EXTREME NETWORKS INC [EXTR] Filings

10-Q 1 extr-10q_20220331.htm 10-Q extr-10q_20220331.htm

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SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

Form 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022


☐	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 000-25711

EXTREME NETWORKS, INC.

(Exact name of registrant as specified in its charter)



delaware		77-0430270
[State or other jurisdiction of incorporation or organization]		[I.R.S Employer Identification No.]

2121 RDU Center Drive, Suite 300, Morrisville, North Carolina		27560
[Address of principal executive offices]		[Zip Code]

Registrant’s telephone number, including area code: (408) 579-2800

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Common Stock

EXTR

NASDAQ Global Select Market

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. Yes ☒ No ☐

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 (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

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.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

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 ☒

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☐ No ☐

As of April 21, 2022, the registrant had 130,835,701 shares of common stock, $0.001 par value per share, outstanding.

EXTREME NETWORKS, INC.

FORM 10-Q

QUARTERLY PERIOD ENDED

March 31, 2022

INDEX


		PAGE
PART I. CONDENSED CONSOLIDATED FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Financial Statements (Unaudited)

	Condensed Consolidated Balance Sheets as of March 31, 2022 and June 30, 2021	3

	Condensed Consolidated Statements of Operations for the three and nine months ended March 31, 2022 and 2021	4

	Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended March 31, 2022 and 2021	5

	Condensed Consolidated Statements of Stockholders' Equity for the three and nine months ended March 31, 2022 and 2021	6

	Condensed Consolidated Statements of Cash Flows for the nine months ended March 31, 2022 and 2021	7

	Notes to Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	37

Item 4.	Controls and Procedures	38

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	39

Item 1A	Risk Factors	39

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	43

Item 3.	Defaults Upon Senior Securities	43

Item 4.	Mine Safety Disclosure	43

Item 5.	Other Information	43

Item 6.	Exhibits	44

Signatures		45

EXTREME NETWORKS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)

(Unaudited)

	March 31, 2022			June 30, 2021
ASSETS
Current assets:
Cash	$	166,566		$	246,894
Accounts receivable, net		162,967			156,476
Inventories		37,738			32,885
Prepaid expenses and other current assets		79,605			51,340
Total current assets		446,876			487,595
Property and equipment, net		49,365			55,004
Operating lease right-of-use assets, net		28,164			36,927
Intangible assets, net		36,689			36,038
Goodwill		400,144			331,159
Other assets		63,606			63,370
Total assets	$	1,024,844		$	1,010,093
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt, net of unamortized debt issuance costs of $2,305 and $2,404, respectively	$	30,945		$	23,721
Accounts payable		68,504			60,142
Accrued compensation and benefits		45,151			71,610
Accrued warranty		10,576			11,623
Current portion of operating lease liabilities		15,804			18,743
Current portion of deferred revenue		222,380			212,412
Other accrued liabilities		64,430			57,449
Total current liabilities		457,790			455,700
Deferred revenue, less current portion		150,030			133,172
Long-term debt, less current portion, net of unamortized debt issuance costs of $2,986 and $4,760, respectively		279,514			315,865
Operating lease liabilities, less current portion		23,919			32,515
Deferred income taxes		7,956			3,828
Other long-term liabilities		6,372			14,545
Commitments and contingencies (Note 9)
Stockholders’ equity:
Convertible preferred stock, $0.001 par value, issuable in series, 2,000 shares authorized; none issued		—			—
Common stock, $0.001 par value, 750,000 shares authorized; 139,115 and 133,279 shares issued, respectively; 130,689 and 126,682 shares outstanding, respectively		139			133
Additional paid-in-capital		1,108,013			1,078,602
Accumulated other comprehensive loss		(1,320	)		(2,811	)
Accumulated deficit		(939,482	)		(978,343	)
Treasury stock at cost, 8,426 and 6,597 shares, respectively		(68,087	)		(43,113	)
Total stockholders’ equity		99,263			54,468
Total liabilities and stockholders’ equity	$	1,024,844		$	1,010,093

See accompanying notes to condensed consolidated financial statements.

EXTREME NETWORKS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended						Nine Months Ended
	March 31, 2022			March 31, 2021			March 31, 2022			March 31, 2021
Net revenues:
Product	$	198,373		$	176,334		$	574,636		$	503,575
Service and subscription		87,135			77,066			259,489			227,755
Total net revenues		285,508			253,400			834,125			731,330
Cost of revenues:
Product		92,582			76,442			264,459			223,842
Service and subscription		31,568			28,145			93,919			83,465
Total cost of revenues		124,150			104,587			358,378			307,307
Gross profit:
Product		105,791			99,892			310,177			279,733
Service and subscription		55,567			48,921			165,570			144,290
Total gross profit		161,358			148,813			475,747			424,023
Operating expenses:
Research and development		49,615			48,909			145,461			147,619
Sales and marketing		72,840			70,898			213,932			201,955
General and administrative		17,714			16,023			52,594			48,844
Acquisition and integration costs		2,833			—			6,456			1,975
Restructuring and related charges		407			425			978			2,121
Amortization of intangibles		638			1,406			2,596			4,704
Total operating expenses		144,047			137,661			422,017			407,218
Operating income		17,311			11,152			53,730			16,805
Interest income		109			81			302			281
Interest expense		(2,794	)		(5,594	)		(9,750	)		(18,325	)
Other income (expense), net		54			269			297			(1,572	)
Income (loss) before income taxes		14,680			5,908			44,579			(2,811	)
Provision for income taxes		1,856			2,436			5,718			5,579
Net income (loss)	$	12,824		$	3,472		$	38,861		$	(8,390	)

