Why Cloud Networking Company Extreme Networks Shares Are Diving Today

Extreme Networks Inc (NASDAQ: EXTR) shares are tumbling today by over 6% after the company lowered its Q2 revenue guidance yesterday.

The company trimmed the outlook for Q2 revenues to around $294 million to $297 million (from $312 million to $327 million earlier) vs. consensus of $320.51 million.

EXTR projects annualized subscription and support revenue of about $430 million (up 41% Y/Y) and expects recurring revenue to account for 33% of total revenue. 

The company expects Q2 gross margin to be toward the higher end of the prior guidance range of 59.5%-61.5%. 

EXTR repurchased shares worth $25 million in Q2 and ended the quarter with a cash balance of $221.4 million.

Ed Meyercord, President and CEO said, "Our revised second fiscal quarter outlook reflects industry headwinds of channel digestion and elongated sales cycles. In late Q2, we saw multiple large deals pushing out to future quarters." 

"We remain confident in our long-term strategy and our ability to achieve double-digit long-term revenue and EPS growth supported by competitive customer wins and the growth in our opportunity funnel."

The company will report its Q2 earnings results on January 31, 2024.

Also Read: Extreme Networks Poised For A Strong Comeback: Analyst Predict Bright Future In CY24

Price Action: EXTR shares are down 6.39% at $16.40 premarket on the last check Tuesday.