How Extreme Networks Won Big in Its Q4

By Chris Lange Updated Jan 12, 9:06AM EST · Published Aug 15, 10:55AM EDT

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How Extreme Networks Won Big in Its Q4 — © Thinkstock

When Extreme Networks Inc. (NASDAQ: EXTR) reported its most recent quarterly results after the markets closed on Monday, the company said that it had $0.17 in earnings per share (EPS) and $178.7 million in revenue. That compared with consensus estimates from Thomson Reuters of $0.15 in EPS and revenue of $172.46 million. The fiscal fourth-quarter of last year reportedly had EPS of $0.10 and $139.99 million in revenue.

During the quarter, the company completed the acquisition of Avaya’s networking business and has commenced the integration process. Technology assets from the acquisition include Avaya’s award-winning fabric technology for highly secure, simplified access, management and control, in addition to a new family of high performance modular switches, software tools and Internet of Things technology.

Separately, Extreme Networks expects to close on its purchase of the data center networking assets of Brocade Communications by the end of October.

In terms of the outlook for the fiscal first quarter, management expects to see revenues between $200 million and $210 million and EPS in the range of $0.11 to $0.17. The consensus estimates call for $0.07 in EPS and $148.8 million in revenue for the quarter.

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On the books, Extreme Networks cash and cash equivalents totaled $130.45 million at the end of the quarter, up from with $94.12 million at the end of the previous fiscal year.

Ed Meyercord, president and CEO of Extreme Networks, commented:

Led by solid organic growth and continued execution of our recently acquired WLAN business, we concluded 2017 with one of our strongest performances in recent years. During our fourth quarter, revenue from our Extreme solutions portfolio generated organic growth of 6% driven by record wireless performance that was at or above current industry growth rates, while our non-GAAP gross margins expanded by 230 basis points year-over-year to 57.1% through our high-quality solution selling strategy and disciplined approach to discounting. Even more noteworthy, for the first time since 2013, we achieved positive GAAP earnings, while delivering non-GAAP earnings at or above our expectations for the ninth consecutive quarter.

Shares of Extreme Networks were last seen up about 11% at $10.33, with a consensus analyst price target of $13.00 and a 52-week range of $3.75 to $11.03.

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About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.