Extreme Networks, Inc. (NASDAQ: EXTR) provides software-driven networking solutions for enterprise customers worldwide. It designs, develops, and manufactures wired and wireless network infrastructure equipment; and develops the software for network management, policy, analytics, security, and access controls.
The company announced in August that it is now positioned as a Challenger by Gartner, Inc. in the Gartner Magic Quadrant for Data Center Networking, July 11, 2018. Prior to 2018. Extreme Networks appeared as a Niche Player in the Gartner Magic Quadrant for Data Center Networking for several years.
Extreme completed its acquisition of Brocade Communications Systems, Inc.’s data center networking business, its third in a series of acquisitions since October 2016. Extreme was also named a Leader for the first time in the July 2018 Gartner Magic Quadrant for the Wired and Wireless LAN Access Infrastructure.
According to CEO Ed Meyercord “We are resetting expectations for our data center business and are taking swift action to rebuild our sales pipeline after a disappointing fiscal fourth quarter, while celebrating some key wins. … We are now undertaking an initiative over the next six months to bring our portfolio together and consolidate distribution to improve channel efficiency. We expect this change to impact our revenues for the first two quarters of fiscal 2019 by approximately $30 million to $40 million as compared with prior full-year outlook.”
Extreme Networks, Inc. provides software-driven networking solutions for enterprise customers worldwide. It designs, develops, and manufactures wired and wireless network infrastructure equipment; and develops the software for network management, policy, analytics, security, and access controls. The company offers edge/access Ethernet switching systems that deliver Ethernet connectivity for edge of the network; aggregation/core Ethernet switching systems for aggregation, top-of-rack, and campus core environments; data center switching systems for enterprises and cloud data centers; and wireless access point products, as well as distributed Wi-Fi networks. It also provides ExtremeControl, a network access control solution that allows the enterprises to unify the security of their wired and wireless networks with visibility and control over users, devices, and applications; and ExtremeAnalytics, a network-powered application analytics and optimization solution, which captures, aggregates, analyzes, correlates, and reports network data that enables in decision making and enhancing business performance. In addition, the company offers ExtremeGuest and ExtremeLocation, which are cloud services that enable enterprises to incorporate location-based services; and ExtremeCloud, a wired and wireless cloud network management solution, which offers visibility and control over users and applications. It markets and sells its products through distributors, resellers, and field sales organizations. The company serves enterprises and organizations in education, healthcare, manufacturing, hospitality, transportation, and logistics, as well as government agencies, private cloud data centers, and universities. Extreme Networks, Inc. was founded in 1996 and is headquartered in San Jose, California.
5 Wall Street analysts have issued ratings and price targets for Extreme Networks in the last 12 months. Their average twelve-month price target is $12.20, suggesting that the stock has a possible upside of 103.67%. The high price target for EXTR is $17.00 and the low-price target for EXTR is $6.50. There are currently 2 hold ratings and 3 buy ratings for the stock, resulting in a consensus rating of “Buy.”
Date Brokerage Rating Price Target
8/9/2018 DA Davidson In-Line ➝ Buy $13.00
8/9/2018 JMP Securities Market Outperform $12.00 ➝ $9.00
8/9/2018 Cowen Outperform ➝ Market Perform $16.00 ➝ $6.50
8/8/2018 Needham & Company LLC Buy ➝ Hold
Fourth Quarter Results:
Fourth quarter revenue was $278.3 million, or an increase of 56% year-over-year.
GAAP gross margin for the fourth fiscal quarter was 54.0%, a reduction of 340 basis points year-over-year, and non-GAAP gross margin was 57.6%, an increase of 10 basis points year-over-year.
GAAP operating margin for the fourth fiscal quarter was (1.2%) and non-GAAP operating margin was 9.8%, compared to 8.8% and 12.8%, respectively, year-over-year.
GAAP net loss for the fourth fiscal quarter was $5.6 million, or $(0.05) per basic share, a decrease of $18.8 million and $0.17 per basic share, year-over-year. Non-GAAP net income was $24.0 million, or $0.20 per diluted share, an increase of $3.6 million and $0.02 per diluted share, year-over-year.
Fiscal Year Results:
Fiscal year revenue was $983.1 million, or an increase of 62% year-over-year.
Fiscal year GAAP net loss for the fiscal year was $46.8 million, or $0.41 per basic share, an increase of $45.0 million and $0.39 per basic share, year-over-year. Non-GAAP net income was $78.0 million, or $0.65 per diluted share, or an increase of $20.4 million and $0.13 per diluted share, year-over-year.
For the current quarter ending in October, Extreme Networks said it expects revenue in the range of $230 million to $240 million.
Stock influences and risk factors
If they fail to meet their payment or other obligations under their Credit Agreement the lenders under such Credit Agreement, as amended, could foreclose on, and acquire control of, substantially all of their assets.
