The hard decisions that Extreme Networks made earlier this year were an anchor on its first quarter earnings report Thursday, but the San Jose, California-based networking company says its rebound is progressing well.
To recap: Extreme laid off 285 employees in May, saw three of its executives resign in April, and got a new CEO the same month. That CEO, Ed Meyercord, indicated on Thursday’s earnings call that brighter days are ahead.
“I’ve been in the CEO seat now for six months, and I like the way this team is coming together,” he said. “It’s accomplished a lot in a very short period of time.”
One big number for Extreme was a reported loss of $11.5 million, or 11 cents per share, in its fiscal first quarter. The bigger number was a non-GAAP profit of 7 cents per share, which topped the 3 cents predicted by analysts surveyed by Zacks Investment Research.
Extreme had revenues of $125 million for the quarter, which just missed analyst’s projections of $125.2 million. The company’s revenues were down 9 percent from the same quarter a year ago.
Extreme said its revenues will be $130 million to $140 million for its fiscal second quarter. The networking company expects its per-share non-GAAP earnings to be 6 to 10 cents.
First-quarter losses aside, Meyercord said that Extreme’s cost reductions strengthened its financial position and that reorganizing all of Extreme’s departments has resulted in a company better suited to meet customers’ needs going forward.
“Extreme was an engineering-led company with engineering controlling all of the product development, product marketing, and customer service,” Meyercord said. “We separated these functions. We now have a single sales organization and independent product development and marketing groups.”
The end result is that the engineering teams now have a clearer direction for developing software-defined products and services across Extreme’s customer verticals, which include education, healthcare, manufacturing, hospitality, government, and mid-level enterprise.
To simplify the sales of its portfolio, the company will market its products with new names, including Extreme Wireless, Extreme Management, and Extreme Analytics.
Meyercord cited several reasons why his company will improve. Extreme expects to capitalize on the upcoming 802.11ac Wave 2 technology with new access points coming available this quarter. They will arrive in time to be included in the federal E-Rate funding cycle in the calendar fourth quarter of next year.
“We plan to follow this with new 2.5 Gb/s and 5 Gb/s access layer switches after the chipsets become available in fiscal Q4,” Meyercord said.
Meyercord said growth will also be boosted by the aforementioned E-Rate funding letters from the FCC, which were slow at the start of the first quarter but picked up near the end and are expected to grow in the second quarter.
He also expects Extreme’s channel partner and distribution teams to post incremental growth in the third quarter, but said it was hard to forecast.
“We’ve taken up our revenue guidance in Q2 by $10 million over Q1, given our confidence in the strength of our pipeline with both the volume of deals and the visibility we have,” Meyercord said.