Leading The Infinite Enterprise - EXTREME NETWORKS - Investor Relations
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EXTREME NETWORKS EXTREME NETWORKS Leading The Infinite Enterprise February 2022
Cautionary Statement on Financial Measures
Non-GAAP Measures: Forward-Looking Statements:
In preparing the accompanying information Extreme Networks This presentation contains forward-looking statements
Inc. (the “Company”) has excluded, where applicable, the including, but not limited to: the expected financial
impact of certain Non-GAAP costs as listed at the end of this performance of the Company. These forward-looking
presentation. The Company believes these Non-GAAP statements involve a number of risks and uncertainties
measures provide both management and investors with which could cause actual results to differ materially
additional insight into its current operations, the trends from those anticipated by these statements. You
affecting the Company, the Company's marketplace should not place undue reliance on forward-looking
performance, and the Company’s ability to generate cash from statements, which are based on current beliefs,
operations. Accordingly, management uses these Non-GAAP assumptions and expectations, and speak only as of
measures along with comparable GAAP information when the date of this presentation. We undertake no
evaluating the Company’s historical performance and future obligation to update these statements. For a detailed
business activities. The Company’s Non-GAAP measures may description of these risks and uncertainties please refer
be different than those used by other companies and should be to our most recent reports on Form 10-K, Form 10-Q,
considered in conjunction with, and not as a substitute for, the and Form 8-K filed with the SEC.
Company’s financial information presented in accordance with
GAAP. Please refer to our most recent earnings press release
dated January 27, 2022, which is posted on the “Investor
Relations” section of our website and to pages 44-47 and 38 of
this presentation for the required reconciliation to the most
comparable GAAP financial measures.
©2022 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 2
Extreme Networks at a Glance
A Global Leader in Enterprise Networking Global Dominance
25 YEARS OF INNOVATION
Ranked among the
Growth in Cloud Significant New Taking Share of TOP 5 MOST
Networking Opportunities in 5G Network Investments POWERFUL
companies in enterprise
networking 2021
FASTEST
GROWING
Cloud-Managed
Cloud Adoption Significant Strong Execution Network Solution
Drives Above- Operating Leverage and Y/Y Growth in
Market Product from Cash Flow
Demand Revenue Growth
EXTR 1996 1999 ~2,400 +50,000 $1.0bn $161 mm
LTM Q1’FY22 LTM Q2’FY22
NASDAQ Year Founded Year IPO’d Employees Customers
Revenue Adj. EBITDA
©2022 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 3
Investing for Growth in the Infinite Enterprise Era
SDN Solutions Fabric Networking Cloud Networking Simplified
Investment Investment Investment Universal Hardware
2013 2017 2019 2021
EFFORTLESS
SECURE FABRIC CLOUD CLOUD-DRIVEN
NETWORKING NETWORKING NETWORKING NETWORKING
SCALE CLOUDIFY INNOVATE ACCELERATE
MOBILE DATA CENTER CLOUD-DRIVEN
SD-WAN
NETWORKING NETWORKING NETWORKING
2016 2017 2020 2021
Mobile Networking Data Center Networking Refreshed 70% of Portfolio Infinite Enterprise
Investment Investment Investing ~$200M in R&D Focused on Cloud Investment
©2022 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 4
The Extreme Strategy and Differentiation
Offer customers Universal platforms
Provide a
choice: public Highest value of for enterprise class
differentiated end-
cloud, private cloud management switching and
to-end cloud wireless
cloud, or on- subscriptions
