compensation, benefits and share-based compensation), consultant fees and prototype expenses related to the design, development, and testing of our products.
Research and development expenses increased by $1.1 million or 2.1% for the three months ended March 31, 2025 as compared to the corresponding period in fiscal 2024. The increase in research and development expenses was primarily due to a $1.1 million increase in personnel costs due to higher headcount and higher compensation and benefits costs, a $0.7 million increase in engineering project costs, and a $0.5 million increase in other expenses primarily consisting of software costs, partially offset by a $1.2 million decrease in contractor costs.
Research and development expenses decreased by $0.4 million or 0.2% for the nine months ended March 31, 2025 as compared to the corresponding period in fiscal 2024. The decrease in research and development expenses was primarily due to a $7.0 million decrease in contractor costs, partially offset by a $3.0 million increase in personnel costs due to higher headcount and higher compensation and benefits costs, a $1.6 million increase in information and technology and facilities related costs, and a $2.0 million increase in other expenses primarily consisting of recruiting and professional fees.
Sales and Marketing Expenses
Sales and marketing expenses consist primarily of personnel costs (which consist of compensation, benefits and share-based compensation), as well as trade shows and promotional expenses.
Sales and marketing expenses decreased by $7.9 million or 9.0% for the three months ended March 31, 2025 as compared to the corresponding period in fiscal 2024. The decrease in sales and marketing expenses was primarily due to a $4.3 million decrease in personnel costs primarily due to lower headcount, a $2.4 million decrease in other expenses primarily related to marketing expenses for trade shows and information technology and facilities expenses, and a $1.2 million decrease in professional fees.
Sales and marketing expenses decreased by $23.7 million or 8.9% for the nine months ended March 31, 2025 as compared to the corresponding period in fiscal 2024. The decrease in sales and marketing expenses was primarily due to a $16.7 million decrease in personnel costs due to lower headcount, a $2.7 million decrease in information technology and facilities costs, a $2.8 million decrease in contractor costs and professional services costs, and a $1.5 million decrease in travel expenses.
General and Administrative Expenses
General and administrative expenses consist primarily of personnel costs (which consist of compensation, benefits and share-based compensation), legal and professional service costs, and facilities and information technology costs.
General and administrative expenses increased by $4.3 million or 17.1% for the three months ended March 31, 2025 as compared to the corresponding period in fiscal 2024. The increase in general and administrative expenses was primarily due to a $6.7 million increase in system transition costs, partially offset by a $1.5 million decrease in legal costs related to litigation matters, net of insurance recoveries, and a $0.9 million decrease in professional fees.
General and administrative expenses increased by $17.7 million or 23.8% for the nine months ended March 31, 2025 as compared to the corresponding period in fiscal 2024. The increase in general and administrative expenses was primarily due to a $14.5 million increase in system transition costs and a $7.3 million increase in legal costs related to litigation matters, net of insurance recoveries, partially offset by a $3.7 million decrease in professional fees, and a $0.4 million decrease in other costs related to recruiting fees and advertising.
30
Restructuring and Related Charges
For the three and nine months ended March 31, 2025, we recorded restructuring benefit of $0.4 million and restructuring charges of $1.9 million, respectively, which primarily consisted of additions to severance and benefits costs and professional services fees as well as reversals of previously established accruals related to unused severance benefits associated with the reduction-in-force actions related to the “Q2 2024 Plan”, and “Q3 2024 Plan”, each as described in Note 13, Restructuring and Related Charges, in Notes to the Condensed Consolidated Financial Statements included elsewhere in this Report.
For the three and nine months ended March 31, 2024, we recorded restructuring and related charges of $14.4 million and $26.3 million, which primarily consisted of severance and benefits costs and professional services fees associated with the reduction-in-force actions related to the “Q1 2024 Plan”, “Q2 2024 Plan”, and “Q3 2024 Plan”.
Amortization of Intangible Assets
During the three months ended March 31, 2025 and 2024, we recorded $0.5 million of operating expenses for each period related to the amortization of intangible assets.
During the nine months ended March 31, 2025 and 2024, we recorded $1.5 million of operating expenses for each period related to the amortization of intangible assets.
Interest Income
During the three months ended March 31, 2025 and 2024, we recorded $1.0 million and $1.2 million, respectively, in interest income. The decrease in interest income was primarily related to the lower interest earned on our cash accounts due to lower cash and cash equivalents balances held during the third quarter in fiscal 2025.
