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Why Extreme Networks Stock Popped Today

By Evan Niu, CFA – Aug 5, 2020 at 1:25PM

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The networking tech specialist reported quarterly results and issued a rosy forecast.

What happened

Shares of Extreme Networks (EXTR 2.07%) have popped today, up by 7% as of 12:30 p.m. EDT, after the company reported fiscal fourth-quarter earnings. The networking software specialist beat expectations and issued strong guidance.

So what

Revenue in the fiscal fourth quarter came in at $215.2 million, slightly ahead of the $212.7 million in sales that Wall Street was modeling for. That led to adjusted earnings of $0.03 per share, while analysts were looking for an adjusted net loss per share of $0.03. Cloud subscription bookings increased 42% on a sequential basis.

Green stock chart going up

Image source: Getty Images.

"During Q4 Extreme established itself as a critical business partner to our customers and partners with two industry-leading offers," CEO Ed Meyercord said in a statement. "We announced unparalleled choice of cloud management across all three public cloud platforms, and we set a new standard for access to cloud data and insights by offering unlimited data to cloud customers for the lifetime of their subscriptions."

Now what

Extreme Networks also provided guidance that topped expectations. Fiscal first-quarter revenue is expected to be in the range of $220 million to $230 million, above the consensus estimate of $217.9 million. That should result in adjusted earnings per share of $0.01 to $0.04.

"We are also increasingly confident in our outlook heading into FY21 as we are seeing improving customer demand in key verticals such as Government, Education, and Manufacturing," CFO Remi Thomas commented. "These trends are reflected in our better-than-seasonal Q1 outlook that calls for a 4% sequential increase in revenue."

Evan Niu, CFA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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