architecture infrastructure
premise
Enable a common Extend switching
Expand Wi-Fi
fabric to simplify and routing
technology
and automate the technology
leadership
network leadership
Expand market
Provide high- Leverage and
penetration by Maintain and
quality “in-house” expand multiple
targeting high- extend strategic
customer service distribution
growth market relationships
and support channels
segments
Advancing How We Connect By Challenging Complexity
©2022 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 5
Key Investment Highlights
Uniquely positioned with an integrated end-to-end networking
solution
Differentiated and an industry leading cloud solution offering
Strong cloud subscription growth with high visibility of future
revenues
Diversified customer base across a number of growing verticals
Strong, stable margins with a substantial free cash flow profile
Experienced management team
©2022 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 6
Leaders In Targeted Verticals Rely on Extreme
Revenue
Enterprise Vertical Recent Trends Key Customers
Contribution*
Government / Education ~35%
Enterprise and Other >20%
Manufacturing ~10%
Healthcare ~10%
Retail / T&L >10%
Sports /Entertainment
~5%
& Hospitality
©2022 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 7
*Contribution based on Q2 FY22 results
Market Convergence – Network, Security, and Cloud
CLOUD
Distributed Cloud
SDWAN
SASE
NETWORKING SECURITY
©2022 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 8
Leveraged to Large and Growing Addressable Market
$26 Billion $3 Billion
Enterprise Networking TAM
Service Provider
Networking SAM
$16 Billion
Enterprise Extreme SAM $50-100 Million
Annual Target
(Service Obtainable Market)
Source: 650 Group, Gartner, IDC, Omdia, Company Reports ©2022 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 9
Diversified Growth Drivers and Revenue Streams
TODAY MID-TERM
Revenue Stream 1
Wired & Wireless
Platform + Services
Revenue Stream 2 INFRASTRUCTURE BUSINESS CLOUD EDGE BUSINESS
ExtremeCloud SaaS ExtremeCloud SaaS
Wired, Wireless, and
ExtremeCloud SD-WAN SP SDWAN & SASE
Revenue Stream 3 Platform + Services Mobile Edge
Subscription + XaaS
5G opportunities
©2022 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 10Strong SaaS Subscription Growth
SaaS ARR & SaaS Deferred Ending Revenue (In $M’s except percentages)
Ending SaaS ARR1
$88
$80
$70
$63
$57
$54
2021 Q1 2021 Q2 2021 Q3 2021 Q4 2022 Q1 2022 Q2
1 Extreme uses SaaS annual recurring revenue ("SaaS ARR") to identify the annual recurring value of customer contracts at the end of a reporting period. We believe that SaaS ARR is an
important metric because it is driven by our ability to acquire new customers and to maintain and expand our relationship with existing customers. SaaS ARR represents the projected
annualized revenue run-rate of active ExtremeCloud™ IQ (XIQ) and other subscription contracts [along with bookings we received] at the end of a reporting period. Each contract (either
fulfilled or yet to be fulfilled) is annualized by dividing the contract value by the number of months in the contract term and then multiplying by 12. Calculated SaaS ARR for each contract
is then aggregated to arrive at total SaaS ARR. SaaS ARR should be viewed independently of revenue and does not represent our revenue under U.S. GAAP on an annualized basis. It is an
operating metric that can be impacted by contract start and end dates, bookings changes and renewal rates. SaaS ARR does not have a standardized meaning and therefore may not be
©2022 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 11
comparable to similarly titled measures presented by other companies. SaaS ARR is not intended to be a replacement for forecasts of revenue.