During the nine months ended March 31, 2025 and 2024, we recorded $2.7 million and $3.9 million, respectively, in interest income. The decrease in interest income is primarily related to the lower interest earned on our cash accounts due to lower cash and cash equivalents balances held during the first three quarters of fiscal 2025.
Interest Expense
During the three months ended March 31, 2025 and 2024, we recorded $3.8 million and $4.2 million, respectively, in interest expense related to the debt obligations held under our Amended Credit Agreement. The decrease in interest expense was primarily due to lower average rates under the Amended Credit Agreement.
During the nine months ended March 31, 2025 and 2024, we recorded $12.4 million and $12.8 million, respectively, in interest expense related to the debt obligations held under the Amended Credit Agreement. The decrease in interest expense was primarily due to lower average rates under the Amended Credit Agreement.
Other Income (Expense), Net
During the three months ended March 31, 2025 and 2024, we recorded other expense, net of $0.4 million and other income, net of $0.4 million, respectively. The other income (expense), net for each period primarily related to the foreign exchange impact from the revaluation of certain assets and liabilities denominated in foreign currencies into U.S. Dollars.
During the nine months ended March 31, 2025 and 2024, we recorded other expense, net of $0.4 million and other income, net of $0.4 million, respectively. The other income (expense), net for each period primarily related to the foreign exchange impact from the revaluation of certain assets and liabilities denominated in foreign currencies into U.S. Dollars.
Provision for Income Taxes
For the three months ended March 31, 2025 and 2024, we recorded income tax provision of $3.7 million and an income tax benefit of $0.6 million, respectively.
For the nine months ended March 31, 2025 and 2024, we recorded income tax provision of $7.8 million and $7.0 million, respectively.
The income tax provisions for the three and nine months ended March 31, 2025 and 2024 consisted of (1) taxes on the income of our foreign subsidiaries, (2) state taxes in jurisdictions where we have no remaining state net operating losses, (3) foreign withholding taxes, and (4) tax expense associated with the establishment of a U.S. deferred tax liability for amortizable goodwill resulting from the acquisition of Enterasys Networks, Inc., the WLAN business from Zebra Technologies Corporation, the Campus Fabric Business from Avaya LLC and the Data Center Business from Brocade Communications System. In addition, the income tax provision for each of the three and nine months ended March 31, 2025 includes U.S. federal income tax expense of $1.5 million.
31
Critical Accounting Policies and Estimates
Our unaudited condensed consolidated financial statements and the related notes included elsewhere in this Report are prepared in accordance with accounting principles generally accepted in the United States. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted under SEC rules and regulations. The preparation of these unaudited condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. In many instances, we could have reasonably used different accounting estimates, and in other instances changes in the accounting estimates are reasonably likely to occur from period to period. Accordingly, actual results could differ significantly from the estimates made by our management. On an ongoing basis, we evaluate our estimates and assumptions. To the extent that there are material differences between these estimates and actual results, our future financial statement presentation, financial condition, results of operations, and cash flows will be affected.
As discussed in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended June 30, 2024, we consider the following accounting policies to be the most critical in understanding the judgments that are involved in preparing our consolidated financial statements:
There have been no changes to our critical accounting policies since the filing of our last Annual Report on Form 10-K.
Liquidity and Capital Resources
The following table summarizes information regarding our cash and cash equivalents (in thousands):
|
|
March 31, |
|
|
June 30, |
|
||
Cash and cash equivalents |
|
$ |
185,480 |
|
|
$ |
156,699 |
|
As of March 31, 2025, our principal sources of liquidity consisted of cash and cash equivalents of $185.5 million, accounts receivable, net of $99.5 million, and available borrowings under our 2023 Revolving Facility of $135.8 million. Our principal uses of cash include the purchase of finished goods inventory from our contract manufacturers, payroll and other operating expenses related to the development and marketing of our products, purchases of property and equipment, and repayments of debt and related interest and share repurchases. We believe that our $185.5 million of cash and cash equivalents at March 31, 2025, our cash flow from operations and the availability of borrowings from the 2023 Revolving Facility will be sufficient to fund our planned operations for at least the next 12 months and into the foreseeable future.
