Why Extreme Networks (EXTR) Shares Are Plunging Today

• Extreme Networks, IncEXTR reported a second-quarter FY23 revenue growth of 13% year-on-year to $318.3 million,beating the consensus of $304.4 million.
• Product revenue grew by 17% Y/Y to $223.4 million. Service and subscription revenue grew 6% Y/Y to $94.9 million.
• SaaS ARR was $115 million, up 29% Y/Y.
• Non-GAAP EPS of $0.27 beat the consensus of $0.24.
• Non-GAAP gross margin expanded by 30 bps to 58.5%. Non-GAAP operating margin expanded by 180 bps to 14.9%.
• EXTR generated $70.6 million in operating cash flow and held $202.5 million in cash and equivalents.
• President and CEO Ed Meyercord stated: "We are raising our FY23 revenue growth outlook to the high-end of our 10-15% range and expect this momentum to continue into FY24 as the supply chain environment continues to improve."
• Outlook:EXTR sees Q3 revenue of $315 million - $325 million, above the consensus of $313.88 million.
• It sees Q3 Non-GAAP EPS of $0.23 - $0.29 compared to the consensus of $0.26.
• EXTR anticipates FY23 revenue of $1.279 billion, above the consensus of $1.250 billion.
• CFO Transition:CFO Rmi Thomas resigned after accepting a position at a privately held software company. Thomas will remain with Extreme until February 16. The company has initiated a search for a CFO.
• Senior Vice President and head of Financial Planning & Analysis Cristina Tatewill take over as interim CFO.
• Price Action:EXTR shares traded lower by 19.9% at $15.47 on the last check Wednesday.

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