2 SaaS Ending Deferred Revenue refers to the ending quarterly balance of advance payments received for SaaS goods or services that are to be delivered or performed in the future.Strong Growth Outlook for Cloud Subscriptions
Bookings Revenue
$86M
$57M
Q2'21 Annualized Run Rate L-T Target Q2'21 Annualized Run Rate L-T Target
©2022 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 12Competitive Differentiation
One Network, One Cloud
ANY APP WIPS NAC ANALYTICS IoT LOCATION GUEST SD-WAN
ISO 27001 | Air DefenseSegmented Embedded
CLOUD
NETWORKING
ANY CLOUD AWS | AZURE | GCP
SECURITY
XIQ XMC XCA/SITE ENGINE
ANY WAY
NETWORK MANAGMENT
FABRIC
ANYWHERE
CAMPUS
©2022 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 13The Benefits of Universal Hardware
A more agile and secure network for campus and branch environments
Effortless Operation and Intelligence
End-to-End
Automation +
• Single pane of glass
• Intuitive workflows
Combining the Simplest Network and Smartest Cloud
©2022 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 14The Benefits of Universal Hardware
Cloud Management + Next-Gen Multi-Use Case Platforms + Simplified Licensing
Competitive Advantage Universal Hardware
• Simplified licensing + Hardware agility = reduced TCO
• Consistent experience – zero-touch deployment
• Flexibility for NOS
• Data-driven AI/ML
• Simplified sparing strategy ONBOARD AND
SELECT PERSONA
Business Benefits
• Streamlined supply chain
• Native cloud attach capabilities
• Higher gross margin contribution
EXOS VOSS OS OF CHOICE
©2022 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 15Differentiated and an Industry Leading Cloud Solution Offering
Fully Integrated End-To-End Cloud Networking Solutions
ExtremeCloudTM IQ At A Glance XIQ Essentials
1 2 3 ExtremeGuest™
A robust guest engagement solution
ExtremeIoT™
A simple IoT security solution that is
that enables network operators to
designed to protect high risk, wired
use analytical insights for a deeper
IoT devices
dive
Depth of Deployment Highest Quality ExtremeAirDefense™ ExtremeLocation™
Capability Options Real time, ML / AI
Safeguards the network from A resilient cloud-driven solution, that
Management, Public Cloud, Private continuous innovation
external threats and notifies IT staff, provides enterprises’ powerful multi-
intelligence, and Cloud, On-Premise
enabling an immediate response tier location services across all sites
assurance
Value Based Subscriptions
ExtremeCloud ExtremeCloud ExtremeCloud
ExtremeCloud ™ IQ Pilot
™ IQ Connect ™ IQ Navigator ™ IQ CoPilot
ExtremeCloud™ Everything in
Everything in
Everything in
Everything in Navigator, plus:
IQ Connect, plus: Connect, plus: Pilot, plus:
Advanced
Free device Additional Explainable machine
infrastructure
management for management learning derived
management,
access points, functions for third insights and
reporting, and
switches, and routers party and non-native intelligence
remediation tools
cloud devices
Universal Switch Universal Access
Point
Advantage over Legacy Networking
LEGACY NETWORKING ExtremeCloudTM IQ
Traditional Fabric
Flexible: Optimized for skills, scale, and objectives
Networking Networking
Campus Distributed
✓Disparate wired and wireless Agile: Continuous innovation and frictionless
Deployment Options
✓Human-only management delivery
Secure: Proven in the most risk-sensitive
1 2 3
✓Multiple management interfaces
Manually configured users and
environments
Technology: Access to the world’s best technology
✓devices
Public Cloud Private Cloud On-Premise
©2022 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 16Not All Cloud Architectures Are Created Equal. Choose Wisely.
Global Footprint
Scalability
APIs
Microservices
Native ML
Native AI
Multi-Duration
Multi-Cloud
(AWS, Azure, Google Cloud)
Multi-Deployment
(Public, Private, Local)
Multi-Vendor Device Support
ISO & CSA Certified
(27001, 27701, 27017 & CSTAR Level 1)
©EXTREME NETWORKS, INC. ALL RIGHTS RESERVED.
17What is SD-WAN?