On February 18, 2025, we announced that our Board had authorized management to repurchase up to $200 million shares of the Company's common stock over a three-year period, commencing July 1, 2025 (the “2025 Repurchase Program”). As of March 31, 2025, we had approximately $37.3 million remaining from the $200.0 million share repurchase authorization approved in May 2022 (the “2022 Repurchase Program”), which expires on June 30, 2025. Under these repurchase programs, purchases may be made from time to time in the open market or pursuant to a 10b5-1 plan. The manner, timing and amount of any future purchases will be determined by our management based on their evaluation of market conditions, stock price, Extreme’s ongoing determination that it is the best use of available cash and other factors. Neither of the 2022 Repurchase Program or the 2025 Repurchase Program obligate us to acquire any shares of our common stock, and they may be suspended or terminated at any time without prior notice and will be subject to regulatory considerations. During the three and nine months ended March 31, 2025, we repurchased a total of 853,247 shares of our common stock on the open market at a total cost of $13.0 million with an average price of $15.24 per share.
On August 9, 2019, we entered into an Amended and Restated Credit Agreement (the “2019 Credit Agreement”), by and among Extreme, as borrower, several banks and other financial institutions as Lenders, BMO Harris Bank N.A., as an issuing lender and swingline lender, Silicon Valley Bank, as an Issuing Lender, and Bank of Montreal, as administrative agent and collateral agent for the Lenders.
On June 22, 2023, we entered into the Second Amended and Restated Credit Agreement (the “2023 Credit Agreement”) by and among Extreme, as borrower, BMO Harris Bank, N.A., as an issuing lender and swingline lender, Bank of America, N.A., JPMorgan Chase Bank, N.A., PNC Bank, National Association and Wells Fargo Bank, National Association, as issuing lenders, the financial institutions or entities party thereto as lenders, and Bank of Montreal, as an administrative agent and collateral agent, which amended and restated the 2019 Credit Agreement. The 2023 Credit Agreement provides for i) a $200.0 million first lien term loan facility in an aggregate principal amount (the “Term Facility”), ii) a $150.0 million five-year revolving credit facility (the “2023 Revolving Facility”) and iii) an uncommitted additional incremental loan facility in the principal amount of up to $100.0 million plus an unlimited amount
32
that is subject to pro forma compliance with a specified Consolidated Leverage Ratio tests. We may use the proceeds of the loans for working capital and general corporate purposes.
At our election, the initial term loan (the “Initial Term Loan”) under the 2023 Credit Agreement may be made as either a base rate loan or a Secured Overnight Financing Data Rate loan (“SOFR loan”). The applicable margin for base rate loans ranges from 1.00% to 1.75% per annum, and the applicable margin for SOFR loans ranges from 2.00% to 2.75%, in each case based on the Company’s Consolidated Leverage Ratio. All SOFR loans are subject to a floor of 0.00% per annum and spread adjustment of 0.10% per annum. We also agreed to pay other closing fees, arrangement fees, and administration fees.
The 2023 Credit Agreement requires us to maintain certain minimum financial ratios at the end of each fiscal quarter. The 2023 Credit Agreement also includes covenants and restrictions that limit, among other things, our ability to incur additional indebtedness, create liens upon any of its property, merge, consolidate or sell all or substantially all of its assets. The 2023 Credit Agreement also includes customary events of default which may result in acceleration of the outstanding balance.
On August 14, 2024, we entered into an Amendment Number One to the 2023 Credit Agreement the (the 2023 Credit Agreement as amended by that certain Amendment Number One, “Amended Credit Agreement”). Under the Amended Credit Agreement, we modified the definition of the consolidated EBITDA for the purposes of evaluating compliance with financial covenants under the Amended Credit Agreement. The amended definition of consolidated EBITDA modifies the amount and type of add-backs that are allowable to better align with our operations and activities.
During the three and nine months ended March 31, 2025, the Company was in compliance with the modified terms and financial covenants under the Amended Credit Agreement.
