Preliminary F1Q22 Results: 14% YoY Revenue Growth Drives Top & Bottom-Line Beats



KEY POINTS
  • Extreme Networks President and CEO Ed Meyercord said the F1Q22 was “a very strong first quarter, characterized by unprecedented bookings.” F1Q22 revenue was up 14% YoY, which followed the 29% YoY growth in F4Q21. The company said its “SaaS subscription bookings grew 71% during the quarter,” and cited the recent acquisition of Ipanema business as a key SD-WAN addition.
  • F1Q22 revenue of $268 million was $11 million above consensus, slightly lower than last quarter’s revenue beat of $15 million. Non-GAAP EPS was $0.21, which was also above the consensus of $0.16. Non-GAAP gross margin came in at 60.3% (flat sequentially), and a non-GAAP operating margin of 13.8% (up 450 basis points sequentially).
  • The company believes the F2Q22 will be the peak of the supply chain expedite fees and additional shipping costs. Extreme is seeing demand strength in five of its six verticals. Only retail did not have a positive demand outlook, and it was flat.
  • Guidance for 2FQ22 for $265-280 million in revenue, and non-GAAP EPS guidance is $0.14-0.21. Consensus is for non-GAAP EPS of $0.18 on sales of $268 million.
  • The stock moved up over 4% to the $10.75 level pre‑market, after the report, and is trading at a forward P/S of 1.21, slightly below its two-year high P/S of 1.40x back in May.
  • See our initiation and other reports and management interview videos on Extreme Networks on our website.
COMPANY OVERVIEW

Headquartered in San Jose, CA, with 2,800 employees, Extreme Networks provides software-driven networking services for enterprise customers. Its products include wired and wireless network infrastructure equipment and software for network management, policy, analytics, and access controls. It offers high-density Wi-Fi, centralized management, cloud-based network management, and application analytics capabilities. The company serves several end-markets including Government & Education (>35% of sales), Healthcare (>10%), Manufacturing (~10%), Retail Logistics / Transportation (~10%), Telco / Service Provider (<10%), and Sports / Entertainment & Hospitality (<5%). Roughly half of the firm's revenue is generated in the Americas, with the rest coming from Europe, the Middle East, Africa, and Asia-Pacific.

Extreme Networks President and CEO Ed Meyercord said the F1Q22 was “a very strong first quarter, characterized by unprecedented bookings.” F1Q22 revenue was up 14% YoY, which followed the 29% YoY growth in F4Q21. The company said its “SaaS subscription bookings grew 71% during the quarter,” and cited the recent acquisition of Ipanema business as a key SD-WAN addition.

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