Frictionless Enterprise Cloud-Native Ipanema Full Range of WAN Edge
WAN Evolution SD-WAN Application SD-WAN Functionality
MPLS ––> SD-WAN ––> SASE Orchestration, networking Unrivalled performance Routing and basic security
security, multicloud monitoring and guarantee through zone-based firewall
connectivity, and WAN toolset
optimization
Cloud Security CloudMesh Cloud-First Delivery,
Enhanced Agility, and TTM
Orchestrated, cloud-based Low latency cloud-based full-
advanced security in mesh + multicloud Cloud Orchestration +
partnership with Checkpoint on-ramp in partnership EdgeSentry + CloudMesh +
with Equinix pay-as-you-go
©2022 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 18ExtremeCloud SD-WAN strengthens the Infinite Enterprise vision by
offering value in top 3 buying criteria as unified experience through XIQ
Automated connectivity
Infinitely At
Distributed Scale Business Continuity and Resiliency
Always up-to-date Security
ExtremeCloud
SD-WAN
Existing Extreme Install
Net New Customers
Base
ExtremeCloud SD-WAN
+
Build a resilient, cloud-
IQ Extend your XIQ from the
native SD-WAN from
DC to the Branch using an
ground up, in 30% less
end-to-end Extreme based
time and benefit from low
solution while leveraging
TCO w/subscription that
cloud economics
includes HW
©2022 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 19Acceleration of Infinite Enterprise & Building Blocks of SASE
Infinite Enterprise SASE Ecosystem
Extreme
Infinite
Enterprise
Infinitely Consumer
Distributed Centric
SD- FWaaS SWG CASB ZTNA
Cloud-Driven WAN Ecosystem Ecosystem Ecosystem Ecosystem
Management
App Experience and AI
(App Intelligence) ExtremeCloud
Distributed Connectivity Extreme Edge Compute
(SDWAN)
Distributed Security
(SASE)
©2022 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 20Early Stages of Long-term 5G Growth Opportunity
5G Will Account for 80% of Mobile RAN Spending by 2025
Mobile Data Traffic* Mobile RAN Revenue Outlook**
(EB/Month) ($ Millions)
180 $45,000
160
$36,000
140
120
$27,000
100
80
$18,000
60
40
$9,000
20
0 $0
2019 2020 2021 2022 2023 2024 2025 2019 2020 2021 2022 2023 2024 2025
4G/3G/2G 5G 4G Mobile RAN Revenue 5G Mobile RAN Revenue
Combining the Simplest Network**Source:
*Source: Ericsson Mobility Report and650Smartest Cloud
Group – Mobile Radio Access Network (RAN) Quarterly Market
and Forecast Report
©2022 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 215G Service Provider Strategy
Extreme Hyper-
Focused use cases Automation
IP Fabric, Visibility, Border Routing, Transport
Multi-Access Edge
Access Data Center Core Data Center
Computing (MEC)
Differentiated solutions
Completeness, Scale, Hardening, Security
Hyper-automated infrastructure
Design, Discovery, Automated Provisioning,
Continuous Validation and Monitoring, Auto-
remediation with AI/ML
Extreme Extreme
Border Transport
Routing Services
©2022 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 22Our Winning Position in 5G Rollouts
Cloud Native Infrastructure Solutions (CNIS) Network Packet Broker
● Rapid growth based on 5G market adoption ● Transitioning to 9920 from MLXe – improves performance,
density, and power consumption
● Targets for 5G Core and containerized apps
● Upgrading infrastructure to 100G, with an upgrade path to
● >$100M million opportunity over the next 3-5 years increased functionality and 400G bandwidth
● Roadmap for Virtual Packet Broker, Virtual Tap, and
Mobile Edge Computing
● >$100M million opportunity over the next 3-5 years
Packet Broker
Technology Technology Technology
Innovation Refresh Refresh
©2022 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 23FQ2’22 Financial Highlights