Basic and diluted income (loss) per share:
Net income (loss) per share - basic	$	0.10		$	0.03		$	0.30		$	(0.07	)
Net income (loss) per share - diluted	$	0.10		$	0.03		$	0.29		$	(0.07	)

Shares used in per share calculation - basic		129,913			124,788			129,321			123,252
Shares used in per share calculation - diluted		133,415			129,988			133,779			123,252

See accompanying notes to condensed consolidated financial statements.

EXTREME NETWORKS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

(Unaudited)

	Three Months Ended					Nine Months Ended
	March 31, 2022		March 31, 2021			March 31, 2022			March 31, 2021
Net income (loss)	$	12,824	$	3,472		$	38,861		$	(8,390	)
Other comprehensive income (loss):
Derivatives designated as hedging instruments:
Change in unrealized gains and losses on interest rate swaps		908		158			1,169			(135	)
Reclassification adjustment related to interest rate swaps		231		230			797			616
Change in unrealized gains and losses on foreign currency forward contracts		275		—			214			—
Net change from derivatives designated as hedging instruments		1,414		388			2,180			481
Net change in foreign currency translation adjustments		57		(730	)		(689	)		2,885
Other comprehensive income (loss)		1,471		(342	)		1,491			3,366
Total comprehensive income (loss)	$	14,295	$	3,130		$	40,352		$	(5,024	)

See accompanying notes to condensed consolidated financial statements.

EXTREME NETWORKS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(In thousands)

(Unaudited)

	Common Stock				Additional Paid-		Accumulated Other			Treasury Stock						Accumulated			Total Stockholders'
	Shares		Amount		In-Capital		Comprehensive Loss			Shares			Amount			Deficit			Equity
Balance at December 31, 2020		130,180	$	130	$	1,055,719	$	(2,670	)		(6,597	)	$	(43,113	)	$	(992,141	)	$	17,925
Net income		—		—		—		—			—			—			3,472			3,472
Other comprehensive loss		—		—		—		(342	)		—			—			—			(342	)
Issuance of common stock from equity incentive plans, net of tax withholdings		2,328		3		4,880		—			—			—			—			4,883
Share-based compensation		—		—		9,198		—			—			—			—			9,198
Balance at March 31, 2021		132,508	$	133	$	1,069,797	$	(3,012	)		(6,597	)	$	(43,113	)	$	(988,669	)	$	35,136

Balance at June 30, 2020		127,114	$	127	$	1,035,041	$	(6,378	)	$	(6,597	)	$	(43,113	)	$	(980,279	)	$	5,398
Net loss		—		—		—		—			—			—			(8,390	)		(8,390	)
Other comprehensive income		—		—		—		3,366			—			—			—			3,366
Issuance of common stock from equity incentive plans, net of tax withholdings		5,394		6		7,161		—			—			—			—			7,167
Share-based compensation		—		—		27,595		—			—			—			—			27,595
Balance at March 31, 2021		132,508	$	133	$	1,069,797	$	(3,012	)		(

EXTREME NETWORKS INC [EXTR] Filings
10-Q	[2022-04-29]
10-Q	[2022-01-28]
10-Q	[2021-11-05]
10-K	[2021-08-27]
10-Q	[2021-04-29]
10-Q	[2021-02-09]
10-Q	[2020-10-29]
10-K	[2020-08-31]
10-Q	[2020-05-11]
10-Q	[2020-01-30]
10-Q	[2019-10-31]
10-K	[2019-08-29]
10-Q	[2019-05-10]
10-Q	[2019-01-30]
10-Q	[2018-11-02]
10-K	[2018-08-29]
10-Q	[2018-05-10]
10-Q	[2018-02-08]
10-Q	[2017-11-09]
10-K	[2017-09-13]
10-Q	[2017-05-04]
10-Q	[2017-02-02]
10-Q	[2016-11-02]
10-K	[2016-09-06]
10-Q	[2016-04-29]
10-Q	[2016-02-02]
10-Q	[2015-11-02]
10-K	[2015-09-14]
10-Q	[2015-05-07]
10-Q	[2015-01-30]
10-Q	[2014-10-29]
10-K	[2014-09-15]
10-Q	[2014-05-07]
10-Q	[2014-02-06]
10-Q	[2013-11-04]
10-K	[2013-08-30]
10-Q	[2013-05-01]
10-Q	[2013-01-31]
10-Q	[2012-11-01]
10-K	[2012-08-23]
10-Q	[2012-05-04]
10-Q	[2012-02-07]