Extreme Networks saw its data center business rebound thanks to new customer wins. The company reported fiscal first quarter 2019 revenues of $239.9 million, a 13 percent increase over the same quarter in the previous year. In addition, the company reported a net loss of $9.1 million and a gross margin of 55.1 percent.
Investors responded favorably to the news. At deadline, Extreme’s stock was trading up 13 percent at $6.66 per share compared to the previous day’s close of $5.87 per share.
During its call with investors, Extreme Networks President and CEO Ed Meyercord said that the company made some changes in its data center networking business, including hiring employees that are focused on key vertical markets such as service provider and federal. “We are excited about the talent and how quickly they are ramping,” Meyercord said.
He also hinted that the company will announce a new data center product that will incorporate automation and will be tied to the company’s management center.
Meyercord acknowledged that it has taken longer than expected for Extreme to integrate the data center networking assets that it acquired from Brocade for around $55 million in October 2017. Shortly after that Extreme also closed on a $100 million purchase of Avaya’s networking business. The company had predicted the Brocade assets would generate more than $230 million in annualized revenue and that the Avaya assets would generate a minimum of $200 million in revenue in fiscal 2018.
Extreme Networks executives said they anticipate revenue for the fiscal second quarter of 2019 to be in the range of $239 million to $249 million.
Meyercord also said that Extreme has increased the prices on its products. Those sold in the U.S. will see a 7 percent increase in pricing. Those sold outside the U.S. will see a 5 percent increase. He noted that these price changes were due to the increase in components costs related to U.S. tariffs on products produced in China.
However, he stressed that even with the price increases, Extreme’s pricing is still lower than Cisco, which is the company’s biggest competitor.