©2022 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 24Q2 2022 Results Summary
Double-Digit Growth Fueled by Strong Demand and Execution
Continued Strong Growth Cloud SaaS Subscriptions Robust Profitability and
Free Cash Flow
• Sustained Double-Digit Y/Y • Total Subscription Bookings
Bookings Growth Growth of 47% Y/Y • Record quarterly GAAP and
Non-GAAP Income
• Record Quarterly Revenue on 16% • Annualized Cloud SaaS
Y/Y Revenue Growth Bookings of ~$122 million • $19.0 million in FCF
• Backlog Grew to ~$300 million • Ending ARR of $88 million, up • Net Debt of $149.4 million
55% Y/Y
• Repurchased 1.8 million shares
for a total of $25 million
Results and Guidance Provide Greater Confidence in Double-Digit Revenue Growth and
10-15% Non-GAAP Operating Margin Outlook for FY22
©2022 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 25FQ2’22 Highlights
CLOUD ADOPTION Driving Growth PROFITABILITY & CASH FLOW
SaaS ARR2
$88M
Non-GAAP
Gross Margin %1 58.2 %
Backlog ~$300M
Recurring $136M Total Revenue
Non-GAAP
Operating
Non-
GAAP
Revenue 30%
SaaS Deferred Growth (Y/Y %) 16.0% Margin %1 EPS ($) 1
Revenue2 10.9%
13.1% $0.21
Product Revenue
Growth (Y/Y %) 15.2%
Free Cash Flow
Service &
Subscription Revenue
Growth (Y/Y %)
17.8% $19.0M
Product Book Service Book
SaaS Subscription
to Bill Ratio to Bill Ratio 47% Net
Bookings Growth (Y/Y %)
1.12x 1.16x $149M Debt
Large Customers
(Over $1M in bookings for the Quarter) 38 ©2022 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 26
2 See Appendices for ARR & SaaS Deferred Revenue Definition 1 See Appendices for GAAP to Non-GAAP reconciliation.Fiscal Q2' 22 Product Highlights
Improved Privacy and CoPilot ExtremeCloud IQ-Site Engine
Security
• Port Efficiency • AirGap
• Drill down into tiles
ExtremeCloud IQ API Phase 4 Mobile App 4.0
• Instant Stack • SDK: Java, Go, Python, Javascript • Topology view
27
• Revert Switch Config • Create SSIDs and a lot more.. • OS Persona Selection
©2022 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED.GAAP Financial Highlights – Financial Operations
(In M’s except percentages and EPS)
Quarter
FQ2'21 FQ1'22 FQ2'22
GAAP
Product Revenue $165.8 $185.2 $191.1
Services Revenue $76.3 $82.5 $89.8
Total Revenue $242.1 $267.7 $280.9
Total GM % 57.9% 58.1% 56.5%
Operating Income $ $5.7 $18.3 $18.1
Operating Margin % 2.4% 6.9% 6.4%
Net Income (Loss) ($3.1) $12.7 $13.3
EBITDA $18.7 $30.2 $28.2
EPS ($0.02) $0.10 $0.10
©2022 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 28Non-GAAP Financial Highlights – Financial Operations
(In M’s except percentages and EPS)
Quarter
FQ2'21 FQ1'22 FQ2'22
Non-GAAP1
Product Revenue $165.8 $185.2 $191.1
Services Revenue $76.3 $82.5 $89.8
Total Revenue $242.1 $267.7 $280.9
Total GM % 61.0% 60.3% 58.2%
Operating Income $ $24.6 $37.0 $36.7
Operating Margin % 10.2% 13.8% 13.1%
Net Income $16.0 $28.0 $28.4
EBITDA $29.4 $42.4 $41.9
EPS $0.13 $0.21 $0.21
1 See Appendices for GAAP to Non-GAAP reconciliation.
©2022 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 29Financial Highlights – Balance Sheet
(In M’s except days)
Balance Sheet Highlights FQ2'21 FQ1'22 FQ2'22
Cash $184.0 $191.3 $173.5
Accounts Receivable $128.2 $129.6 $133.3
Inventories $49.8 $32.4 $37.2
Accounts Payables $53.7 $63.4 $58.8
Gross Debt* $356.3 $330.0 $322.9
Net Debt** $172.3 $138.7 $149.4
Cash Conversion Cycle Table FQ2'21 FQ1'22 FQ2'22
Days Sales Outstanding 49 45 44
Days of Inventory 62 37 38
Days Payable Outstanding 67 72 60
Cash Conversion Cycle 44 9 22
*Gross Debt is defined as long-term and current portion of long-term debt as shown
on the balance sheet plus unamortized debt issuance costs, if any.
