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Why Extreme Networks Stock Is Soaring Today

By Evan Niu, CFA - Jan 28, 2021 at 12:13PM

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The networking specialist reported strong preliminary results and issued a rosy outlook.

What happened

Shares of Extreme Networks (EXTR -1.61%) are soaring today, up by 15% as of 11:35 a.m. EST, after the company reported preliminary fiscal second-quarter earnings. The results are expected to come in above expectations, and Extreme Networks issued a rosy forecast for next quarter.

So what

Revenue in the fiscal second quarter should be in the range of $238 million to $248 million, putting the midpoint ahead of the $240.7 million in sales that Wall Street is modeling for. That should result in adjusted earnings per share of $0.11 to $0.17, compared to the consensus estimate of $0.11 per share in adjusted profits. The networking technology company said that customer adoption of its new universal hardware platform helped drive the outperformance.

Green stock chart going up

Image source: Getty Images.

"We are well positioned in the market and continue to see the acceleration of our customers' digital transformation, along with rising demand for more intuitive management of increasingly distributed networks, as driving the growth of our business," CEO Ed Meyercord said in a statement. "We set a record, with 39 customers that spent over $1 million with Extreme during the quarter."

Now what

Extreme Networks provided guidance for the fiscal third quarter that calls for revenue of $240 million to $250 million, comfortably above the $233 million that analysts are expecting. Adjusted earnings per share should be $0.11 to $0.16, easily topping the Street's forecast of $0.08. Adjusted gross margin is expected to be in the range of 61.5% to 62.5%.

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Extreme Networks, Inc. Stock Quote
Extreme Networks, Inc.
$9.80 (-1.61%) $0.16

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