Sentiment Analysis of the earnings transcript to help figure out if there are any bullish or bearish sentiments that could be gathered from it. We're doing ML and AI based analysis on the earnings call to get some more insights.
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| Statement |
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| As a result, we believe we are well positioned to deliver strong profitability and improved operating margins during the year |
| Despite expected near term market conditions and lower revenue expectations for the full year fiscal 2024, we expect mid- to high-single digits of revenue growth, which we believe is above industry growth estimates and implies our share gains will continue |
| Cloud adoption remains strong on 30% year-over-year ARR growth to $141 million, and SaaS deferred revenue grew 38% year-over-year |
| Customer retention metrics remain high, a testament to our customers' loyalty and preference for our industry-leading solutions |
| First quarter revenue of $353.1 million grew 19% year-over-year, exceeding the high end of our expectations entering the quarter |
| Product revenue of $253.5 million grew 23% year-over-year, reflecting continued improvement in our supply chain environment |
| Extreme delivered another strong quarter with revenue growth of 19% and EPS growth of 75% |
| So our share gain profile, and when we're winning the kind of accounts that we're winning with the kind of names that we're winning for references, that bodes very well for us |
| Our strategic initiatives around differentiated zero-trust posture, expanded machine learning and AI capabilities are expected to drive expansion, ARR growth, and average revenue per user |
| I don't know if it's going to be 90 basis points sequentially every single quarter, but we are expecting that we continue to improve our gross margins throughout the year |
| We think that we will continue to see improvement throughout the year |
| That will allow us to grow our EPS by over 25% during the year |
| Our funnel of opportunities continues to grow up double digits on a year-over-year basis as our underlying business and competitive position remain strong |
| As Ed noted, we remain committed to long term double digit growth and I see tremendous opportunity for Extreme to grow our business, accelerate our recurring revenue contribution from subscription and support and improve our margins and cash flow |
| And so we think that that is an important element for shareholders to look at and realize that this company is going to get through this air pocket, still deliver good, strong, profitable growth this year |
| And we've been delivering high levels of growth and profitability for quite some time, for several years |
| So I would say, we feel confident in our ability to achieve that 25% growth in EPS this year |
| And we've come up with what is a very exciting platform that greatly simplifies the ability to provide a managed service from a networking perspective and all the elements that we're providing |
| We remain optimistic about the enterprise networking spending environment and our ability to take share |
| Second, we offer unmatched flexibility |
| So that's still enabling us to have a good second quarter from an EPS perspective, and obviously helps us for the rest of the year as well |
| Our AIOps solution now cover over 200,000 devices and are gaining traction with large customers as they look for new ways to leverage the network to drive better business outcomes |
| We were able to act quickly, which was great for us in the quarter, to this kind of evolving market environment |
| A global leading fast food chain has selected ExtremeCloud SD-WAN to ensure consistent performance and improve guest experiences at its 1,500 locations across the UK |
| With Extreme, this industry leader has greater visibility across its network and will be able to simplify network management at all locations, increase overall network security, and optimize operations by improving performance for critical applications |
| Our increasing pool of large, high-profile customers and our technology differentiation is why we continue to see the value of deals over a million dollars grow each quarter |
| We continue to have a healthy customer order backlog with clear visibility to order with specific customer request dates through the balance of our fiscal year |
| To that end first quarter earnings per share was $0.35 above the high end of our guidance range entering the quarter |
| Our strong revenue growth, gross margin expansion, and operating expense management contribute to another increase in our operating margin, now at 17.7%, up from 12.1% in the year-ago quarter and up from 17.4% in the prior quarter |
| We'll also share why we're so excited about new commercial opportunities with our recently launched modern managed services platform, a private subscription offer for very large service providers, our highly targeted certification and security, compliance opportunity, and the elevation of our entire portfolio to subscription licensing |
| Statement |
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| At the end of fiscal Q1, we felt the impact of the macro environment trends in our industry and lowered our outlook for near-term top-line growth |
| The higher interest rate environment and economic challenges in some of our larger markets, like Germany, lengthened sales cycles and pushed out a larger amount of end-of-quarter orders in Q1 than we would normally expect |
| Based on changing customer buying patterns and macroeconomic conditions, we are tempering our revenue outlook for this quarter and the balance of the year |
| So I would say yes we had a softer orders quarter in Q1 than we expected, and that’s it reflected in our Q2 guidance |
| And in our second quarter, we had a softer quarter because of what we just discussed around the pushing out of some of those orders |
| However, looking ahead at the balance of fiscal 2024, we are taking a more cautious tone in light of the current spending environment |
| We're looking at more end customer demand challenges right now |
| And so it was that softness at the very end of the quarter that caused us to look at Q2 to be more cautious and conservative |
| So that’s the challenge, if you will we have right now from a visibility perspective, the macroeconomic is, are these sales cycles going to continue to elongate? Are things going to continue to push where you can’t ship it in the quarter? That’s the phenomenon |
| So we're just seeing Europe being this more sluggish, I would say, area of any we commented, particularly in Germany, that's the area that's really I'll call causing the slowdown is mostly in the European area |
| And with the slowdown of sales cycle, people became a lot more cautious about the call here |
| The problem with managed services is that the platforms are really complicated and difficult to manage |
| As it relates to Q4, yes, we've got a tough comp there |
| Unidentified Analyst And then just my follow-up on that is just obviously you've got backlog working down, you expect it now to normalize in Q4, you've got some very difficult comps in the back half |
| Wanted to ask you one of the big sort of issues looking at this industry for some time now has been the elevated backlog, certainly you've had it as well |
| Alex Henderson Okay, so if that's the case, in order to hit your guidance as given, it sounds like your product sales literally have to be down in the December quarter and essentially flat for the full year, excluding the just printed quarter |
| And so it started slipping at the end of the quarter and then as we look forward, our teams just got a lot more cautious with their call, given the environment |
| As we turned into Q2, Kevin mentioned that our teams became more cautious with their call |
| They just slowed things down |
| And our field teams, on the heels of what had happened at the end of the quarter felt they should be more cautious with their calls |
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