**Net debt is defined as Gross Debt minus Cash. ©2022 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 30Non-GAAP Free Cash Flow
(In $M’s)
Extreme uses the non-GAAP free cash flow metric as a measure of things, invest in Extreme’s business, make strategic acquisitions,
operating performance. Free cash flow represents GAAP net cash and strengthen the balance sheet. A limitation of the utility of the
provided by operating activities, less purchases of property, plant non-GAAP free cash flow metric as a measure of financial
and equipment. Extreme considers free cash flow as useful performance is that it does not represent the total increase or
information for management and investors regarding the amount decrease in the Company's cash balance for the period. As shown
of cash generated by the business after the purchases of property, in the table below:
plant and equipment, which can then be used to, among other
FQ2'21 FQ1'22 FQ2'22
Operating Cash Flow $38.0 $40.3 $22.2
PP&E Capital Expenditures ($5.0) ($3.4) ($3.2)
Free Cash Flow $33.0 $36.8 $19.0
©2022 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 31Quarterly Results of Operations
(In M’s except percentages)
©2022 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 32Quarterly Results of Operations
(In M’s except percentages and EPS)
©2022 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 33Revenue by Geography
(In M’s except percentages)
$18M $6M
$80M $191M $93M $31M $90M $53M
$24M
$111M $281M $146M
©2022 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 34FQ3’22 Financial Guidance
©2022 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 35FQ3’22 Guidance – GAAP
(In M’s except percentages and EPS)
FQ3’22
FQ2’22
Guidance
Revenue ($M) $280.9 $276.0 - $286.0
Gross Margin % 56.5% 55.8% - 57.8%
Net Income $13.3 $5.1 – $12.6
EPS $0.10 $0.04 – $0.09
©2022 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 36FQ3’22 Guidance – Non-GAAP
(In M’s except percentages and EPS)
FQ3’22
FQ2’22
Guidance
Revenue ($M) $280.9 $276.0 - $286.0
Gross Margin % 58.2% 57.3% - 59.3%
Net Income $28.4 $21.3-$28.7
EPS $0.21 $0.16 – $0.21
©2022 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 37FQ3’22 Guidance - GAAP to Non-GAAP Reconciliation
Operating Margin
Gross Margin Rate Earnings per Share
Rate
GAAP 55.8% - 57.8% 3.9%-6.4% $0.04-$0.09
Estimated Adjustments for:
Amortization of Product Intangibles 1.0% 1.0% $0.02
Share-Based Compensation 0.2% 3.8% $0.08
Restructuring Charges, net - 0.1% $0.00
Acquisition and Integration Costs - 1.0% $0.02
Amortization of Non-product Intangibles 0.3% 0.5% $0.01
Non-GAAP Tax Adjustment - - ($0.01)
Non-GAAP 57.3% - 59.3% 10.5% - 12.7% $0.16 - $0.21
©2022 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 38Long Term Goals
©2022 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 39Long Term (3 to 5-Year Horizon) Revenue Drivers
Enterprise Networking Market Growth Rate — 3%-5%
Incremental Service
$20M in FY22, ramping to ~$50M-$100M annually
Provider Opportunities
Subscription Booking CAGR 25%-30%
Subscription Renewal Rate 85%-90%
Maintenance Attach 7%-10% of Product Revenue
Maintenance Renewal Rate 75%-85%
©2022 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 40Target Operating Model
P&L Drivers (Non GAAP*) Cash Drivers
FY21 Actuals FY21 Actuals
Gross Margin OPEX % of Rev OP Margin FCF % of Rev* CCC (Days) CAPEX % of Rev
60.8% 49.9% 10.8% 12.6% 24 1.7%
Long-Term Targets Long-Term Targets
63%-65% 46%-49% 15%-18% 11%-13% 35-45 1.5%-2%
*A reconciliation of non-GAAP guidance measures to the corresponding GAAP
measures is not available on a forward-looking basis due to the uncertainty
regarding, and potential variability of, many of the costs and expenses that may be
incurred in the future.