Key Components of Cash Flows and Liquidity
A summary of the sources and uses of cash and cash equivalents is as follows (in thousands):
|
|
Nine Months Ended |
|
|||||
|
|
March 31, |
|
|
March 31, |
|
||
Net cash provided by operating activities |
|
$ |
70,092 |
|
|
$ |
39,997 |
|
Net cash used in investing activities |
|
|
(18,067 |
) |
|
|
(13,632 |
) |
Net cash used in financing activities |
|
|
(23,102 |
) |
|
|
(109,919 |
) |
Foreign currency effect on cash and cash equivalents |
|
|
(142 |
) |
|
|
(265 |
) |
Net increase (decrease) in cash and cash equivalents |
|
$ |
28,781 |
|
|
$ |
(83,819 |
) |
Net Cash Provided by Operating Activities
Cash flows provided by operations in the nine months ended March 31, 2025 were $70.1 million, including our net income of $0.3 million and non-cash expenses of $86.0 million for items such as amortization of intangible assets, share-based compensation, depreciation, reduction in carrying amount of right-of-use assets, deferred income taxes, provision for excess and obsolete inventory and interest. Other sources of cash for the period included a decrease in inventories and increases in deferred revenue and accrued compensation and benefits. This was partially offset by increases in accounts receivable and prepaid expenses and other assets as well as decreases in accounts payable, operating lease liabilities and other liabilities.
Cash flows provided by operations in the nine months ended March 31, 2024 were $40.0 million, including our net loss of $31.8 million and non-cash expenses of $109.3 million for items amortization of intangible assets, share-based compensation, depreciation, reduction in carrying amount of right-of-use assets, deferred income taxes, and interest. Other sources of cash for the period included a decrease in accounts receivable, and increases in deferred revenue and other current and long-term liabilities. This was partially offset by increases in inventories and prepaid expenses and other assets as well as decreases in accounts payable, operating lease liabilities and accrued compensation and benefits.
Net Cash Used in Investing Activities
Cash flows used in investing activities in the nine months ended March 31, 2025 were $18.1 million for the purchases of property and equipment and the capitalized software development costs.
Cash flows used in investing activities in the nine months ended March 31, 2024 were $13.6 million for the purchases of property and equipment.
33
Net Cash Used in Financing Activities
Cash flows used in financing activities in the nine months ended March 31, 2025 were $23.1 million primarily due to share repurchases of $13.0 million under the 2022 Repurchase Program, payments of $1.9 million for taxes paid on vested and released stock awards net of proceeds from the issuance of shares of our common stock under our Employee Stock Purchase Plan (“ESPP”) and exercise of stock options, a payment of $0.7 million for debt financing costs related to the Amended Credit Agreement, and debt repayments of $7.5 million.
Cash flows used in financing activities in the nine months ended March 31, 2024 were $109.9 million primarily due to payments of $27.6 million for taxes paid on vested and released stock awards net of proceeds from the issuance of shares of our common stock under our ESPP and exercise of stock options, share repurchases of $49.9 million under the 2022 Repurchase Program, a $25.0 million payment against our revolving facility, and debt repayments of $7.5 million.
Foreign Currency Effect on Cash and cash equivalents
Foreign currency effect on cash and cash equivalents increased in the nine months ended March 31, 2025, primarily due to changes in foreign currency exchange rates between the U.S. Dollar and particularly the Indian Rupee, the UK Pound and the Euro.
Contractual Obligations
As of March 31, 2025, we had contractual obligations resulting from our debt arrangement, agreements to purchase goods and services in the ordinary course of business and obligations under our operating lease arrangements.
Our debt obligations relate to amounts owed under our Amended Credit Agreement. As of March 31, 2025, we had $182.5 million of debt outstanding, which is payable on quarterly installments through our fiscal year 2028. We are subject to interest on our debt obligations and unused commitment fee. See Note 7, Debt, in the Notes to Condensed Consolidated Financial Statements in this Report for additional information regarding our debt obligations.
Our unconditional purchase obligations represent the purchase of long lead-time component inventory that our contract manufacturers procure in accordance with our forecast. We expect to honor the inventory purchase commitments within the next 12 months. As of March 31, 2025, we had non-cancelable commitments to purchase $36.0 million of inventory. See Note 8, Commitments and Contingencies, in the Notes to Condensed Consolidated Financial Statements for additional information regarding our purchase obligations.
We have contractual commitments to our suppliers which represent commitments for future services. As of March 31, 2025, we had contractual commitments of $19.4 million that are due through our fiscal year 2027.
We lease facilities under operating lease arrangements at various locations that expire at various dates through our fiscal year 2033. As of March 31, 2025, the value of our obligations under operating leases was $55.3 million.
We have immaterial income tax liabilities related to uncertain tax positions and we are unable to reasonably estimate the timing of the settlement of those liabilities.
