What happened

Shares of technology company Extreme Networks (EXTR -1.55%) popped on Friday after the company provided preliminary results for its upcoming fiscal first quarter of 2021. These results exceeded management's guidance for Q1 on both the top and bottom lines, giving investors something to cheer. As of 10:50 a.m. EDT today, Extreme Networks stock was up 17%.

So what

Management had guided for Q1 revenue of $220 million to $230 million and a loss per share of $0.11 to $0.14 according to generally accepted accounting principles (GAAP). Now the company expects to report Q1 revenue of $233 million to $236 million and a GAAP loss per share of $0.08 to $0.11. 

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Image source: Getty Images.

Given the ranges in both guidance and preliminary results, Extreme Networks' revenue is as much as 7% better than what it guided for before. And the loss per share is as much as 43% better than feared, though still a loss. This is a sequential improvement from the fourth quarter, when it reported revenue of $216 million and a loss per share of $0.18. But it's a meaningful drop from the $256 million in revenue it generated in the first quarter last year.

The drop in revenue makes sense. Extreme Networks has hospitality customers, including the National Football League, that have reduced or paused spending because of the COVID-19 pandemic.

Now what

Extreme Networks withdrew $55 million from its credit line back in March, but today it announced it's repaid $20 million of this. Much of its remaining debt won't be due for years, but the company does have a large net debt position of $203 million. That said, it also has almost $200 million in cash on the balance sheet right now, which should provide some financial stability for this small-cap stock over the next few years as it tries to grow its networking business.