They depend upon international sales for a significant portion of revenue which imposes a number of risks on the business.
They purchase several key components for products from single or limited sources and could lose sales if these suppliers fail to meet their needs.
Intense competition in the market for networking equipment and Cloud platform companies could prevent the company from increasing revenue and attaining profitability.
On Friday, September 7, 2018, EXTR shares closed at $5.99 per share on traded volume of 1.8 million shares. The current RSI (14) is 34.70
At $5.99, EXTR shares are trading below their 50 DMA and 200 DMA of $7.53 and $10.45 respectively.
Traders News Source is a wholly owned subsidiary of Traders News Source LLC, herein referred to as TNS LLC.
Traders News Source has not been compensated for this report by anyone and the opinions if any are that of the author Vikas Agrawal, CFA. Author’s Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I, wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in the article.
This web site, published by TNS LLC, and is an investment newsletter that is built on the premise of assisting individual investors in learning about investing. Our goal as publishers of financial information is to provide research and analysis of investments to our subscribers. TNS LLC does not give buy or sell recommendations. We do purchase distribution rights from analyst, financial writers and bloggers for a fee that may be licensed to issue price targets and recommendations. Furthermore, we encourage you to speak to a licensed professional prior to making an investment in any type of publicly traded security.
We do sell advertising to other companies including brokerage firms, web sites, publicly traded issuers, investor relations firms, and investment publications, among others. TNS LLC makes no warranty as to the policies of these organizations, and in no way endorses their offers, services, or the content of their advertisements.
When an advertiser is a publicly traded company or a third party acting on behalf of a public company, we fully disclose all compensation in the email advertisement. Such disclosure is included in a disclosure statement in each of the advertisements sent via email.
Our reports/releases are a commercial advertisement and are for general information purposes ONLY. We are engaged in the business of marketing and advertising companies for monetary compensation. Never invest in any stock featured on our site or emails unless you can afford to lose your entire investment. The disclaimer is to be read and fully understood before using our services, joining our site or our email/blog list as well as any social networking platforms we may use.
PLEASE NOTE WELL: TNS LLC and its employees are not a Registered Investment Advisor, Broker Dealer or a member of any association for other research providers in any jurisdiction whatsoever.
Release of Liability: Through use of this website viewing or using you agree to hold TNS LLC, its operator’s owners and employees harmless and to completely release them from any and all liability due to any and all loss (monetary or otherwise), damage (monetary or otherwise), or injury (monetary or otherwise) that you may incur. The information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of the available data. TNS LLC encourages readers and investors to supplement the information in these reports with independent research and other professional advice. All information on featured companies is provided by the companies profiled, or is available from public sources and TNS LLC makes no representations, warranties or guarantees as to the accuracy or completeness of the disclosure by the profiled companies. None of the materials or advertisements herein constitute offers or solicitations to purchase or sell securities of the companies profiled herein and any decision to invest in any such company or other financial decisions should not be made based upon the information provide herein. Instead TNS LLC strongly urges you conduct a complete and independent investigation of the respective companies and consideration of all pertinent risks. Readers are advised to review SEC periodic reports: Forms 10-Q, 10K, Form 8-K, insider reports, Forms 3, 4, 5 Schedule 13D.
TNS LLC is compliant with the Can Spam Act of 2003. TNS LLC does not offer such advice or analysis, and TNS LLC further urges you to consult your own independent tax, business, financial and investment advisors. Investing in micro-cap and growth securities is highly speculative and carries an extremely high degree of risk. It is possible that an investor’s investment may be lost or impaired due to the speculative nature of the companies profiled.
The Private Securities Litigation Reform Act of 1995 provides investors a ‘safe harbor’ in regard to forward-looking statements. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, goals, assumptions or future events or performance are not statements of historical fact may be “forward looking statements”. Forward looking statements are based on expectations, estimates, and projections at the time the statements are made that involve a number of risks and uncertainties which could cause actual results or events to differ materially from those presently anticipated. Forward looking statements in this action may be identified through use of words such as “projects”, “foresee”, “expects”, “will”, “anticipates”, “estimates”, “believes”, “understands”, or that by statements indicating certain actions & quote; “may”, “could”, or “might” occur.
Understand there is no guarantee past performance will be indicative of future results. In preparing this publication, TNS LLC has relied upon information supplied by its customers, publicly available information and press releases which it believes to be reliable; however, such reliability cannot be guaranteed. Investors should not rely on the information contained in this website. Rather, investors should use the information contained in this website as a starting point for doing additional independent research on the featured companies. The advertisements in this website are believed to be reliable, however, TNS LLC and its owners, affiliates, subsidiaries, officers, directors, representatives and agents disclaim any liability as to the completeness or accuracy of the information contained in any advertisement and for any omissions of materials facts from such advertisement. TNS LLC is not responsible for any claims made by the companies advertised herein, nor is TNS LLC responsible for any other promotional firm, its program or its structure.