©2022 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 41Summary Long-Term Targets
(In M’s except percentages and EPS)
5-9% 25-35% 35%
L-T Revenue Growth CAGR L-T Cloud Subscription Target Software and Services
Revenue CAGR Recurring Revenue
63-65% 15-18% 11-13%
L-T Gross Margin Non-GAAP Operating Target Free Cash
Expansion Margin Target Flow % of Revenue
©2022 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 42EXTREME NETWORKS Appendices - GAAP to Non-GAAP Reconciliations Note: The totals for some periods may not foot due to rounding. Please see press release for full reconciliation.
GAAP to Non-GAAP Reconciliations
Revenue & Gross Margin (In M’s except percentages)
Quarter
FQ2'21 FQ1'22 FQ2'22
Product Revenue $ 165.8 $ 185.2 $ 191.1
Service Revenue 76.3 82.5 89.8
Total Revenue - GAAP $ 242.1 $ 267.7 $ 280.9
Gross Margin - GAAP 140.2 155.6 158.8
Gross Margin % - GAAP 57.9% 58.1% 56.5%
Amortization of Product Intangibles 6.6 5.2 4.1
Share-Based Compensation in COGS 0.8 0.7 0.7
Gross Margin - Non-GAAP $ 147.6 $ 161.5 $ 163.6
Gross Margin % - Non-GAAP 61.0% 60.3% 58.2%
©2022 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 44GAAP to Non-GAAP Reconciliations
Operating Income (In M’s except percentages)
Quarter
FQ2'21 FQ1'22 FQ2'22
Operating Income - GAAP $ 5.7 $ 18.3 $ 18.1
Operating Margin- GAAP 2.4% 6.9% 6.4%
Amortization of Product Intangibles 6.6 5.2 4.1
Total Share-Based Compensation 10.1 10.4 11.3
Restructuring Charges, net 0.7 0.3 0.3
Amortization of Non Product Intangibles 1.5 1.3 0.8
Integration Costs in OpEx - 1.5 2.1
Operating Income - Non-GAAP $ 24.6 $ 37.0 $ 36.7
Operating Margin - Non-GAAP 10.2% 13.8% 13.1%
©2022 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 45GAAP to Non-GAAP Reconciliations
Net Income (Loss) (In $M’s except EPS)
Quarter
FQ2'21 FQ1'22 FQ2'22
Net Income (Loss) - GAAP $ (3.1) $ 12.7 $ 13.3
Shares - GAAP 123.3 133.2 133.6
EPS - GAAP (Diluted ) $ (0.02) $ 0.10 $ 0.10
Amortization of Product Intangibles 6.6 5.2 4.1
Total Share-Based Compensation 10.1 10.4 11.3
Restructuring Charges, net 0.7 0.3 0.3
Amortization of Non Product Intangibles 1.5 1.3 0.8
Tax Effect of non-GAAP Adjustments 0.2 (3.4) (3.5)
Integration and Acquisition Costs in OpEx - 1.5 2.1
Net Non-GAAP Adjustments 19.1 15.3 15.1
Net Income - Non-GAAP $ 16.0 $ 28.0 $ 28.4
Shares - Non-GAAP 125.7 133.2 133.6
EPS - Non-GAAP $ 0.13 $ 0.21 $ 0.21
©2022 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 46GAAP to Non-GAAP Reconciliations
EBITDA (In $M’s)
Quarter
FQ2'21 FQ1'22 FQ2'22
Net Income (Loss) - GAAP $ (3.1) $ 12.7 $ 13.3
Interest $ 6.0 $ 3.8 $ 3.0
Provision for Income Taxes $ 1.9 $ 2.1 $ 1.8
Depreciation/Amortization 13.9 $ 11.6 $ 10.1
EBITDA - GAAP 18.7 30.2 28.2
Net Non-GAAP Adjustments 19.1 15.3 15.1
Income taxes included in Net Non-GAAP Adjustments (0.2) 3.4 3.5
Amortization included in Net Non-GAAP Adjustments (8.2) (6.5) (4.9)
EBITDA - Non-GAAP $ 29.4 $ 42.4 $ 41.9
©2022 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 47©2022 EXTREME NETWORKS, INC. ALL RIGHTS RESERVED. 48
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