We did not have any material commitments for capital expenditures as of March 31, 2025.
Off-Balance Sheet Arrangements
We did not have any off-balance sheet arrangements as of March 31, 2025.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Interest Rate Sensitivity
Our exposure to market risk for changes in interest rates relates primarily to debt and foreign currencies.
Debt
At certain points in time, we are exposed to the impact of interest rate fluctuations, primarily in the form of variable rate borrowings from the Amended Credit Agreement, which is described in Note 7, Debt, in the Notes to Condensed Consolidated Financial Statements in this Report. At March 31, 2025, we had $182.5 million of debt outstanding, all of which was from the Amended Credit Agreement. During the quarter ended March 31, 2025, the average daily outstanding amount was $194.3 million, with a high of $215.0 million and a low of $182.5 million.
34
The following table presents hypothetical changes in interest expense for the quarter ended March 31, 2025, on the outstanding borrowings under the Amended Credit Agreement as of March 31, 2025, that are sensitive to changes in interest rates (in thousands):
|
|
Change in interest expense given a decrease in |
|
|
Average outstanding |
|
|
Change in interest expense given an increase in |
|
|||||||||||
Description |
|
(100 bps) |
|
|
(50 bps) |
|
|
as of March 31, 2025 |
|
|
100 bps |
|
|
50 bps |
|
|||||
Debt |
|
$ |
(1,943 |
) |
|
$ |
(972 |
) |
|
$ |
194,306 |
|
|
$ |
1,943 |
|
|
$ |
972 |
|
* The underlying interest rate was 6.41% as of March 31, 2025.
Exchange Rate Sensitivity
A majority of our sales and expenses are denominated in United States Dollars. While we conduct some sales transactions and incur certain operating expenses in foreign currencies and expect to continue to do so, we do not anticipate that foreign exchange gains or losses will be significant, in part because of our foreign exchange risk management process discussed below.
Foreign Exchange Forward Contracts
We record all derivatives on the balance sheet at fair value. From time to time, we enter into foreign exchange forward contracts to mitigate the effect of gains and losses generated by the foreign currency forecast transactions related to certain operating expenses and re-measurement of certain assets and liabilities denominated in foreign currencies. Changes in the fair value of these foreign exchange forward contracts are offset largely by re-measurement of the underlying foreign currency denominated assets and liabilities. As of March 31, 2025 and 2024 foreign exchange forward contracts not designated as hedging instruments, had a notional amount of $52.2 million and $15.5 million, respectively. Changes in the fair value of derivatives are recognized in “Other income (expense), net.”
For the three months ended March 31, 2025 and 2024, the Company recognized foreign currency transaction net losses of $0.9 million and foreign currency transaction net gains of $0.7 million, respectively, and for the nine months ended March 31, 2025 and 2024, the Company recognized foreign currency transaction net gains of $0.5 million and foreign currency transaction net gains of $0.4 million, respectively, related to the change in fair value of foreign currency denominated assets and liabilities.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, such as this Report, is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and to ensure that such information is accumulated and communicated to our management, including the Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”), as appropriate to allow timely decisions regarding required disclosure.
Under the supervision and with the participation of our management, including our CEO and CFO, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Report. Based on this evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Report.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rules 13a – 15(f) and 15d – 15(f) under the Securities Exchange Act of 1934, as amended) during the three months ended March 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitations on Effectiveness of Controls
Our management, including the CEO and CFO, does not expect that our disclosure controls or our internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Our controls and procedures are designed to provide reasonable assurance that our control system’s objective will be met, and our CEO and CFO have concluded that our disclosure controls and procedures are effective at the reasonable assurance level. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within Extreme Networks have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls
35
can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events. Projections of any evaluation of the effectiveness of controls in future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures. Notwithstanding these limitations, our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives. Our CEO and CFO have concluded that our disclosure controls and procedures are, in fact, effective at the “reasonable assurance” level.
36
PART II. Other Information
Item 1. Legal Proceedings
For information regarding litigation matters required by this item, refer to Part I, Item 3, “Legal Proceedings” of our Annual Report on Form 10-K for the fiscal year ended June 30, 2024, and Note 8, Commitments and Contingencies, to the Notes to Condensed Consolidated Financial Statements, in this Report, which are incorporated herein by reference.
