The 10-second takeaway
For the quarter ended June 30 (Q4), Extreme Networks beat expectations on revenues and beat expectations on earnings per share.
Compared to the prior-year quarter, revenue shrank. Non-GAAP earnings per share dropped. GAAP earnings per share shrank significantly.
Margins shrank across the board.
Extreme Networks tallied revenue of $79.5 million. The two analysts polled by S&P Capital IQ wanted to see revenue of $74.6 million on the same basis. GAAP reported sales were 9.3% lower than the prior-year quarter's $87.6 million.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures are normalized by S&P Capital IQ and may vary to maintain comparability with normalized estimates.
EPS came in at $0.07. The two earnings estimates compiled by S&P Capital IQ forecast $0.06 per share. Non-GAAP EPS of $0.07 for Q4 were 13% lower than the prior-year quarter's $0.08 per share. GAAP EPS of $0.03 for Q4 were 63% lower than the prior-year quarter's $0.08 per share.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures are normalized by S&P Capital IQ and may vary to maintain comparability with normalized estimates.
For the quarter, gross margin was 55.3%, 40 basis points worse than the prior-year quarter. Operating margin was 4.4%, 190 basis points worse than the prior-year quarter. Net margin was 4.0%, 490 basis points worse than the prior-year quarter. (Margins calculated in GAAP terms.)
Next quarter's average estimate for revenue is $70.6 million. On the bottom line, the average EPS estimate is $0.05.
Next year's average estimate for revenue is $301.8 million. The average EPS estimate is $0.27.
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 116 members out of 124 rating the stock outperform, and eight members rating it underperform. Among 24 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 23 give Extreme Networks a green thumbs-up, and one give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Extreme Networks is outperform, with an average price target of $5.25.
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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.