Extreme Networks Lowers Q2 Revenue Guidance From $312M-$327M To ~$294M-$297M Vs $320.51M Est.; Expects Annualized Subscription And Support Revenue To Be ~$430M
Portfolio Pulse from Benzinga Newsdesk
Extreme Networks, Inc. (EXTR) has revised its Q2 revenue guidance downward from the previously estimated range of $312M-$327M to approximately $294M-$297M, which is below the consensus estimate of $320.51M. The company attributes the revision to industry challenges such as channel digestion and longer sales cycles, which have led to large deals being postponed to future quarters. Despite this, Extreme Networks reports a 41% year-over-year growth in subscription revenue and expects recurring revenue to make up 33% of total revenue. The company also notes a strong gross margin and an ending cash balance of $221.4M after share repurchases of $25M. CEO Ed Meyercord expresses confidence in the company's long-term strategy and its managed services and subscription offerings.
January 08, 2024 | 9:32 pm
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NEGATIVE IMPACT
Extreme Networks has lowered its Q2 revenue guidance, which is likely to negatively impact investor sentiment and the stock price in the short term.
Lowering revenue guidance typically results in negative investor sentiment as it suggests that the company is not performing as well as expected. The fact that the revised guidance is below the consensus estimate further exacerbates the potential negative impact on the stock price. However, the company's confidence in its long-term strategy and the growth in subscription revenue may mitigate some of the negative sentiment.
CONFIDENCE 85
IMPORTANCE 90
RELEVANCE 100