Item 1A. Risk Factors
Our operations and financial results are subject to various risks and uncertainties, including those described in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended June 30, 2024, which could adversely affect our business, financial condition, results of operations, cash flows, and the trading price of our common stock. There have been no material changes to our risk factors since our Annual Report on Form 10-K for the year ended June 30, 2024 and our Quarterly reports on Form 10-Q for the three months period ended September 30, 2024 and December 31, 2024, except for the following risk factor which supplements the risk factors disclosed in the reports reference above.
Geopolitical changes are creating uncertainty regarding economic matters.
The ongoing unpredictability of U.S. trade policies, including recent tariff adjustments and shifts in enforcement priorities, continues to create significant uncertainty in the global supply chain. Our direct manufacturing presence in China remains minimal, and we do not anticipate material direct exposure to the latest round of U.S. tariffs on Chinese imports; however, our reliance on electronic and semiconductor components sourced from China presents ongoing risk. These components are essential to our products, and any escalation in tariffs or imposition of new export controls by China may result in increased costs and potential delays.
We also maintain significant manufacturing operations in Vietnam and the Philippines. These countries have periodically come under scrutiny in U.S. trade reviews and remain exposed to potential tariff hikes or new trade barriers.
Additionally, global trade partners may continue to respond to U.S. tariffs with retaliatory measures. For instance, China has reiterated threats of restricting exports of critical raw materials, including rare earth minerals essential to several of our components. Such actions could disrupt our supply chain, elevate input costs, and undermine the competitiveness of our offerings, thereby adversely affecting our business, financial condition, and operating results.
We are actively monitoring these evolving trade dynamics and are implementing diversification and supply chain resilience strategies to mitigate potential disruptions. This includes exploring alternative sourcing options and reassessing geographic risk in our manufacturing and logistics footprint.
The continued uncertainty around tariff policy and broader geopolitical tensions is contributing to market volatility, which has impacted the Company’s stock price, and is likely to continue to do so. In addition, if tariffs are set that materially impact the Company’s financial results, the Company’s stock price could be negatively impacted.
In addition to policies regarding tariffs, any significant changes enacted by the new administration to the U.S. Tax Code, or specifically to the Tax Cuts and Jobs Act (the “U.S. Tax Act”) enacted in 2017, or to regulatory guidance associated with the U.S. Tax Act, could materially adversely affect our tax liabilities and effective tax rate.
Our stock price has been volatile in the past and may significantly fluctuate in the future.
In the past, the trading price of shares of our common stock has fluctuated significantly. This could continue as we or our competitors announce new products, our results or those of our customers or competition fluctuate, conditions in the networking or semiconductor industry change, conditions in the global economy change, or when investors change their sentiment toward stocks in the networking technology sector.
In addition, fluctuations in our stock price and our enterprise value to sales valuation may make our stock attractive to momentum, hedge or day-trading investors who often shift funds into and out of stock rapidly, exacerbating price fluctuations in either direction, particularly when viewed on a quarterly basis. These fluctuations may adversely affect the trading price or liquidity of our common stock.
Some companies, including us, that have had volatile market prices for their securities have had securities class action lawsuits filed against them. Such suits, regardless of its merits or outcome, can result in substantial costs and divert management’s attention and resources.
37
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
There were no sales of unregistered equity securities during the three months ended March 31, 2025.
The following table provides stock repurchase activity during the three months ended March 31, 2025 (in thousands, except per share amounts):
|
|
|
|
|
|
|
|
|
|
|
Approximate Dollar Value |
|
||||
|
|
Total |
|
|
Average |
|
|
Total Number of Shares |
|
|
of Shares |
|
||||
|
|
Number of |
|
|
Price Paid |
|
|
Purchased as Part of |
|
|
That May Yet Be Purchased |
|
||||
|
|
Shares |
|
|
per Share |
|
|
Publicly Announced |
|
|
Under the Plans or Programs |
|
||||
|
|
Purchased |
|
|
(2) |
|
|
Plans or Programs |
|
|
(1) |
|
||||
Beginning amount available to repurchase |
|
|
|
|
|
|
|
|
|
|
$ |
50,285 |
|
|||
January 1, 2025 - January 31, 2025 |
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
|
50,285 |
|
February 1, 2025 - February 28, 2025 |
|
|
490 |
|
|
|
15.72 |
|
|
|
490 |
|
|
|
42,577 |
|
March 1, 2025 - March 31, 2025 |
|
|
363 |
|
|
|
15 |
|
|
|
363 |
|
|
|
37,285 |
|
Total |
|
|
853 |
|
|
$ |
15.24 |
|
|
|
853 |
|
|
|
|
|
Remaining amount available to repurchase |
|
|
|
|
|
|
|
|
|
|
$ |
37,285 |
|
|||
Item 3. Defaults Upon Senior Securities - Not Applicable
Item 4. Mine Safety Disclosures - Not Applicable
Item 5. Other Information
Rule 10b5-1 Trading Plan
On
On
38
Item 6. Exhibits
|
|
|
|
Incorporated by Reference |
|
|
||||
Exhibit Number |
|
Description of Document |
|
Form |
|
Filing Date |
|
Number |
|
Filed Herewith |
|
|
|
|
|
|
|
|
|
|
|
3.1 |
|
Amended and Restated Certificate of Incorporation of Extreme Networks, Inc. |
|
8-K |
|
11/18/2022 |
|
3.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
3.2 |
|
Certificate of Amendment to Amended and Restated Certificate of Incorporation. |
|
8-K |
|
11/9/2023 |
|
3.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
3.3 |
|
|
8-K |
|
6/9/2023 |
|
3.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.1 |
|
|
|
|
|
|
|
|
X |
|
|
|
|
|
|
|
|
|
|
|
|
31.2 |
|
|
|
|
|
|
|
|
X |
|
|
|
|
|
|
|
|
|
|
|
|
32.1* |
|
|
|
|
|
|
|
|
X |
|
|
|
|
|
|
|
|
|
|
|
|
32.2* |
|
|
|
|
|
|
|
|
X |
|
|
|
|
|
|
|
|
|
|
|
|
101.INS |
|
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. |
|
|
|
|
|
|
|
X |
|
|
|
|
|
|
|
|
|
|
|
101.SCH |
|
Inline XBRL Taxonomy Extension Schema with Embedded Linkbase Documents. |
|
|
|
|
|
|
|
X |
|
|
|
|
|
|
|
|
|
|
|
104 |
|
Cover Page Interactive Data File (embedded within the Inline XBRL document). |
|
|
|
|
|
|
|
|
* Furnished herewith. Exhibits 32.1 and 32.2 are being furnished and shall not be deemed to be “filed” for purposes of section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, nor shall such exhibits be deemed to be incorporated by reference in any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as otherwise specifically stated in such filing.
39
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
EXTREME NETWORKS, INC. |
||
|
|
(Registrant)
|
|
|
/s/ Kevin Rhodes |
|
|
Kevin Rhodes |
|
|
Executive Vice President, Chief Financial Officer (Principal Accounting Officer)
May 1, 2025
|
40
Exhibit 31.1
SECTION 302 CERTIFICATION OF EDWARD B. MEYERCORD III
AS CHIEF EXECUTIVE OFFICER
I, Edward B. Meyercord III, certify that:
Date: |
May 1, 2025 |
/s/ EDWARD B. MEYERCORD III |
|
|
Edward B. Meyercord III |
|
|
President and Chief Executive Officer |
Exhibit 31.2
SECTION 302 CERTIFICATION OF KEVIN RHODES
AS CHIEF FINANCIAL OFFICER
I, Kevin Rhodes, certify that:
Date: |
May 1, 2025 |
/s/ KEVIN RHODES |
|
|
Kevin Rhodes |
|
|
Executive Vice President, Chief Financial Officer (Principal Accounting Officer) |
Exhibit 32.1
CERTIFICATION OF EDWARD B. MEYERCORD III AS CHIEF EXECUTIVE OFFICER, PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Extreme Networks, Inc. on Form 10-Q for the period ended March 31, 2025, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, in the capacities and on the date specified below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
Date: May 1, 2025 |
/s/ EDWARD B. MEYERCORD III |
|
Edward B. Meyercord III |
|
President and Chief Executive Officer |
|
|
Exhibit 32.2
CERTIFICATION OF KEVIN RHODES AS CHIEF FINANCIAL OFFICER, PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Extreme Networks, Inc. on Form 10-Q for the period ended March 31, 2025, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, in the capacities and on the date specified below, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
Date: May 1, 2025 |
/s/ KEVIN RHODES |
|
Kevin Rhodes |
|
Executive Vice President, Chief Financial Officer (Principal Accounting Officer) |
|
|